Birkenstock margin warning clouds upbeat revenue forecast; shares fall

BIRKENSTOCK forecast annual sales above analysts’ estimates on Thursday (Jan 18), buoyed by higher pricing and strong demand for its sandals and clogs, but warned margins could come under pressure from investments to expand globally.

Shares of the German luxury footwear maker, which reported its first results since going public, fell about 5 per cent in premarket trading as quarterly profit also missed estimates.

The stock ended about 19 per cent higher in 2023 after a weak market debut in October.

The results come against the backdrop of ebbing global luxury demand and also follow lacklustre sales expectations from Nike and JD Sports Fashion.

Demand for Birkenstock’s footwear, which retails for as much as US$350 a pair, has been fortified by a post-pandemic move away from formal dressing to a more casual and informal wear, and the company has boosted sales through its own website and stores.

Sales through its own website and stores jumped 29 per cent during the fourth quarter and accounted for about 40 per cent of total 2023 revenue.

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Quarterly revenue rose 16.5 per cent to 374.5 million euros (S$547.3 million), topping market expectations of 357.4 million euros, according to LSEG data.

But adjusted profit per share of 0.14 euro missed estimates of 0.17 euro.

Sales in the Americas region jumped 30 per cent to 187.2 million euros during the fourth quarter, and the company also highlighted China and India as key growth drivers.

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Birkenstock forecast fiscal 2024 revenue to be between 1.74 billion euros and 1.76 billion euros, compared to analysts’ expectations of 1.72 billion euros.

Still, the expected sales growth of 17 to 18 per cent would be a slowdown from the 20 per cent in 2023.

Unit growth was 6 per cent in 2023 while average selling price jumped 14 per cent since fiscal 2022, driven by higher full-price sales.

This boosted gross profit margin by 180 basis points to 62.1 per cent in the three months ended Sep 30.

Birkenstock expects 2024 adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) to be between 520 million and 530 million euros on a constant currency basis.

The company also plans to also roll out mono-brand stores – a single store dedicated to one particular brand – in 2024. REUTERS