Swiss sportswear company On Holding has made a significant move by signing French football star Kylian Mbappé, ending his long-standing partnership with Nike. This strategic signing coincides with On's official entry into the competitive soccer market. The brand, known for its distinctive "hollow pod" soles and success in running and tennis, is looking to diversify its revenue streams beyond its core categories where sales growth has been slowing, particularly in the Americas which accounts for over half of its revenue. Mbappé's previous association with Nike dated back to 2006 when he was nine years old, and he had been a central figure in Nike's football marketing, even receiving signature Mercurial boots at the recent FIFA World Cup.
On's decision to enter soccer with such a high-profile athlete is seen as an attempt to challenge the long-standing duopoly of Nike and Adidas in the sport. Analysts at Evercore ISI believe this investment could be a "positive near-term catalyst for the stock," which saw its U.S.-listed shares rise by 5% in premarket trading following the announcement. However, concerns about the financial implications exist, as entering the soccer category, with products like cleats and licensed team fanwear, typically involves lower gross margins. Jefferies analyst Randal Konik expressed skepticism, noting that "football is one of the most expensive categories to enter and performance credibility cannot simply be bought," drawing parallels to Under Armour's challenges with Stephen Curry.
The move comes at a challenging time for Nike, which has seen its shares decline by over 50% in the past year and is set to be removed from the S&P 100. Nike has also recently lost other significant endorsements, such as Spain's Lamine Yamal to Adidas. On the other hand, On, while making headlines for its strategic expansion, has also faced its own difficulties, missing second-quarter net sales estimates and alarming investors about slowing growth. The company is aiming to launch its first football boots in 2027 and has also appointed former French player Thierry Henry as its director of football, with FC Barcelona midfielder Sydney Schertenleib also involved in the new division.
Despite the potential hurdles and significant investment required, On's bold entry into soccer with Mbappé is a clear signal of its ambition to grow and diversify. The brand is betting on Mbappé's global appeal to boost its visibility and capture a share of a market dominated by established giants. Mbappé himself expressed enthusiasm for the partnership, stating on social media that he found himself "surrounded by innovators who dream of the same things I do," indicating a belief in On's vision and technological approach. This high-stakes play will test On's ability to translate celebrity endorsement into sustained market success in a highly competitive arena.
