Birkenstock Holding plc (BIRK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with high revenue growth expectations and robust demand across regions. Positive indicators include a strong APAC growth forecast, strategic store expansion, and B2B outpacing DTC growth. Despite some FX and tariff challenges, the company is mitigating these through strategic pricing and production efficiencies. The Q&A session supports these positives, highlighting strong consumer demand and confidence in sustaining growth. Although there are some uncertainties in production capacity, the overall sentiment remains positive, suggesting a likely 2% to 8% stock price increase.
Key Financial Performance
Revenue Full year revenue growth of 18% in constant currency, reaching EUR 2.1 billion, the best year in the company's history. This was above the 15% to 17% range provided at the beginning of the year. Reasons for growth include strong demand across all segments, categories, and channels, as well as targeted price actions and a higher share of premium products.
Gross Margin Gross margin improved by 30 basis points to 59.1% for the fiscal year. Excluding FX and tariff impacts, the margin was up 90 basis points to 59.7%. The improvement was driven by operational efficiencies and targeted price increases.
Adjusted EBITDA Margin Adjusted EBITDA margin increased by 100 basis points to 31.8% for the fiscal year, meeting the high end of the target range. Excluding FX and tariff impacts, the margin was up 170 basis points to 32.5%. This was due to strong operational performance and cost management.
Units Sold 38 million pairs sold in fiscal 2025, up over 12% year-over-year. The increase was supported by strong demand and a 5% increase in ASP (average selling price) in constant currency, driven by targeted price actions and a higher share of premium products.
B2B Channel Growth B2B channel revenue grew by 21% in constant currency, with its share of business increasing to 62% from 60% in fiscal 2024. Growth was driven by strong wholesale demand, especially among younger demographics.
APAC Segment Growth APAC segment revenue grew by 34% in constant currency, approximately double the pace of more mature markets. APAC's share of global revenue increased to 11%, supported by higher ASP and strong demand.
Adjusted Net Profit Adjusted net profit for the fiscal year was EUR 346 million, up 44% year-over-year. This growth was driven by strong operational performance, lower interest payments, and a lower effective tax rate.
Cash Flow from Operating Activities Cash flows from operating activities were EUR 384 million for the fiscal year, down 12% from fiscal 2024. The decline was mainly due to the timing of tax payments.
Inventory to Sales Ratio Inventory to sales ratio declined to 34% for the year from 35% in fiscal 2024, indicating improved inventory management.
Capital Expenditures (CapEx) Approximately $85 million spent in CapEx during the fiscal year, focused on adding production capacity, retail, and IT investments.
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Operating Highlights
Closed-toe shoes: Revenue share increased by 500 basis points year-over-year to 38%. Non-Boston closed-toe silhouettes grew over 30%.
Boston silhouette: Continues to lead the clog category and turns 50 years in 2026.
APAC growth: Grew 34% in constant currency, now 11% of global revenue. APAC has the highest ASP and is expected to grow at double the pace of mature markets.
Retail expansion: Added 30 new stores in 2025, ending the year with 97 stores. Plans to open 40 new stores in 2026, targeting 150 stores ahead of schedule.
Production capacity: Invested over EUR 150 million to expand production capacity. Production constraints remain a challenge due to high demand for premium products.
B2B and D2C growth: B2B channel grew 21% and D2C grew 12% in constant currency. B2B share increased to 62% of business.
Maintaining scarcity: Focused on disciplined distribution growth and maintaining over 90% full price realization.
Youth demographic: Strong wholesale growth driven by Gen Z, with a shift towards in-person shopping.
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Risk or Challenges
Tariff and Currency Pressures: The company faces significant headwinds from FX and tariffs, with a 600-650 basis points impact on revenue growth in the first half of fiscal 2026 and a 300-350 basis points impact for the full year. Tariffs are expected to cause a 100 basis point decline in both gross and EBITDA margins.
Production Capacity Constraints: The company is constrained by its production capacity, which limits its ability to meet growing demand, particularly in the B2B channel and for premium products that require more production time.
Supply Chain Pressure: The vertically integrated supply chain is under pressure due to the combination of increased wholesale demand and the production of premium products, which require more production minutes.
