Birkenstock: Robust EPS, Revenue Miss

Birkenstock (NYSE:BIRK), known for its iconic footwear, presented its first quarter results for fiscal 2025 on Feb. 20. Although revenue missed analyst expectations, the company reported robust earnings per share (EPS) thanks to increased demand for closed-toe products. The results displayed mixed signals with a notable EUR 0.18 in adjusted EPS, surpassing the forecast of EUR 0.17, and revenue at EUR 362 million, which was slightly below the predicted EUR 373 million. This quarter reflects a strong demand despite some revenue challenges.

Source: Analyst estimates for the quarter provided by FactSet.

A Brief Overview of Birkenstock

Birkenstock, founded in 1774, stands as a leading global footwear brand, celebrated for its sandals and shoes. Beyond footwear, it offers closed-toe products, skincare, and accessories. The business ensures its global reach through a blend of e-commerce, owned stores, and business-to-business (B2B) channels. Ensuring product diversification and geographic expansion remain crucial for its growth. Recently, focus has been on bolstering production capabilities and maintaining a balanced product mix.

The company has prioritized expanding its retail presence, especially in under-penetrated markets, and investing robustly in its geographic footprint. It emphasizes innovation while upholding the brand's heritage, helping to sustain customer loyalty and premium pricing.

Quarter Performance and Achievements

During the quarter, Birkenstock reported a 19.5% year-over-year revenue increase to EUR 362 million, although it missed the projected target of EUR 373 million. The company's ability to exceed expectations partially stemmed from strong demand in closed-toe footwear. Robust gains across different geographical segments and channels further contributed.

In terms of regional performance, the Americas saw a 16% revenue rise, largely driven by closed-toe products. Meanwhile, the EMEA region, including B2B and direct-to-consumer (DTC) channels, grew by 17%, while APAC experienced impressive growth at 47%, underscoring successful strategic investments in these regions.

The B2B segment excelled with a 30% revenue rise, indicating strong retail partner demand and expanded store presence. On the downside, the gross profit margin declined slightly by 0.7 percentage points to 60.3%. This was primarily due to a strategic focus on B2B channels that affected pricing structures. The quarter included an investment of EUR 19 million to enhance production capacity, ensuring future demands are met.

CEO Oliver Reichert stated, "Our results for the first quarter of 2025 reflect the continued strength of our brand…With the strong start to the year, we are confident in our ability to deliver on our guidance for 2025."

Looking Ahead

For fiscal 2025, Birkenstock maintains its guidance, projecting revenue growth between 15% and 17%. It targets an adjusted EBITDA margin of 30.8% to 31.3%. The company's strategic expansion focuses on retail horizons, aiming to open 30 new stores and expand geographically, with particular attention to APAC, where growth has been most promising.

Investors should watch Birkenstock's ability to sustain its balanced portfolio strategy and its retail and B2B growth efforts. With investments in production capacity on the rise, the company hopes to meet demand while maintaining profitability. The company is poised to leverage its strong brand equity and global presence, ensuring that it remains responsive to market trends and consumer preferences.

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