Birkenstock Posts Strong Earnings With Sandal Demand Growing

Birkenstock Holding Plc’s earnings beat analysts’ estimates as shoppers snapped up its high-end sandals and clogs whereas different informal footwear makers struggled.

Adjusted earnings had been €81 million ($88 million) earlier than curiosity, taxes, depreciation and amortisation within the quarter ending in December, the corporate mentioned Thursday in an announcement. That in contrast with the €75.5 million common estimate.

Since Birkenstock’s preliminary public providing in October, chief govt officer Oliver Reichert has tried to persuade buyers that the corporate can preserve its decade-long scorching streak by staying trendy, increasing its manufacturing capability in Germany and Portugal and focusing on beforehand untapped international locations like China and India.

The outcomes “as soon as once more display the resilience of our enterprise mannequin and the robust sustained demand for our merchandise,” Reichert mentioned within the assertion.

Birkenstock affirmed its 2024 steerage and mid-term targets of reserving a gross revenue margin of greater than 60 p.c and adjusted Ebitda margin share within the low 30s.

Whereas sneaker manufacturers together with Nike Inc. and Puma SE have raised doubts about client spending, Birkenstock has argued that there’s a possibility to win over new followers.

Income within the quarter reached €303 million, larger than the €285 million common estimate, with gross sales rising at double-digit charges within the Americas, Europe and Asia, the corporate mentioned.

Historically a maker of no-frills sandals, Birkenstock has ratcheted up its providing of higher-end footwear and closed-toe merchandise in recent times, together with the Bend sneaker, the Highwood boots and extra clogs with shearling. These merchandise command larger costs, serving to Birkenstock enhance income and enchantment to a wider array of shoppers.

Whereas Birkenstock attracted consideration from designers way back to the Nineteen Eighties, the corporate has come to embrace the style world during the last decade or so, launching collaborations with luxurious names comparable to Dior, Manolo Blahnik and Rick Owens.

That’s coincided with a push to construct out its digital gross sales channels, lowering its reliance on retail companions, and increase its community of factories, together with a brand new plant in Pasewalk, Germany, that has price greater than €100 million.

The investments within the Pasewalk web site, and one other in Portugal, are weighing on profitability for now, however will probably be a long-term development driver, in keeping with the corporate.

After initially flopping of their buying and selling debut, Birkenstock shares have since climbed about 11 p.c above its itemizing worth.

By Tim Loh

Study extra:

Birkenstock Slumps as Forecast Disappoints Some Investors

The inventory slid 12 p.c in buying and selling earlier than US exchanges opened. If the drop extends into buying and selling hours, it might erase the positive factors made because the firm’s preliminary public providing in October.