By Ananya Mariam Rajesh and Neil J Kanatt

(Reuters) -Roger Federer-backed On Holding raised its annual sales forecast on Tuesday and said it would have to undertake selective pricing to mitigate impacts from U.S. President Donald Trump's tariffs.

The Trump administration has implemented a baseline 10% tariff on all trading partners globally with further tariffs on countries such as Vietnam and Indonesia on a 90-day pause. These two countries are major production hubs for On.

Vietnam faces a 46% tariff on exports to the U.S. if a reduction cannot be negotiated before the moratorium expires in July. In 2024, On sourced about 90% of its shoes and about 60% of its apparel and accessories from Vietnam.

"We are looking into diversification, but at the same time ... pricing will be one of the elements to mitigate some of the impacts at the moment. So we are planning to adjust some prices in the U.S. as of July," said CEO and CFO Martin Hoffmann.

On forecast annual adjusted core profit margin growth, which excludes interest, taxes, depreciation and amortization, in the range of 16.5% to 17.5%, compared with previous expectations of 17% to 17.5%.

It now expects full-year 2025 net sales growth of at least 28% on a constant currency basis, up from previous expectation of 27%.

"So looking now also into the second quarter, we see that the demand remains strong and basically, April was just the strongest month that we ever had in our history," Hoffmann added.

Shares of the sportswear company rose 1.3% in volatile premarket trading.

On's first-quarter sales rose 43% to 726.6 million Swiss francs ($861.41 million), beating estimates of 681.2 million Swiss francs, fueled by high profile collaborations, such as with actor Zendaya, and new product launches including Cloud 6 and Cloudsurfer 2.

The company posted adjusted profit of 0.21 Swiss francs per share, compared with 0.22 Swiss francs expected by analysts according to data compiled by LSEG.

($1 = 0.8435 Swiss francs)

(Reporting by Ananya Mariam Rajesh and Neil J Kanatt in Bengaluru; Editing by Krishna Chandra Eluri)