Economic and Geopolitical Challenges: The company operates in an environment affected by global tariffs, international trade changes, the war in Ukraine, and an energy crisis, which pose risks to operations and financial performance.
FX Impact on Profitability: Nearly all costs of goods sold (COGS) and a majority of SG&A expenses are in euros, making the company vulnerable to currency fluctuations, particularly the depreciation of the U.S. dollar.
Strategic Growth Risks: The company’s growth strategy, including plans to open 40 new stores and expand in the APAC region, is dependent on managing production responsibly and maintaining brand scarcity, which could be challenging.
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Guidance & Outlook
Revenue Growth: Targeting constant currency revenue growth of 13% to 15% for fiscal 2026, with reported revenue growth of 10% to 12% due to FX headwinds, reaching EUR 2.3 billion to EUR 2.35 billion.
Adjusted EBITDA: Expected to be at least EUR 700 million for fiscal 2026, with an adjusted EBITDA margin of 30% to 30.5%, inclusive of FX and tariff pressures. Excluding these factors, the margin would be 32% to 32.5%.
Gross Margin: Forecasted to be 57% to 57.5% for fiscal 2026, including 100 basis points of pressure from FX and 100 basis points from incremental U.S. tariffs.
Unit Growth: Targeting approximately 10% unit growth per year, balancing supply chain constraints and maintaining product scarcity.
Capital Expenditures: Planned to be in the range of EUR 110 million to EUR 130 million for fiscal 2026, focusing on production capacity, retail, and IT investments.
Retail Expansion: Plan to open about 40 new retail stores globally in fiscal 2026, aiming to reach the 150-store target ahead of schedule.
APAC Growth: APAC market expected to grow at double the pace of more mature markets, continuing its 34% growth trajectory in constant currency.
Share Repurchases: Intend to repurchase shares for a total consideration of $200 million during fiscal 2026, subject to market conditions.
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Shareholder Return Plan
Share Buyback Program: The company repurchased 3.9 million shares totaling EUR 176 million during fiscal 2025. Additionally, Birkenstock plans to repurchase shares for a total consideration of $200 million during fiscal 2026, subject to market conditions.
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Key Q&A
Q:What's driving the more conservative view for fiscal '26 compared to the 20% constant currency revenue growth in Q4 and 18% for the year?
A:The more conservative view for fiscal '26 is driven by production capacity constraints rather than demand. The company plans to produce over 5 million more pairs in '26 but faces limitations in production minutes, especially for clogs, which take more time to produce than sandals. Investments are being made in preproduction capacity in Portugal and a new facility near Dresden, which will be operational in '27.
Q:Can you explain the margin outlook for 2026 and the impact from FX and tariffs?
A:FX and tariffs will represent a 200 basis points drag on gross and EBITDA margins in 2026. FX will impact top-line growth by 300-350 basis points, translating to a EUR 63 million hit to gross profit. Tariffs will add 100 basis points of margin pressure, mitigated by pricing adjustments and production efficiencies. The company is also working to reduce exposure to the U.S. dollar and tariffs by growing its APAC business.
Q:Could we assume that top-line growth in Q1 could be up high teens?
A:The company guides mid-teens growth for the long-term algorithm but noted that the holiday season in the U.S. performed very well, indicating strong brand performance.
Q:How do you think about channel growth in 2026, particularly B2B versus D2C?
A:B2B is expected to outpace D2C growth in 2026 due to strong demand in multi-brand retail environments, especially among younger demographics. Both channels are growing double digits, with B2B benefiting from strategic retail partnerships and high margins. The company plans to add 40 new D2C stores in 2026 to capture more in-person demand.
Q:What are you seeing in terms of consumer demand in the EU, and any comments on first-quarter trends there?
A:Consumer demand in the EU is strong, with double-digit growth in B2B and DTC channels despite a flat to negative market. Growth is driven by product newness and higher price points, particularly in closed-toe categories. Q1 trends are expected to continue in line with overall guidance.
Q:Would you expect to return to mid- to high-teens growth in fiscal '27?
A:The company aims to increase production capacity by roughly 10% annually to meet demand, which should support a return to mid- to high-teens growth in fiscal '27.
Q:Can you unpack the EBITDA margin guidance and its components?
