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Public Markets Investor, Opportunistic Buying & Cost-Basis Management
If one insists on a recovery play in sporting apparel, On Holding seems best suited thanks to its balance sheet. Long-term buy-and-holds of apparel stocks are highly unlikely to work, which makes the space hard to get behind. Trends are fickle: in Southern California, younger gym-goers no longer wear On, only older people. x.com x.comÂ
On Holding is the better opportunity right now, supported by its recent earnings guidance. x.comÂ
On Holding could rerate quickly from 9 times forward EBITDA back to 20 times if its growth decline slows or reverses, possibly in early 2027, while it holds premium gross margins. Over the past two quarters it deliberately held prices and protected its premium positioning, pulling back from wholesale toward direct-to-consumer. Its apparel business is growing 84%, small now but a clear sign its category expansion is working. x.comÂ
On Holding holds zero interest now that its growth has slowed too much and all the founders have left. It would still be preferable to Nike or Lululemon, but retail and apparel are best avoided altogether. x.com x.comÂ
On Holding is the better business to own: when you can pay a few more turns of valuation for higher growth, don't think twice. Deckers, which Michael Burry killed, is the contrast. x.comÂ
On Holding trades at about 16.5x forward earnings after a roughly 52% drawdown. x.comÂ
On Holding looks likely to be dead money for a while after its first-ever guide-down sent shares down 19%. Revenue missed, guidance was soft and wholesale growth slowed, and part of the weakness may reflect Nike starting to recapture market share. x.comÂ
On Holding will keep eating Nike's lunch because Nike has lost its halo-brand status among affluent consumers, who now wear On Clouds or Hoka. Those top earners do the bulk of consumer spending, and when a brand loses the top of the market, the middle and lower end follow. x.com x.comÂ
On Holding's entry into golf shoes could be a big win because the category has offered uninspiring options for years. After shopping the category, the field looks wide open, with a potential $150-$300 price point. x.comÂ
Lululemon's weakness is structural, and consumers may also be tightening budgets for aspirational purchases across apparel. The same slowing-sales trend showed up at other brands this quarter, and heavy wholesale promotions were flagged on the On and Amer Sports calls, making apparel a tough industry to invest in. x.comÂ
Nike and Lululemon show why apparel brands almost always belong in the too-hard pile. Consumer tastes change on a whim and are hard to model, and missteps in keeping up can be the beginning of the end even for the hottest, most beloved brands. A new shirt is among the first things people cut, and structurally growing beyond brand awareness and store runways is extremely difficult. There are better places for time and money. x.comÂ
