On’s gross margin hit 72.6%. Without the tariff refund, it was still 66.9%.

On Holding reported third-quarter results on November 10, and the Swiss sportswear company cleared a new bar: net sales of CHF 931.4 million, up 17.2%, or about $1.13 billion at recent franc rates—the first quarter above CHF 900 million. Gross profit margin hit 72.6%, the highest in On’s history. Shares still slipped in premarket trading, because the fine print matters. That record margin includes CHF 52.6 million—roughly $64 million—in U.S. tariff refunds. Take them out and gross margin was 66.9%. The full-price business still looks strong. The refund just made the headline look louder.

On is the Zurich brand behind the Cloud family of shoes—Cloud 6 for all-day wear around $160, Cloudtilt in the lifestyle lane, Cloudsurfer for road miles—plus a growing apparel line. Roger Federer has been a co-entrepreneur and equity holder since 2019. Co-founder and co-CEO Caspar Coppetti said the company held full price in a promotional market and delivered record underlying margins. CFO Frank Sluis has said premium is not an adjective in On’s financial model—it is the mechanism. In practice that means products people buy without a markdown, more sales through On’s own channels, and the cost benefits of getting bigger, before any customs refund shows up.

Direct-to-consumer is carrying more of the weight. DTC sales—On.com plus the company’s own stores—rose 25% to CHF 393.3 million and reached 42.2% of net sales. Wholesale still mattered, up 12.2% to CHF 538.2 million, but grew slower on purpose after On held back some sell-in earlier in the year rather than pack promotional shelves. Own retail is part of the plan: On has been building toward roughly 100 stores in big cities, with plans to roughly double that fleet by 2029, and management says those doors make money on their own. Walk into a Limmatquai or Flatiron flagship and you are paying the brand’s price, not Foot Locker’s weekend sale board. That mix is how a sneaker company lands mid-60s gross margins while peers chase volume with markdowns.

The tariff money needs its own paragraph. After the U.S. Supreme Court struck down duties levied under the International Emergency Economic Powers Act in February, Customs opened an electronic refund path in April. On says it had paid about CHF 57.4 million in those IEEPA tariffs and submitted claims that brought in CHF 52.6 million during the quarter. Because the duties related to inventory already sold, the company booked the money as a cut to cost of sales—hence the jump to 72.6%. The refund added about 570 basis points to the quarter’s gross margin. The year-ago quarter had its own one-time lift of about 200 basis points from lower freight and other costs. Adjust for both, and On puts the underlying gross-margin gain at around 320 basis points. Adjusted EBITDA margin was 27.6% including the refunds, or 21.9% without them. Net income rose 36.9% to CHF 162.8 million.

What people are buying, and where, still looks like a premium brand expanding. Footwear does the heavy lifting—shoes were CHF 843.7 million, up 15.4%—while apparel jumped 38.7% and accessories 39.2%, helped by On’s latest Zendaya collection, which the company called its most visible apparel launch yet. Asia-Pacific sales rose 31.1%; EMEA cleared CHF 250 million in a quarter for the first time; the Americas grew a steadier 12.4%. The Cloudsurfer 3 sold through hard in its run-specialty pre-launch. Cloudtilt keeps pulling younger buyers into the lifestyle lane. After the quarter, On athletes took a double win in Frankfurt and put runners on both the men’s and women’s podiums in New York—a first for the brand at a World Marathon Major. Podiums help the story. Full-price tickets still pay the bills.

On’s outlook tries to show both numbers. Full-year net sales growth stays in the low-20% range on a constant-currency basis, implying about CHF 3.47 billion to CHF 3.56 billion at current spot rates, with a faster fourth quarter expected into the holidays. Including the tariff refunds, On sees gross margin around 67.5% and adjusted EBITDA margin of 21.0% to 21.5%. On the comparable basis it used before the refunds arrived, it raised the gross-margin outlook to around 66% from at least 65%, and left adjusted EBITDA at 19.5% to 20.0%. Cash ended September at CHF 1.34 billion. Premarket selling suggested plenty of investors had already done the subtraction.

If a pair of Ons sits by the door—or ONON sits in a brokerage account—read the quarter like a receipt with a footnote. Full-price discipline and the DTC share are what you can lean on next year. The tariff refund was a one-time check. Taxable Investing Basics for First-Gen Professionals and High-Income Asian American Money Mistakes help keep a consumer stock from crowding rent and remittances. RSU Vest Day Playbook for Diaspora Households and Salary Benchmarks and Market Data for First-Gen Negotiations keep employer equity and a $160 sneaker in different conversations. For the Asia lane lifting On’s mix, Goldsea’s pieces on Zendaya and On’s Asia growth, Asian-owned sneaker brands, and Anta’s Puma push sketch who else is fighting for the same shelf.

People paying sticker price built this margin. Customs padded it. Keep those two lines separate when you look at the print.