Birkenstock Boosts Annual Forecasts on Full-Price Selling, Firm Demand

Birkenstock raised its annual revenue and core profit forecasts on Thursday as the German sandal maker bets on full-price selling and strong demand for its cork-based sandals and newer closed-toe styles, sending its shares up 10 percent premarket.

Most wholesale retailers are still stocking up on in-demand Birkenstock products despite a wider effort to cut back on inventory as demand for discretionary items such as footwear remains under pressure.

Birkenstock has also been expanding its own store base to boost full-price selling in its direct-to-consumer channel, where its products are sold largely above the average selling price at wholesale shops.

This helped second-quarter DTC revenue grow more than 30 percent, while wholesale revenue rose 19.2 percent.

Birkenstock’s closed-toe footwear has been growing in popularity, with the category bringing in more than a quarter of the company’s total second-quarter revenue, compared with a high-teens percentage a year earlier.

The company now expects fiscal 2024 revenue between €1.77 billion and €1.78 billion, up from a prior forecast of €1.74 billion to €1.76 billion.

It forecast annual adjusted earnings before interest, taxes, depreciation, and amortisation between €535 million and €545 million, up from €520 million to €530 million expected earlier.

However, Birkenstock’s quarterly adjusted EBITDA margin was down 470 basis points to 33.7 percent due to pressures from its plans to expand globally and invest more in production.

“Investors are focused on the impact of this DTC expansion ... if that is done successfully it will reduce the volatility in the business which traditionally comes with wholesale exposure and they will have a stronger control over the brand,” said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.

Birkenstock’s second-quarter revenue rose 21.6 percent to €481.2 million ($520.23 million), compared with LSEG estimates of €466.1 million. Adjusted profit per share came in at €0.41, beating estimates of €0.36.

By Ananya Mariam Rajesh; Editing by Devika Syamnath

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