Birkenstock raises forecast as tariffs impact margin

German footwear manufacturer Birkenstock increased its revenue in the third quarter of the current 2026 financial year, subsequently raising its forecast.

In the three months to June 30, the company achieved a revenue increase of 13 percent (plus 15 percent on a currency-neutral basis) to 719.5 million euros (830 million dollars). After nine months, growth stands at 11 percent to 1.74 billion euros. The London-based parent company, Birkenstock Holding plc, which is listed on the New York Stock Exchange, announced this in a quarterly statement on Thursday.

“We performed exceptionally well in the third quarter and once again demonstrated the strength of our brand,” said chief executive officer Oliver Reichert.

The direct-to-consumer business grew by 14 percent to 277.7 million euros, growing faster than the business-to-business segment, which increased by 13 percent to 441.7 million euros. During the reporting period, Birkenstock opened 13 of its own stores, reaching 124 locations worldwide by June 30.

The Americas remains the strongest region with 347.4 million euros (plus 11 percent, plus 14 percent on a currency-neutral basis). In Europe, the Middle East and Africa, revenue increased by 15 percent to 297.2 million euros. The impact of conflicts in the Middle East was less than expected. Asia-Pacific grew by 18 percent to 74.7 million euros, or 23 percent on a currency-neutral basis and almost 30 percent excluding Australia.

Tariffs and currency effects weigh on margin

The gross margin decreased by 140 basis points to 59.1 percent. According to the company, this was due to unfavourable currency translation, additional US tariffs and the product mix. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 11 percent to 242.5 million euros. The corresponding margin decreased by 70 basis points to 33.7 percent.

Profit decreased by 15 percent to 109.6 million euros, as financial expenses more than doubled from 18.3 to 43.0 million euros. This was driven by one-off, non-cash expenses of 22 million euros for the share buyback and the refinancing of bonds. Earnings per share fell by 13 percent to 0.60 euros, while adjusted earnings per share rose by 19 percent to 0.74 euros.

At the end of the quarter, Birkenstock completed an accelerated share buyback of 230 million euros, reducing the number of outstanding shares by six million. In mid-June, the company issued senior notes worth 900 million euros at 4.50 percent, using the proceeds to redeem 428.5 million euros of notes at 5.25 percent. The remaining proceeds will facilitate further buybacks of up to 500 million US dollars. Cash and cash equivalents stood at 693.6 million euros on June 30. The net leverage ratio increased to 1.8 times adjusted EBITDA due to the buyback, up from 1.5 times at the end of September.

Higher forecast

For the 2026 financial year, Birkenstock now expects currency-neutral revenue growth of 15 percent, up from the previously forecast 13 to 15 percent. Reported revenue is expected to be at the upper end of the 2.3 to 2.35 billion euro range. Adjusted EBITDA is projected to be at least 710 million euros, instead of 700 million euros, corresponding to a margin of 30.2 to 30.5 percent.

The adjusted gross margin forecast remains unchanged at 57.0 to 57.5 percent. The investment forecast also remains at 110 to 130 million euros. The adjusted earnings per share forecast is still 1.90 to 2.05 euros, which includes impacts from tariffs, currency effects, the tax rate and the buyback.

This article was created with the help of AI.