The Running Dream: Nike and On’s Slow Dance

Many years later, as the rain tasted of iron filings and the scent of forgotten rubber filled the air, old Mateo would recall the summer the running shoes began to speak. Not with voices, of course, but with the silent language of numbers, of shifting fortunes, and the slow erosion of empires. He remembered a time when Nike, a name whispered with reverence in every barrio, seemed as immutable as the Andes, yet even mountains crumble, grain by grain, under the relentless weight of time and the audacity of newcomers. It was a summer, he’d say, when the very ground beneath their feet seemed to hum with a restless energy, a premonition of the slow dance between the established titan and the audacious challenger.

The air, thick with the humidity of a season refusing to yield, held a peculiar stillness over the athletic wear market. Nike, the behemoth, a creature of habit and legacy, found its stride faltering, its once-unassailable dominance challenged not by brute force, but by a subtle shift in the currents. The stock, a barometer of dreams and aspirations, had dipped—a mere fifteen percent over the past year, a wound easily concealed beneath layers of marketing and brand loyalty, yet a wound nonetheless. Lululemon, once a rising sun, now cast a long, melancholic shadow, halved in value, a cautionary tale whispered among investors. But it was On Holding, the Swiss upstart, the one with the soles that seemed to defy gravity, that truly captured the imagination—and the attention of those who understood the language of disruption. Down eleven percent, yes, but moving with a purpose, a quiet determination that hinted at a more profound shift.

Nike, for generations, had been the architect of athletic desire, its swoosh a symbol recognized in every corner of the globe. It commanded a loyalty built not merely on performance, but on a carefully constructed mythology—a narrative of triumph, of overcoming obstacles, of pushing the boundaries of human potential. The company held more sales than all its competitors combined, a testament to its enduring power. Yet, in its pursuit of efficiency and control, it had made missteps—severing ties with trusted wholesale partners, clinging to established product lines while the world clamored for innovation. It was as if the old king, secure in his castle, had failed to notice the barbarians gathering at the gates, seizing the abandoned pathways to market share.

Now, under the new leadership of Elliott Hill, Nike seemed to be rediscovering its footing, though the path was fraught with challenges. Revenue remained stagnant, a flatline in a world obsessed with exponential growth. Wholesale revenue, however, showed a glimmer of hope, rising eight percent—a tentative step forward. But the specter of tariffs loomed large, eroding margins and casting a shadow over future prospects. The gross margin had dipped three percentage points, a subtle but significant erosion of profitability. Yet, there was a path to recovery, a flicker of resilience. Nike continued to pay a growing dividend, a modest yield of 2.5 percent, a gesture of stability in a volatile world. The stock traded at 28 times forward earnings, a valuation that reflected both its legacy and its uncertainties.

On Holding: The Ascent

On Holding, by contrast, was a creature of the present, a whirlwind of innovation and ambition. Born in the Swiss Alps, it had quickly gained a reputation for its distinctive CloudTec soles, a technology that promised to cushion every stride and propel athletes forward. The company had expanded beyond footwear, offering a full line of athletic apparel and accessories, capturing the imagination of a premium market hungry for something new. Sales had surged by 35 percent, driven by both direct-to-consumer channels and strategic wholesale partnerships. Apparel and accessories, in particular, had more than doubled in value, a testament to the brand’s growing appeal. It was as if the very air around On Holding crackled with energy, a palpable sense of momentum.

The company had positioned itself as a premium brand, a purveyor of quality and performance. This strategy had allowed it to maintain strong margins, even in the face of economic headwinds. Gross margin had widened, rising from 60.6 percent to 65.7 percent, a clear indication of its pricing power. Net income had soared, increasing by nearly 290 percent—a breathtaking ascent. It was a performance that defied expectations, a testament to the power of innovation and strategic execution. The company had numerous levers to pull, countless opportunities to sustain its growth. Entering new markets, releasing groundbreaking products—the possibilities seemed limitless. And, surprisingly, the valuation remained reasonable. The stock traded at 36 times forward earnings, not much higher than Nike. Looking at the enterprise value to EBITDA ratio—a metric favored by discerning investors—revealed an even more compelling picture. At 27, it was on par with Nike, a testament to the company’s underlying profitability.

The choice, then, is not merely a matter of numbers, but of temperament, of investment philosophy. The value investor, seeking stability and dividends, may find solace in Nike’s enduring legacy. The growth investor, hungry for innovation and upside potential, will undoubtedly gravitate towards On Holding. Personally, observing the currents, the subtle shifts in the market winds, I see On Holding as the better buy today. It is a company not simply running with the pack, but charting a new course, a path towards a future where innovation and performance reign supreme. And in the long run, Mateo would say, it is not the strongest who survive, nor the most cautious, but those who dare to run a little faster, a little bolder, towards the horizon.

2026-02-23 15:02

On Holding: The Ascent

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