On Holding AG, the Swiss running shoe company known for its distinctive CloudTec technology, just reported a stellar first quarter for 2024. Revenue soared past the half-billion mark for the first time, driven by strong demand across all regions, channels, and categories. But buried within the celebratory pronouncements and optimistic projections lies a subtle hint that one of On's most valuable assets might be on the verge of departure.

This hidden clue centers around the language used by On's leadership when discussing tennis legend Roger Federer, a co-entrepreneur and the face of the Roger franchise. While praising the performance of the Roger line – which grew an impressive 45% in the quarter – CFO and Co-CEO Martin Hoffmann made a curious statement. He emphasized that the partnership with Federer is "extremely long term" and that Federer is "very, very committed to it."

Such emphatic affirmations, especially when unprompted by the analyst questioning, often signal an attempt to quell underlying anxieties. Why the need to underscore Federer's commitment so forcefully? This suggests that perhaps behind the scenes, there are tensions or uncertainties surrounding Federer's future with On.

Adding fuel to this hypothesis is Hoffmann's follow-up remark: "You all know that we cannot comment on short-term share sales speculation for anyone." This statement, seemingly out of place in a discussion about Federer's commitment, directly addresses rumors circulating about a potential change in Federer's ownership stake in On.

Could this mean Federer is contemplating selling his shares? If so, the implications for On could be significant. Federer's association with the brand, particularly his hands-on involvement in product development and his global star power, has been instrumental in elevating On's profile and driving demand, especially for the Roger line.

Roger Line Performance

The numbers paint a compelling picture. The Roger franchise has consistently outperformed On's overall growth, a testament to Federer's influence. This table shows the growth figures:

This suggests that Federer's departure could potentially dampen the growth trajectory of this key product line.

Furthermore, Federer's presence has added a layer of prestige and desirability to the On brand. He embodies the company's values of performance, innovation, and style, attracting a wider audience beyond dedicated runners. Losing this association could impact On's brand image and its ability to command premium pricing.

Of course, this remains a hypothesis. On's leadership could simply be reaffirming Federer's commitment to dispel any unfounded rumors. However, the carefully chosen language and the unsolicited references to share sale speculation warrant closer scrutiny. It's a subtle shift in tone that savvy investors might find intriguing.

It's worth noting that On has taken steps to mitigate the potential impact of Federer's eventual departure. They've expanded their athlete roster, bringing on board young tennis stars Iga Swiatek and Ben Shelton. They've also invested heavily in other product lines and channels, particularly apparel and their own retail stores.

DTC vs Wholesale Growth

This chart shows the impressive growth of On's Direct-to-Consumer (DTC) sales, indicating a strategic shift in their business model.

But the question lingers: can On maintain its phenomenal growth trajectory without its star player? Will the "Roger effect" fade if the maestro himself steps off the court? Only time will tell. But for now, the subtle hints dropped in On's earnings call offer a tantalizing glimpse into a potential shakeup that could have significant repercussions for the brand.

"Fun Fact: Roger Federer invested in On Running in 2019, not just as a brand ambassador but as a co-entrepreneur. He's actively involved in product development and design, bringing his unique insights from the world of professional tennis to the running shoe industry."