Birkenstock Holding plc reported results for the fiscal fourth quarter ended September 30 that easily exceeded analyst targets, but shares fell 11 percent on Thursday, December 18, after the company warned that trade tariffs would weigh on profit margins in its new fiscal year and that revenue growth would slow due to production constraints.

Shares of Birkenstock fell $5.23, or 11.3 percent, to $41.17 on the day.

The German firm, which listed in New York in 2023, said it expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its fiscal year, which runs to September 30, 2026, of at least €700 million ($821.8 million), with a margin of 30.0 percent to 30.5 percent. That would represent a compression from an adjusted EBITDA margin of 31.8 percent in the previous fiscal year and would run below analysts’ consensus expectations of €757.8 million.

The expected narrower profitability comes amid incremental U.S. tariffs and a drag from currency effects, Birkenstock said.

Ivica Krolo, CFO, said on an analyst call that Birkenstock was able to offset most of the 2025 tariff impact with targeted price increases, including the July U.S. price increase. The brand also benefited from the fact that the majority of its goods for 2025 were already shipped before the increase in tariffs, but he said that would not be the case in 2026, where it expects to see more impact from tariffs on cost of goods sold than in 2025. As a result, Birkenstock expects tariffs to cause a decline of about 100 basis points in both gross and EBITDA margins in 2026.

Sales for its new fiscal year are expected to climb in the range of 13 percent to 15 percent, a step down from the growth of 18 percent on a constant-currency basis seen in the just-completed fiscal year. Sales guidance of €2.3 billion to €2.35 billion was below the consensus estimate of €2.39 billion.

CEO Oliver Reichert said on the call that Birkenstock continues to see a shift toward in-store shopping, “especially in the important Gen Z group.” However, the expected continued strong wholesale growth, supporting the brand’s gains with younger consumers, requires the company to produce more pairs, even though it’s already capacity constrained.

“At the same time, the strongest demand we see is for our premium executions, which require even more production minutes,” added Reichert. “The combination of more wholesale and more premium execution is creating additional pressure on our vertically integrated supply chain. We need to manage growth in our production responsibly.

He stressed that Birkenstock’s demand remains strong, marked by its ability in its last fiscal year to maintain a full-price realization above 90 percent, and its commitment to maintaining a relative scarcity model supported by tight distribution. Reichert said, “Growth is not impacted by consumer demand, but our manufacturing capacity. Distribution-wise, we will maintain the quality in our distribution.”

Asked by an analyst whether Birkenstock would be able to return to mid-to high teens-growth in fiscal 2027, Krolo said, “We are constantly capacity constrained. We’ve been for some time. What we are doing is now building up the capacity to close the gap to the demand. Otherwise, we would not be in a position to serve and keep up with the demand that we are seeing in the market. So overall, our goal is to increase our capacity in terms of units by roughly 10 percent for the foreseeable future.”

Fiscal Fourth-Quarter Results Top Estimates
In the fiscal fourth quarter, revenue reached €526 million ($617 mm), an increase of 15 percent on a reported basis and 20 percent in constant-currency. Results topped consensus estimates of €521.1 million.

By region, sales grew 11 percent (+18 percent in constant-currency) in the Americas, 16 percent (+17 percent in constant-currency) in EMEA, and 33 percent (+38 percent in constant-currency) in APAC. B2B or wholesale revenue grew 22 percent (+26 percent in constant-currency) while DTC revenue advanced 8 percent (+12 percent in constant-currency).

Gross margins eroded 90 basis points to 58.1 percent, mainly driven by currency translation (120 basis points) and incremental U.S. tariffs (100 basis points).

Net profit reached €94 million, or €51 cents a share, well above the consensus estimate of €36 cents. In the year-ago period, which included special items, earnings were up 79 percent on a reported basis and 71 percent on an adjusted basis.

Adjusted EBITDA grew 17 percent to €147 million, or up 40 basis points to 27.8 percent, despite headwinds of 140 basis points from the impact of currency translation and 100 basis points from incremental U.S. tariffs.

Fiscal Full-Year Results
For the year, revenue of €2.1 billion climbed 16 percent on a reported basis and 18 percent in constant-currency. Results on a constant-currency basis were ahead of the company’s guidance of 15 percent to 17 percent, driven by strong consumer demand across all segments, channels and categories.

Adjusted EBITDA of €667 million grew 20 percent year-over-year. Adjusted EBITDA margin totaled 31.8 percent, up 100 basis points, reaching the high end of the company’s guidance range of 31.3 percent to 31.8 percent. The improvement reflected sales price adjustments (net of input costs) and better absorption of manufacturing capacity, partly offset by unfavorable currency translation (40 basis points) and incremental U.S. tariffs (30 basis points).

Net profit grew 82 percent to €348 million, or €1.87; adjusted net profit climbed 44 percent to €346 million, or 1.85.

Discussing the year’s performance, Reichert said, “Demand for our brand remains very strong across all segments, categories, and channels.” Birkenstock sold over 38 million pairs in fiscal 2025, up by more than 12 percent. ASP (average selling prices) were up 5 percent in constant currency, supported by targeted price actions and a higher share of premium products, such as closed-toe shoes and leather executions.

“We are winning in both B2B and D2C, gaining shelf space and taking share,” said Reichert. “Birkenstock had a very strong back-to-school season, with retail sales at our top 10 partners increasing over 20 percent year-over-year. Importantly, we see a continuation of this momentum during the important holiday season, and over 90 percent of the growth in B2B came from within existing doors. We remain committed to maintaining relative scarcity and managing tightly our distribution growth.”

He noted that Birkenstock’s ability to achieve over 90 percent full-price sales came despite “significant discounting by others.

Growth Opportunities
He noted that Birkenstock continues to target its three “white space growth opportunities,” opening 30 new stores during the year and ending the year with 97, more than doubling its store fleet since its IPO. New stores are performing ahead of expectations in terms of productivity and return on investment. About 40 stores are scheduled to open in 2026, putting Birkenstock on track to reach its 150-store target ahead of schedule. Reichert added, “This will allow us to capture more in-person shopping demand and younger shoppers within our own D2C business and allows us to showcase the full range of our collection.”

Reichert also noted that the closed-toe share of revenue increased by 500 basis points year-over-year to 38 percent, supporting continued ASP growth. Reichert said, “Ten of our Top 20 silhouettes in 2025 were closed toe. The Boston, a category-defining hero silhouette, which turns 50 years in 2026, continues to lead the clog category, a category like sandals we believe we own. At the same time, non-Boston closed-toe silhouettes grew over 30 percent.”

Finally, Reichert noted that Birkenstock’s third white space opportunity, APAC, grew 34 percent in constant currency in the year, approximately double the pace of more mature markets. APAC increased its share of global revenue to 11 percent, and the APAC segment has the highest ASP. Said Reichert, “We expect to continue to steer APAC growth at double the speed of the other segments.”

Image courtesy Birkenstock