Birkenstock Earnings Call: Record Growth, Managed Constraints

Birkenstock Holding plc ((BIRK)) has held its Q4 earnings call. Read on for the main highlights of the call.

Birkenstock Holding plc’s latest earnings call struck a confident yet cautious tone. Management celebrated a record year in sales and profitability, powered by strong demand across regions and channels and a rapidly expanding retail presence. At the same time, they flagged tangible constraints—limited production capacity, currency and tariff headwinds, and pressure on the vertically integrated supply chain—that could temper the growth trajectory even as underlying brand momentum remains exceptionally strong.

Record-Breaking Revenue and Margin Expansion

Birkenstock delivered the strongest year in its history, with full-year revenue up 18% in constant currency to EUR 2.1 billion. Growth was broad-based, with double-digit gains in every segment and channel, underscoring the power of the brand and its diversified distribution. Profitability improved as well: gross margin ticked up 30 basis points to 59.1%, while adjusted EBITDA margin climbed 100 basis points to 31.8%. For investors, this combination of robust top-line growth and margin expansion signals that Birkenstock is not just selling more pairs, but doing so more profitably.

Broad-Based Regional Strength

Performance was strong across all major geographies, with Asia-Pacific leading the way. APAC revenue surged 34% in constant currency, lifting its share to 11% of global sales and highlighting the region as a key long-term growth engine. The Americas grew 18% in constant currency, reflecting sustained consumer appetite in one of Birkenstock’s most important markets, while EMEA delivered a solid 14% increase. This geographic balance reduces reliance on any single region and signals broad global resonance of the brand.

Aggressive Expansion of the Retail Footprint

Birkenstock continues to lean into direct-to-consumer expansion. The company doubled its owned store fleet to 97 locations, adding 30 new stores in the fiscal year, and plans to open about 40 more in 2026. This strategy is aimed at deepening brand control, improving visibility, and capturing a larger share of the retail margin. For shareholders, the growing store base offers a lever for long-term revenue and profitability, though it also requires disciplined execution and capital allocation.

Strong Cash Generation and Rapid Deleveraging

The company’s strong cash flow is giving it notable financial flexibility. Birkenstock reduced its leverage ratio from 3.3x to 1.5x, a major de-risking move for equity holders. At the same time, it invested over EUR 150 million in expanding production capacity and returned capital via a $200 million share buyback. This balance between reinvestment in the business and shareholder returns suggests management is confident in the durability of demand while keeping the balance sheet conservative.

Enduring Demand and Premium Brand Positioning

Demand indicators remain robust across segments. Birkenstock reported full-price realization above 90%, a strong signal of brand desirability and pricing power. The back-to-school season was particularly impressive, with retail sales at the company’s top 10 partners up more than 20% year over year. The business sold over 38 million pairs in fiscal 2025, and average selling price rose 5% in constant currency, driven by intentional price actions and a growing mix of premium products. For investors, this confirms Birkenstock’s positioning as a premium, not promotional, brand.

Capacity Constraints Are Capping Near-Term Upside

Despite strong demand, Birkenstock acknowledged that growth is currently constrained by production capacity and a deliberate strategy to maintain a degree of scarcity. The company is calibrating growth to a mid-teens pace for fiscal 2026, not because of weak demand, but because it wants to avoid overstretching its manufacturing base and diluting brand exclusivity. This suggests that the limiting factor is supply rather than appetite for the product, a constructive but real constraint for near-term upside.

FX and Tariffs Set to Pressure Margins

Management highlighted significant headwinds from foreign exchange and tariffs in fiscal 2026. FX alone is expected to drag revenue growth by 300 to 350 basis points and shave roughly 200 basis points off the adjusted EBITDA margin. Tariffs add another layer of pressure, particularly given the global nature of Birkenstock’s business. While these factors do not reflect weakening fundamentals, they will likely weigh on reported results and could introduce volatility into quarterly performance.

Rising Stress on Vertically Integrated Supply Chain

The company is facing mounting pressure on its vertically integrated production network. Increased wholesale demand and a shift toward more premium, complex executions are straining manufacturing. Management emphasized the need to carefully manage the ramp in capacity and maintain quality standards. For investors, this underscores operational execution risk: scaling production without compromising quality or delivery times will be critical to sustaining growth and protecting the brand’s reputation.

Guidance Points to Solid Growth Amid Headwinds

Looking ahead, Birkenstock’s guidance reflects ongoing confidence tempered by external headwinds and capacity limits. After outpacing its prior targets in fiscal 2025—posting 18% constant currency revenue growth against guidance of 15% to 17%, along with improved margins—the company now plans for constant currency revenue growth of 13% to 15% in fiscal 2026. Adjusted EBITDA is expected to reach at least EUR 700 million, even with the anticipated drag from FX and tariffs. Planned store openings, continued premiumization, and steady regional growth are expected to drive this performance, though investors should expect reported numbers to reflect currency and cost pressures.

In summary, Birkenstock’s earnings call painted the picture of a brand in high demand, delivering record revenue, expanding margins, and strengthening its balance sheet, yet running up against the practical limits of capacity and external macro headwinds. While growth is being deliberately moderated and FX and tariffs loom over near-term results, the underlying fundamentals—global demand, pricing power, and brand momentum—remain strong. For investors, the story is one of disciplined growth management rather than a peak in the cycle.