Birkenstock Earnings Call: Growth Surges, FX Bites

Birkenstock Holding plc ((BIRK)) has held its Q1 earnings call. Read on for the main highlights of the call.

Birkenstock’s latest earnings call struck an upbeat tone on operations, even as reported numbers were dented by currency swings and U.S. tariffs. Management highlighted double‑digit constant‑currency growth, strong sell‑through and advancing profitability underneath the FX and tariff noise, and backed this confidence with reiterated multi‑year targets and a sizable buyback.

Strong Top-Line Growth Outpaces Targets

Birkenstock reported Q1 revenue of €402 million, up 18% in constant currency and 11% on a reported basis, comfortably ahead of its 13%–15% full‑year growth range. The outperformance suggests the brand’s demand fundamentals remain robust, even though FX translation cut roughly 670 basis points from reported growth.

Regional Engines Led by APAC

Growth was broad‑based, with APAC up 37% in constant currency, the Americas rising 14% and EMEA advancing 17%. Management aims to grow APAC at about twice the pace of other regions and plans to double the region’s revenue by 2028, underscoring the strategic importance of markets like Japan, Korea and Greater China.

Channel Momentum in B2B and Direct-to-Consumer

B2B revenue surged 24% in constant currency, while direct‑to‑consumer rose 12%, showing balanced channel expansion. Notably, over 90% of B2B growth came from existing doors and full‑price sell‑through remained above 90% across channels, indicating tight inventory management and strong pricing power.

Profitability Holds Up Beneath FX and Tariffs

Adjusted net profit climbed 47% year on year to €49 million and adjusted EPS rose 50% to €0.27, with adjusted EBITDA up 4% to €106 million. While reported adjusted EBITDA margin slipped to 26.5%, excluding FX and tariff effects it expanded to 30.1%, highlighting improving underlying profitability.

Retail Expansion and Stronger DTC Platform

The company added nine owned stores in Q1, ending the quarter with 106 locations, and retail sales grew more than 50% in constant currency. Retail’s share of DTC revenue increased by about 400 basis points, the membership program grew over 20%, and same‑store sales rose at a high‑single‑digit rate, deepening customer engagement.

Product Mix Shifts to Year-Round Offering

Closed‑toe styles accounted for nearly 60% of revenue in Q1, reflecting the seasonal peak and broadening beyond classic sandals. Strong demand for clogs, including the Boston’s 50th‑anniversary push, and more elevated open‑toe designs support a year‑round brand positioning and allow higher average selling prices in parts of APAC.

Disciplined Capital Allocation and Planned Buybacks

CapEx reached about €38 million in Q1, focused on production capacity and a facility purchase, aligning with Birkenstock’s vertically integrated model. The company plans a €200 million share repurchase program in fiscal 2026, while targeting net leverage of 1.3–1.4x by year‑end excluding buybacks, signaling confidence and balance sheet discipline.

Reaffirmed Multi-Year Growth and Margin Ambitions

Management reiterated its three‑year algorithm of 13%–15% constant‑currency revenue growth and adjusted EBITDA margins above 30%. At the midpoint, these targets would add roughly €1 billion of revenue by fiscal 2028, reinforcing the narrative of a scalable global brand rather than a short‑cycle fashion story.

FX Headwinds Weigh on Reported Results

Currency translation remains a significant drag, with Q1 revenue growth hit by about 670 basis points and Q2 expected to face a roughly 700‑basis‑point headwind. For the full year, FX is forecast to reduce revenue growth by around 350 basis points and pressure margins by about 200 basis points, masking the stronger constant‑currency performance.

Gross Margin Compression in Reported Numbers

Reported gross margin fell to 55.7% in Q1, down 460 basis points year on year, while adjusted gross margin slipped 290 basis points to 57.4%. However, stripping out around 220 basis points of FX and 130 basis points of tariff impact, adjusted gross margin would have expanded by 60 basis points, showing underlying resilience.

Tariffs Add Extra Pressure to Margins

Incremental U.S. tariffs shaved roughly 100–150 basis points off margins in Q1 and are expected to be a material headwind through Q3. Alongside FX, they contributed to a 170‑basis‑point year‑on‑year decline in adjusted EBITDA margin to 26.5%, even as the business improved operationally beneath these external factors.

EBITDA Margin Decline and Recovery Path

The reported Q1 margin softness contrasts with management’s expectation of a 30%–30.5% adjusted EBITDA margin for the full fiscal year, even after FX and tariffs. Excluding those factors, the underlying margin outlook of 32%–32.5% suggests a credible path back above 30%, assuming external pressures stabilize.

Leverage and Cash Reflect Seasonality

Net leverage ticked up to 1.7x from 1.5x at the end of September, driven by typical seasonal patterns and higher tax payments. Operating cash outflow increased to €28 million from €12 million, reflecting working capital swings and €48 million of taxes, while the company ended Q1 with €229 million in cash and an inventory‑to‑sales ratio of 39%.

Higher DSO and B2B Mix Effects

Days sales outstanding increased to 20 from 15 a year earlier, largely due to a greater B2B share in the mix. This shift affects the timing of cash collections but aligns with the strategy to deepen wholesale partnerships without sacrificing sell‑through quality.

Capacity Constraints as a Strategic Choice

Birkenstock underscored that it remains vertically integrated and “capacity constrained by design,” which limits near‑term unit growth but supports brand scarcity and pricing. This approach requires careful allocation across regions and channels, and management declined to provide detailed unit‑level inventory metrics when pressed.

Near-Term Margin Variability and Conservative Tone

Despite Q1’s strong constant‑currency showing, management stuck to its full‑year guidance and stressed a conservative stance, noting Q1 is only about 17% of annual sales. With Q2 and the first half facing heavy FX and tariff uncertainty, reported results may look noisy, even if underlying demand and profitability trends stay healthy.

Guidance Signals Confidence Despite External Noise

Birkenstock reaffirmed its 13%–15% constant‑currency revenue growth target and ambition for 30%–30.5% adjusted EBITDA margin, translating to at least €700 million in EBITDA this fiscal year. Guidance also includes a 57.0%–57.5% adjusted gross margin, adjusted EPS of €1.90–2.05, CapEx of €110–130 million, a €200 million buyback plan and a year‑end net‑leverage goal of 1.3–1.4x, even as FX and tariffs trim reported growth to roughly 10%–12%.

Birkenstock’s call painted a picture of a brand with strong underlying growth, expanding global reach and improving profitability, temporarily obscured by currency and tariff headwinds. For investors, the key message was that management is staying disciplined on capital, confident in its multi‑year growth algorithm and prepared to return cash via buybacks while navigating short‑term volatility.