German sandal and clog maker Birkenstock (BIRK, Financial) reported impressive Q4 results, surpassing EPS and revenue expectations due to strong demand across all regions and channels. Revenue increased by 22% on a constant currency basis, highlighting the brand's strength amid a sluggish consumer spending environment. Despite a 640 bps year-over-year decline in gross margin to 59.0% in Q4, adjusted net profit surged by 118% year-over-year, driven by tight cost controls.
Looking forward, Birkenstock anticipates margin improvements due to increased utilization of new production facilities. The company expects to reach a gross margin closer to its long-term target of 60% by FY25, with adjusted EBITDA margin projected to expand by up to 50 bps year-over-year to 30.8-31.3%.
The key takeaway is that Birkenstock is thriving in a challenging business environment, with Q4 results underscoring the brand's resilience. Strong demand and economies of scale from increased production capacity are expected to drive a successful FY25.
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