Birkenstock tops estimates as demand stays hot for sandals

Birkenstock Holding Plc reported earnings that beat estimates as consumers continue to snap up its high-end sandals and clogs while some other casual footwear makers struggle.

The company reported a 22% increase year on year to €303 million ($328 million) in sales for the quarter ending December 31, beating the €285 million average of analyst estimates, according to a statement. Adjusted earnings were €81 million before interest, taxes, depreciation and amortization, a measure of profitability (EBITDA). That compared with the €75.5 million average estimate.

Since the initial public officering in October, Birkenstock CEO Oliver Reichert has been trying to convince investors that the company can maintain its decade-long hot streak by staying fashionable, expanding its production capacity in Germany and Portugal and targeting previously untapped countries like China and India, with a focus on increasing sales through its own channels where products are sold at full price.

​“Our results for the first quarter of 2024 once again demonstrate the resilience of our business model and the strong sustained demand for our products. Given our engineered distribution model, demand continues to outpace supply in all regions, channels and categories,” said Reichert.

Although this strategy is deliberate, Birkenstock is working to expand its supply capacity in order to better meet the consumers demand for products. The CEO points out that the recent investments into future growth are having a “planned” and “temporary” impact on profitability, adding “we are confident we will continue to deliver our objectives of a gross profit margin over 60% and an adjusted EBITDA margin in the low thirties percent.”

While other footwear retailers like Nike and Under Amour struggled with slow demand in North-America, for Birkenstock revenue grew at double-digit rates across all of its regions. In the Americas, consumer momentum and demand for the brand continued to drive record sales, resulting in constant currency revenue growth of 19%. While sales in Europe and the APAM region increased by 33% and 51% respectively. 

After taking the company public on the New York Stock Exchange, Birkenstock initially flopped in their trading debut. Since then shares have climbed about 11% above its listing price. In January the footwear manufacturer reported its 2023 fiscal results claiming it was its most successful year yet.

With Bloomberg