Birkenstock Q3 Earnings Call Highlights
Key Points
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- Birkenstock raised its fiscal 2026 outlook after third-quarter revenue rose 13% reported and 15% in constant currency to €720 million. Full-year constant-currency revenue growth is now expected at 15%, with adjusted EBITDA of at least €710 million.
- Direct-to-consumer sales accelerated 16% in constant currency, supported by digital improvements and store expansion; owned retail revenue jumped 50% after the company opened 13 stores. Regional growth was broad, led by APAC at 23% and China at more than 50%.
- Profitability faced pressure from foreign exchange and U.S. tariffs, which reduced adjusted gross margin to 59.2%, though adjusted EBITDA increased 11% to €242 million. Birkenstock also repurchased €230 million of shares and retains flexibility for up to €500 million in additional buybacks or refinancing.
Birkenstock (NYSE:BIRK) raised its fiscal 2026 outlook after reporting third-quarter revenue growth at the high end of its annual target range, supported by broad regional demand, accelerating direct-to-consumer sales and expansion of its owned retail footprint.
For the quarter ended June 30, revenue totaled €720 million, up 13% on a reported basis and 15% in constant currency. Chief Financial Officer Ivica Krolo said currency movements, including depreciation in the U.S. dollar, Canadian dollar, Japanese yen and Indian rupee against the euro, reduced reported revenue growth by 180 basis points.
The company now expects full-year constant-currency revenue growth of 15%, at the top end of its previous 13% to 15% range, and adjusted EBITDA of at least €710 million. Birkenstock expects fourth-quarter constant-currency revenue growth to remain within the 13% to 15% range, with foreign exchange effects expected to be relatively neutral.
Direct-to-Consumer Growth Accelerates
Direct-to-consumer revenue rose 16% in constant currency during the third quarter, outpacing 15% growth in business-to-business revenue. DTC growth accelerated from 12% in the prior quarter, which Krolo attributed to gains in digital conversion and continued store expansion.
The company opened 13 owned stores during the quarter, bringing its total to 124. Owned retail revenue increased 50% in constant currency, while same-store sales rose by a high-single-digit percentage.
Chief Executive Officer Oliver Reichert said investments in new stores, digital content, personalization, checkout options and loyalty benefits supported the DTC performance. He said the company also maintained a disciplined wholesale strategy, with youth-focused retailers and sporting-goods stores leading B2B growth. Sell-through at key partners in those channels increased more than 20% year over year, according to management.
Birkenstock reported 14% constant-currency growth in the Americas, where it opened four U.S. stores to bring its U.S. total to 21. EMEA revenue increased 15%, aided by stronger online and retail demand in Europe and 93% full-price realization. The company opened four EMEA locations during the quarter, bringing the regional total to 50.
APAC revenue climbed 23% in constant currency, or nearly 30% excluding Australia. Management said Australia’s quarterly comparison was affected by a shift in revenue timing following the acquisition of its distributor, as sales are now recognized based on local market seasonality rather than distributor deliveries. China grew more than 50% and was Birkenstock’s largest APAC market during the quarter, Krolo said, with the highest average selling price globally.
Closed-Toe Products Drive Mix Shift
Management highlighted continued momentum in closed-toe footwear, which helped expand the brand’s appeal across seasons. Non-Boston closed-toe styles grew more than 50%, while Naples unit sales rose more than fourfold and Utti unit sales more than doubled from a year earlier. About half of Birkenstock’s top 20 silhouettes are now closed-toe, including three introduced over the past three years.
Reichert said the company also saw solid sandal demand, with mid- to high-single-digit constant-currency growth. New seasonal executions, including flowers, rivets, buckles, prints and textiles, supported demand, particularly for Mayari, Madrid and Siena styles.
The shift toward more complex closed-toe footwear carried a modest margin impact because those products require more labor and production time. Krolo said, however, that they generate higher average selling prices and higher gross profit per pair despite a somewhat lower gross-margin percentage. Product mix contributed more than half of the increase in average selling price, and the company said quarterly growth was in line with its long-term target of roughly one-third average selling price growth and two-thirds unit growth.
Margins Pressured by Currency and Tariffs
Adjusted gross margin was 59.2%, down 130 basis points from a year earlier. Krolo said foreign exchange reduced gross margin by 60 basis points and incremental U.S. tariffs accounted for another 70 basis points of pressure. Excluding those factors, adjusted gross margin increased 10 basis points.
Adjusted EBITDA rose 11% to €242 million, while adjusted EBITDA margin was 33.7%, down 70 basis points. Excluding foreign exchange and tariff effects, adjusted EBITDA margin would have increased 60 basis points year over year, the company said.
Adjusted net profit rose 15% to €134 million, and adjusted earnings per share increased 19% to €0.74. The quarter included non-cash finance costs tied to debt refinancing and the company’s accelerated share repurchase, which were excluded from adjusted net profit.
- Full-year adjusted gross margin is expected to be 57% to 57.5%.
- Full-year adjusted EBITDA margin is expected to be 30.2% to 30.5%, including about 200 basis points of combined pressure from foreign exchange and U.S. tariffs.
- Full-year adjusted EPS guidance remained €1.90 to €2.05.
- The expected tax rate was raised to 30% to 31% from 26% to 28%, largely because of non-tax-deductible expenses related to the share repurchase and debt issuance.
Capital Allocation and Capacity Investment
Birkenstock generated €247 million in operating cash flow during the quarter and ended June with €694 million in cash and cash equivalents after repurchasing €230 million of shares and refinancing its senior notes. In June, the company repaid €428.5 million of 5.25% notes due in 2029 and issued €900 million of 4.5% senior notes due in 2033.
Krolo said the company has flexibility for an additional €500 million of share repurchases or other debt refinancing, subject to market conditions. Net leverage was 1.8 times at quarter-end, or about 1.4 times excluding the accelerated share repurchase. Management expects year-end leverage of roughly 1.6 to 1.7 times after the repurchase’s impact.
Capital expenditures totaled €26 million in the quarter for production capacity, retail and technology investments. Birkenstock said its manufacturing expansion in Arouca, Görlitz, Pasewalk and Wittichenau remains on track to support 10% unit growth, while full-year Capital expenditures are expected to total €110 million to €130 million.
About Birkenstock (NYSE:BIRK)
Birkenstock Group AG, listed on the New York Stock Exchange under the symbol BIRK, is a global footwear manufacturer renowned for its anatomically contoured footbeds and iconic sandal designs. The company’s core product lines include classic models such as the Arizona, Boston and Madrid, alongside a range of clogs, shoes and orthotic insoles. In addition to footwear, Birkenstock offers complementary accessories, including socks and leather care products, reinforcing its commitment to foot health and comfort.
Birkenstock reaches consumers through a diversified distribution network that combines direct-to-consumer channels—such as branded retail stores and e-commerce platforms—with wholesale partnerships spanning specialty footwear retailers, department stores and select online marketplaces.
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