Employee Mo Soto organizes a shelf at a Birkenstock store on October 10, 2023 in Venice, California.
Ethan Swope | fake images
Birkenstock on Thursday beat expectations for Christmas quarter revenue, reporting a 26% year-over-year increase, as the German sandal company benefited from higher prices and growing US demand.
Here's how the shoemaker fared in its fiscal first quarter compared to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:
- Earnings per share: 4 euro cents versus 9 euro cents expected
- Revenue: 303 million euros compared to the expected 288.7 million euros.
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 under-absorption of our ongoing capacity expansion.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 12% year-on-year to €81 million, with an adjusted EBITDA margin of 26.9%, compared to 29.1% the previous year.
CEO Oliver Reichert said in a statement that despite temporary impacts on profitability, demand continued to outpace supply across all regions, channels and categories.
“As we previously communicated, our strategic investments for future growth are having a planned temporary impact on our profitability,” Reichert said.
“However, in the medium term, we are confident that we will continue to meet our objectives of a gross profit margin of over 60% and an adjusted EBITDA margin of thirty percent.”
The new publicly traded shoe maker, which began trading on the New York Stock Exchange under the symbol “BIRK” in October, had a quiet debut when it first hit the public markets, with shares falling more than 12% on its first day as a public company. . The stock has since recovered and is up more than 5% this year, as of Wednesday's close.
In January, the company reported its fiscal 2023 results and said it was the most successful year in the company's nearly 250-year history. Sales grew 20% and the retailer made progress in growing its direct-to-consumer business, which generates better profits and more customer insights than relying on wholesale partners.
How other retailers like it Nike, under the armor and owner of Timberland VF Corp. To address weak demand in North America, Birkenstock reported tremendous strength in the region with sales up 21% during fiscal 2023.
The recent growth comes several years after private equity powerhouse L Catterton acquired a majority stake in Birkenstock in 2021, ending nearly 250 years of family ownership that began when German shoemaker Johann Adam Birkenstock founded the company in 1774.
Birkenstock's new owners embarked on an aggressive growth strategy that focused on increasing direct-to-consumer sales, exiting certain wholesale partnerships, and focusing on driving sales of higher-priced items. In just a few years, its sales have nearly doubled and its market capitalization is now around $9.7 billion, double its 2021 valuation of $4.85 billion.
Since going public, Birkenstock has used some of its revenue to pay down debt. In the fall, it made debt payments that reduced its net leverage to less than 2.5 times EBITDA.
