Dive Brief:
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Birkenstock on Wednesday said that Q4 revenue rose 21.7% year over year to 455.8 million euros, (about $474 million at press time) with double-digit growth across all geographies. Wholesale grew 26% while DTC revenue rose 18%.
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Gross margin contracted by 640 basis points to 59%. The footwear brand swung into the black in the period with a 52.5 million euro net profit, from last year’s 28.3 million euro net loss, per a company press release.
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For the year — its first full fiscal year since its October 2023 IPO — revenue rose nearly 21% to 1.8 billion euros. Gross margin contracted by 330 basis points to 58.8%, and net profit soared 155% to 191.6 million euros. The brand opened 20 new stores during the year, bringing its number of owned locations to 67.
Dive Insight:
With these results, Birkenstock beat its own expectations and those of many analysts.
“We are delivering on the commitments we made during our IPO by expanding profitably into the wide space of opportunities we identified,” CEO Oliver Reichert said during an earnings conference call.
Like other brands, Birkenstock is chasing more direct-to-consumer sales, but executives made clear that the company is aware of the importance of its retail partnerships. Birkenstock continues to expand the channel, with some 90% of the company’s wholesale growth coming from its existing wholesale partners. It is also being disciplined about expanding that, Mehdi Nico Bouyakhf, who leads Birkenstock’s business in Europe, told analysts.
“What they do is they expand our offering, they offer more shelf space, and they go with a wider offering to their consumers,” he said. “So this gives us a broader reach to consumers with a broader assortment and let consumers enjoy the full breadth of our brand. We remain disciplined in our distribution for B2B and this is a high quality and profitable growth with a full price realization that is superior to any other brand out there.”
The company is also being disciplined about opening its own stores, which are key to its DTC ambitions, but expansion plans are robust: The goal is to increase its store count by 50% next year, Bouyakhf said.
“So that's a significant growth of our door fleet,” he said, adding that “every store that is opened is performing and has to perform really well from day one.”
It can be a tricky balancing act. Nike has been pulling back on its own DTC strategy after saying earlier this year that it had gone too far.
Underpinning Birkenstock’s performance in various channels, geographies and categories is the brand’s strength, according to Jefferies analysts led by Randal Konik. “With 250 years of experience, the Birkenstock brand remains strong, continually increasing awareness and gaining market share,” they said in a Wednesday client note.
That is playing out this holiday season, with Birkenstock topping retailers’ lists of brands they need more of before Christmas, “suggesting demand is still well ahead of supply,” according to a research note from Evercore ISI analysts led by Michael Binetti.
