Birkenstock sees lower margins as it expands global footprint
18 January 2024 - 18:21
byHelen Reid
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Pairs of shoes on display at a Birkenstock shop in Berlin, Germany, January 21 2021. Picture: FABRIZIO BENSCH/REUTERS
London — German luxury footwear maker Birkenstock forecast annual sales that beat estimates on Thursday, 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 company, which reported its first results since going public, fell about 5% in premarket trading as quarterly profit also missed estimates. The stock ended about 19% 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 $350 (about R6,635) 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% during the fourth quarter and accounted for about 40% of total 2023 revenue.
Quarterly revenue rose 16.5% to €374.54m, topping market expectations of €357.39m, according to LSEG data. But adjusted profit per share of 14 euro cents missed estimates of 17c.
Sales in the Americas region jumped 30% to €187.24m during the fourth quarter and the company also highlighted China and India as key growth drivers.
Birkenstock forecast fiscal 2024 revenue to be €1.74bn-€1.76bn, compared with analysts’ expectations of €1.72bn. Still, the expected sales growth of 17%-18% would be a slowdown from the 20% in 2023.
Unit growth was 6% in 2023 while the average selling price jumped 14% since fiscal 2022, driven by higher full-price sales. This boosted gross profit margin by 180 basis points to 62.1% in the three months to end-September.
Birkenstock expects 2024 adjusted earnings before interest, taxes, depreciation and amortisation to be €520m-€530m on a constant currency basis.
The company also plans to roll out monobrand stores — a single store dedicated to one particular brand — in 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Birkenstock sees lower margins as it expands global footprint
London — German luxury footwear maker Birkenstock forecast annual sales that beat estimates on Thursday, 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 company, which reported its first results since going public, fell about 5% in premarket trading as quarterly profit also missed estimates. The stock ended about 19% 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 $350 (about R6,635) 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% during the fourth quarter and accounted for about 40% of total 2023 revenue.
Quarterly revenue rose 16.5% to €374.54m, topping market expectations of €357.39m, according to LSEG data. But adjusted profit per share of 14 euro cents missed estimates of 17c.
Sales in the Americas region jumped 30% to €187.24m during the fourth quarter and the company also highlighted China and India as key growth drivers.
Birkenstock forecast fiscal 2024 revenue to be €1.74bn-€1.76bn, compared with analysts’ expectations of €1.72bn. Still, the expected sales growth of 17%-18% would be a slowdown from the 20% in 2023.
Unit growth was 6% in 2023 while the average selling price jumped 14% since fiscal 2022, driven by higher full-price sales. This boosted gross profit margin by 180 basis points to 62.1% in the three months to end-September.
Birkenstock expects 2024 adjusted earnings before interest, taxes, depreciation and amortisation to be €520m-€530m on a constant currency basis.
The company also plans to roll out monobrand stores — a single store dedicated to one particular brand — in 2024.
Reuters
Fall in luxury demand weighs on Burberry’s profit outlook
Shein seeks Chinese authorities’ nod for planned US IPO, sources say
Demand for luxury foods lifts holiday sales at Sainsbury’s
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Watches of Switzerland cuts growth forecast
WATCH: Is Amazon on the verge of disrupting local e-commerce?
Toy makers shift production from China to cheaper India
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.