MW Birkenstock raised prices, but couldn't avoid a revenue shortfall

By Ciara Linnane

Stock falls 3% early Wednesday as revenue miss overshadows a profit beat amid strong growth in APAC

Birkenstock Holding PLC's stock fell 3% early Thursday, after the iconic German sandal maker's fiscal first-quarter revenue fell short of estimates to offset a profit beat after the company raised prices by a mid-single-digit percent.

The company $(BIRK)$ had net income of 20 million euros, or 11 cents a share, for the quarter to Dec. 31, after a loss of EUR7 million, or 4 cents a share, a year ago. Adjusted for one-time items, it had EPS of 18 cents, above the FactSet consensus of 17 cents.

Revenue rose 19% to EUR362 million, but was below the EUR372 million FactSet consensus.

Revenue was boosted by strong demand during the holiday season for the company's closed-toe silhouettes, as well as double-digit volume growth and mid-single-digit growth in average selling prices. Demand was strong in APAC, where the company accelerated the pace of store openings and deliveries to B2B partners.

"Birkenstock proved to be a high-demand gifting item and must-have for our wholesale partners," Chief Executive Oliver Reichert said in prepared remarks. "Our clogs, other closed-toe shoes and boots performed very well, with share of business up 600 basis points year-over-year."

Revenue rose 16% in the Americas, 17% in EMEA and 47% in APAC. The company changed its geographic segment reporting this quarter, moving away from APMA, or Asia, Pacific, Middle East and Africa, to group Europe with the Middle East and Africa, and moving India to merge with Asia Pacific countries to create an APAC segment to replace APMA.

The company's B2B segment was particularly strong in the Americas as key wholesale partners allocated more space to Birkenstock's holiday offering, with closed-end toes, driven by the clogs category, accounting for nearly two-thirds of America's revenue in the quarter.

In EMEA, growth was driven by both B2B and the direct-to-consumer channels with closed-toe penetration increasing by 400 basis points to more than 50% of business.

In APAC, the company is still investing to increase brand awareness, as it promised it would when it went public in 2023.

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The company is still expecting fiscal 2025 revenue growth of 15% to 17% on a constant currency basis. The FactSet consensus is for growth of 17%, meaning the 16% midpoint of that range is below consensus.

Birkenstock ended the quarter with cash of EUR299 million and net leverage of 1.9x as of year-end. It will continue to work to deleverage the balance sheet in fiscal 2025.

The stock has gained 11% in the past 12 months, underperforming the S&P 500's SPX 23.5% gain.

-Ciara Linnane

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February 20, 2025 07:20 ET (12:20 GMT)

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