Shares of Birkenstock (BIRK) are down 13% after the German sandal maker warned of continued negative impacts on its business from U.S. tariffs and the Iran war.
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The warnings have sent BIRK stock sharply lower on May 13 as investors assess the near-term outlook for the shoemaker. The comments also reinforce the broader challenges across the apparel and sportswear sector and are similar to recent warnings from other companies such as Nike (NKE) and Under Armour (UA).
Management at Birkenstock issued the warning as it reported second-quarter financial results that missed Wall Street estimates. The company recorded a six million euros ($7.02 million U.S.) hit to its European and Middle East segment during the year’s first quarter as the company was unable to ship some deliveries into the region due to the war.
The Impact of Tariffs
Birkenstock said that to offset the Middle East disruptions, it is rerouting shipments to regions with stronger growth such as Asia. However, executives at the company also warned that they continue to grapple with impacts from tariffs following changes in U.S. trade policy over the past year.
The company’s average tariff burden has doubled from 10% to 20%, executives said on an earnings call with analysts and media. “If the current tariff structure were to hold… we could see some additional increase in margin pressure in Q4,” said Birkenstock Chief Financial Officer (CFO) Ivica Krolo.
Is BIRK Stock a Buy?
Birkenstock’s shares have a consensus Strong Buy rating among 12 Wall Street analysts. That rating is based on 11 Buy and one Hold recommendations issued in the last three months. The average BIRK price target of $54.20 implies 66% upside from current levels. These ratings could change after the company’s financial results.
