Birkenstock: record quarter, but disappointing margins

(CercleFinance.com) - On Thursday, Birkenstock reported 'record' sales for its third quarter, but profitability fell, weighing heavily on its share price.


The sandal manufacturer, now positioned in the high-end segment, recorded sales of 565 million euros for its third fiscal quarter to the end of June, representing growth of 19% both on a reported basis and at constant exchange rates.

The German-born group, now based in London, reports double-digit growth rates (at constant exchange rates) in the Americas (+15%), Europe (+19%) and Asia-Pacific, Middle East, Africa (+41%) regions.

As a result, its adjusted operating profit (Ebitda) rose by 15% to 186 million euros, with net profit up by 18% to 63 million euros.

This solid performance was, however, overshadowed by the decline in the Group's gross margin, down to 59.5% from 61.7% a year earlier.

In a press release, 'Birk' explains this downturn by the temporary impact of measures taken to increase production and by the ramp-up of its B2B activities.

With regard to its outlook, the company confirmed its forecast of sales growth of around 19% on a reported basis for the full year (+20% at constant exchange rates).

Its adjusted operating margin (Ebitda) is still expected to be between 30% and 30.5%.

In the medium-to-long term, the company is targeting a gross margin of around 60%, with an adjusted operating margin (Ebitda) of over 30%.

Listed on the New York Stock Exchange, the stock was down by more than 14% early Thursday in the wake of this quarterly publication.

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