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Birkenstock Beats Fourth-quarter Revenue Expectations on Strong Demand

FILE PHOTO: A shopper walks past a Birkenstock shoe store in London, Britain, October 11, 2023. REUTERS/Toby Melville/File Photo
FILE PHOTO: A shopper walks past a Birkenstock shoe store in London, Britain, October 11, 2023. REUTERS/Toby Melville/File Photo
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Birkenstock Beats Fourth-quarter Revenue Expectations on Strong Demand

FILE PHOTO: A shopper walks past a Birkenstock shoe store in London, Britain, October 11, 2023. REUTERS/Toby Melville/File Photo
FILE PHOTO: A shopper walks past a Birkenstock shoe store in London, Britain, October 11, 2023. REUTERS/Toby Melville/File Photo

Birkenstock beat analysts' expectations for fourth-quarter sales and forecast annual revenue above estimates on Thursday, in the German luxury sandal maker's first results since going public, betting on higher pricing and strong demand.
The company's sandals and clogs retail for as much as $350 a pair, and the strong results follow signs of ebbing global luxury demand, as well as lackluster sales expectations from Nike and JD Sports Fashion.
Sales are getting a lift from the company's investments to tap into the post-pandemic move away from formal dressing to more casual and informal wear, mainly in the US.
The company's quarterly revenue rose to 374.54 million euros ($407.7 million) from 321.61 million euros a year earlier, compared with market expectations of 357.39 million euros, according to LSEG data.
The company 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.
Shares ended 2023 about 19% higher after a disappointing market debut in October.

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Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
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Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)

Birkenstock beat market expectations for fourth-quarter results on robust demand for its pricey footwear and forecast a recovery in margins in fiscal 2025, sending the company's shares up 7% on Wednesday.

With fresh styles becoming a priority for consumers, Birkenstock's sandals and closed-toe clogs have drawn new customers both at its own stores and at retailers.

The company bypassed steep discounting trends evident during the holiday shopping season, which Birkenstock executives said was off to a strong start globally.

"The expansion of ranges into more closed-toe silhouette has helped boost revenue, given that they offer multi-season wear," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.

Germany-based Birkenstock's average selling prices across its product range were up 8% in fiscal 2024, in part due to higher sales of clogs, the company said, adding that closed-toe styles now made up about a third of its business.

The company has invested in expanding its global store presence and increasing manufacturing capacity this year to meet demand.

While it led to a 330-basis point drop in gross margins in fiscal 2024, Birkenstock forecast a recovery in margins in fiscal 2025 as it ramps up production from new facilities.

The company reported fourth-quarter revenue of 455.8 million euros ($478.27 million), compared with the average analyst estimate of 439.2 million euros, according to data compiled by LSEG.

However, Birkenstock's forecast for fiscal 2025 revenue to increase between 15% and 17% was below estimates of 17.5% growth.

"It would appear with this incredibly healthy growth, the company is choosing to adopt a conservative approach that they expect to be able to meet and beat," BMO Capital Markets analyst Simeon Siegel said.

On an adjusted basis, Birkenstock earned 0.29 euro per share, beating estimates of 0.26 euro.