Birkenstock misses Q3 profit estimates

Birkenstock has missed its quarterly profit estimates as its gross profit margin dropped 220 basis points to 59.5% during the third quarter which ended 30 June. The group reached an adjusted EBITDA of €186m (£156m), up 15% year-over-year. However, adjusted EBITDA margin was 33%, down 140 basis points from 34.4% a year ago, the majority of which related to the temporary gross profit margin impact of production capacity expansion, incremental public company costs and investments in retail expansion, partially offset by an increase in B2B share compared to a year ago. Despite this, revenue for the shoe company increased 19% to €565m (£474m) with strong double-digit revenue growth across all segments including revenue growth of 15% in the Americas, 19% in Europe and 41% in APMA. The brand said that revenue growth benefited from increased sales of closed-toe silhouettes, which grew at over twice the brand average and closed-toe penetration increased 400 basis points year-over-year. During the fiscal third quarter, the company opened seven new owned stores, bringing the total number of owned retail stores to 64. The retailer has invested €15m (£12m) in capital expenditures in the quarter, bringing the total year-to-date to €50m (£42m) in order to to expand its footprint into “underpenetrated” segments and categories. As a result, the company estimated the temporary impact of this investment reduced gross profit margin and adjusted EBITDA margin by 120 basis points in the third quarter. For its fiscal 2024 guidance, the brand confirmed a revenue growth of approximately 19% on a reported basis and 20% on a constant currency basis and an adjusted EBITDA margin of 30-30.5%. Oliver Reichert, CEO of Birkenstock Group and member of the board of directors of the company, said: “Our results for the third quarter of 2024 once again demonstrate the strength of our business model and our ability to achieve the growth and profitability goals we set out for you during our IPO and recent secondary offering roadshow. We achieved the highest quarterly revenue in our history, driven by unbreakable and growing demand across all segments, channels and categories. “Our Q3 results demonstrate our ability to meet consumer demand and align with shopping patterns while maintaining our disciplined engineered distribution approach, which remains our guiding principle. We remain confident in our ability to deliver on our medium to long-term objectives for mid-to-high teens revenue growth, gross profit margin of 60% and adjusted EBITDA margin of over 30%.”