Shares of On Holding AG ONON fell sharply Tuesday after soccer star Kylian Mbappe’s comments sparked a backlash in China, raising concerns about the Swiss sportswear company’s brand in a key growth market.
On shares dropped close to 4% in early trading after opening the week on a high with a 2% gain on Monday.
The stock has struggled this year, trading well below its 52-week high near $51 and recently around the low $30s amid broader challenges in the athletic footwear sector. Rival Nike Inc. has also faced persistent pressure from slowing growth and market-share losses.
While the Swiss brand dropped, US equities opened higher Tuesday as investors weighed corporate earnings and the start of the Federal Reserve’s policy meeting.
Mbappe’s comments bring backlash from China
In a recent interview on a French online show The Bridge, Mbappe was asked about his favorite meme of himself.
The French striker replied that it was one in which his face was placed on “a Chinese dictator,” referring to an image resembling Mao Zedong, the founding leader of the People’s Republic of China.
The remarks, which circulated widely online, triggered intense criticism on Chinese social media.
Chinese companies, including beverage maker Dongpeng, dairy giant Mengniu and cheese producer Milkground, announced they were ending partnerships with Mbappe, citing opposition to words or actions that hurt national sentiment.
China’s state broadcaster reportedly suspended some LaLiga coverage, and related advertising featuring the Real Madrid superstar was removed.
The star footballer issued an apology Tuesday.
Apology
“I apologize to everyone my words have upset. This was absolutely not my intention. I have deep respect for the Chinese people and their history, and I am sincerely sorry.”
“My comment was ill-judged, and I now understand that it hurt many people in China and in Chinese communities around the world,” he said in a statement.
Partnership complicates On’s football push
On signed Mbappé in September as a global ambassador in a long-term deal that includes equity, marking the company’s high-profile entry into football footwear and apparel.
The move was intended to expand beyond its running and tennis roots and boost brand visibility.
The controversy complicates that strategy, particularly in Asia-Pacific, On’s fastest-growing region.
The area has accounted for more than 20% of sales, with especially strong gains in China, as per the company’s second-quarter results.
Reputational damage there could slow momentum at a time when the company is investing heavily in marketing and new categories.
The athletic footwear industry has faced a difficult year overall. Major players including Nike have reported softer demand and intensified competition, pressuring valuations across the sector.
Analysts have offered mixed views recently. Jefferies reaffirmed an underperform rating, citing elevated marketing expenses. JPMorgan, on the other hand, raised its target to $44 while keeping an overweight rating.
The China developments introduce fresh uncertainty around the Mbappe partnership’s near-term benefits for On who are hoping to expand to compete with established names like Adidas and Nike.
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