Employee Mo Soto arranges a shelf at a Birkenstock store on October 10, 2023 in Venice, California.
Ethan Swope | Getty Images
Birkenstock Revenue on Thursday beat quarterly revenue expectations, posting a 22% year-over-year jump, as the German sandal company benefited from higher prices and higher US demand.
As a newly public company, Birkenstock is still getting into the rhythm of public reporting and only just released its 2023 financial results and 2024 guidance just over a month ago. It said Thursday it was sticking with the guidance issued at the time and still expected sales to be between 1.74 billion euros and 1.76 billion euros ($1.89 billion and $1.91 billion), representing growth of 17% to 18%.
The shoemaker, which began trading on the New York Stock Exchange under the symbol “BIRK” in October, had a muted debut when it hit the public markets for the first time, with its shares falling more than 12% on its first day as a public company. The stock has since rebounded and is up more than 5% this year, as of Wednesday's close.
Birkenstock shares closed down more than 2% on Thursday.
Here's what the shoemaker did in its fiscal first quarter compared to what Wall Street expected, based on a survey of analysts conducted by LSEG, formerly known as Refinitiv:
Earnings per share: 9 euro cents, adjusted versus 9 euro cents expected. Revenue: 302.9 million euros, versus 288.7 million euros expected.
The company reported a net loss of 7.15 million euros for the three-month period ending December 31, or a loss of 4 euro cents per share. The previous year, it reported a loss of 9.19 million euros, or a loss of 5 euro cents per share. Excluding one-time items, Birkenstock reported earnings of 17 million euros, or 9 euro cents per share.
Sales rose to €302.9 million, up 22% from €248.5 million the previous year.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12% year-on-year to €81 million, with an adjusted EBITDA margin of 26.9%, down from 29.1% a year earlier.
The retailer has made strides to grow its direct-to-consumer business, which comes with better profits and more customer insights rather than relying on wholesale partners.
CEO Oliver Reichert said the company had deliberately designed its distribution strategy so that demand was higher than supply but was working to double its production capabilities over the next three years to narrow that gap. These investments, along with other efforts by the company to drive growth, are having a “planned” but “temporary” impact on profitability, the CEO said.
The company's gross profit margin fell to 61% from 61.7% during the same period last year, with Birkenstock citing “unfavorable currency translation and planned temporary shortfalls in our ongoing capacity expansion.” The company said it continues to carefully track input costs and mitigate inflationary pressures through “selective price increases implemented.”
In Europe, the company said it had made “two consecutive price adjustments” with “no signs of rejection.”
Consumers are flocking to closed styles
For the first time, closed shoes, including everything from sneakers to clogs, accounted for a larger percentage of sales than sandals, executives said. Strong sales outside of traditional Birkenstock sandals have given the company a boost during the fall and winter months when people aren't buying open-toed shoes as often and opens up additional growth room for the retailer.
“It's a largely closed business right now, and I think it's very important to say that this was the first time that non-sandals made up a larger percentage of our business,” said David Kahan, Birkenstock's president of the Americas.
During the quarter, Birkenstock saw further gains in its direct channels and said DTC sales accounted for 53% of total revenue. While the DTC is strong and focused on the business, Birkenstock continues to see strong demand across its wholesale channels, even as other retailers face a slowdown in orders as department stores and other big box stores look to keep inventory levels in check and handled. With uncertain demand.
Executives noted that wholesalers are not only increasing their orders for Birkenstocks, but are also increasingly choosing early delivery days to keep up with demand.
Other retailers also like it Nike, Under the armor And the owner of Timberland VF Company. Amid weak demand in North America, Birkenstock reported strong strength in the region with sales up 21% during fiscal 2023. This momentum continued during the fiscal first quarter with sales up 14% in the region. In Europe, where demand in some parts was lower than in North America, sales grew 32%, and in the Asia-Pacific, Middle East and Africa region, revenues jumped 47%.
The latest growth comes several years after private equity firm L. Catterton acquired a majority stake in Birkenstock in 2021, ending nearly 250 years of family ownership that began when German cobbler Johann Adam Birkenstock founded the company in 1774.
Birkenstock's new owners embarked on an aggressive growth strategy focused on increasing DTC sales, exiting some wholesale partnerships and focusing on increasing sales of higher-priced items. Within a few years, its sales have nearly doubled and its market cap now stands at about $9.7 billion, double its 2021 valuation of $4.85 billion.
Since going public, Birkenstock has used some of its proceeds to pay down debt. In the fall, it made a number of debt payments that reduced its net leverage. As of the end of December, Birkenstock was valued at 2.6 times EBITDA.
Correction: Birkenstock reported a loss per share of 4 euro cents. After a one-time items adjustment, it reported a profit of 9 euro cents per share, which was in line with Wall Street estimates according to LSEG. An earlier version of this story misstated these numbers.
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