A:The 2026 EBITDA margin guidance includes a 200 basis points drag from FX and tariffs. Capacity absorption will contribute 60 basis points, while a channel shift to B2B will result in a 50 basis points drag. Like-for-like pricing adjustments are expected to offset some of these impacts.
Q:What is the unit growth capacity if you weren't trying to control scarcity?
A:The company did not provide a specific figure but emphasized that production capacity is constrained by the complexity of products like clogs, which take more production minutes than sandals. The growth algorithm is designed around production capacity rather than demand.
Q:What is the opportunity for continued price mix improvement and the share of sales from closed-toe shoes?
A:Closed-toe shoes now account for 38% of sales and are expected to grow further. The company is diversifying its product offering with new silhouettes and higher price points. Price mix improvement is driven by consumers choosing premium products and targeted pricing adjustments.
Q:What gives you confidence in sustaining mid-teens growth over the next 3 to 5 years?
A:Confidence comes from investments in production capacity, including new facilities in Portugal and near Dresden, and the ability to manage product mix and distribution. The company is also expanding in high-growth regions like APAC, which has the highest ASP globally.
Q:Can you provide more specifics on Q1 performance?
A:Q1 is expected to be well above guidance in terms of top-line growth, but no specific margin details were provided.
Q:What are the regional growth plans for fiscal '26?
A:APAC is expected to grow at twice the rate of other regions, driven by high ASPs and strategic capacity allocation. The company aims for a long-term regional business share of 1/3 each for Americas, Europe, and APAC.
Q:What is the timeline for adding 5,000 new B2B doors, and how does this impact near-term growth?
A:The company is disciplined in adding new B2B doors, focusing on high-quality distribution and full-price realization. Growth is currently driven by existing doors, with plans to expand into sports and outdoor categories in fiscal '26.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on Q1 margin performance, stating that they would not preannounce margins. Additionally, they did not quantify the unit growth capacity if scarcity controls were removed, citing the complexity of production constraints.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APAC currency
BB DC
Capital
EUR basis
EUR margin
FX basis
FX headwind
FX tariff
GA
buyback leverage
currency pace
decline
desire
distribution EUR
dollar
euro
exchange rate
face
headwind FX
headwind basis
history
impact basis
margin FX
payment
point EUR
point end
point pressure
pressure FX
reclassification
repurchase share
revenue EUR
share buyback
store fleet
tariff basis
tariff impact
tax rate
BIRK Transcript
Birkenstock Holding plc (BIRK) Q2 2026 Earnings Call Transcript
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The earnings call highlights strong financial performance, with revenue, gross margin, operating income, and net income all showing significant year-over-year growth. The improvements in operational efficiencies and cost management, along with strong demand in key regions, suggest a positive outlook. Despite the absence of strategic initiatives and risk discussion, the robust financials and market demand support a positive stock price movement in the short term.
Bombardier Inc. (BBD.B:CA) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call summary reveals strong financial performance, with significant growth in adjusted net income and EPS. Despite some supply chain challenges, management remains optimistic about future growth, particularly in services and defense. The Q&A section highlights a disciplined approach to capital allocation and potential upside in various segments. Although there is a lack of specific guidance for certain areas, the overall sentiment is positive, with expectations for continued growth and strategic expansion. The focus on reducing debt and disciplined capital deployment further supports a positive outlook.
Birkenstock Holding plc (BIRK) Q1 2026 Earnings Call Transcript
Positive2-12
The earnings call highlights strong financial performance with positive revenue growth and optimistic guidance. The company's strategic initiatives, such as retail expansion and APAC growth, are promising. The Q&A session reinforced confidence with durable demand momentum and effective inventory allocation. Despite some concerns about FX impacts and margin pressures, the overall sentiment is positive, especially with a $200 million share repurchase plan. The absence of specific inventory details is a minor concern, but the strong market strategy and financial health lead to a positive outlook.
Birkenstock Holding plc (BIRK) Q4 2025 Earnings Call Transcript
Positive12-18
The earnings call reveals strong financial performance with high revenue growth expectations and robust demand across regions. Positive indicators include a strong APAC growth forecast, strategic store expansion, and B2B outpacing DTC growth. Despite some FX and tariff challenges, the company is mitigating these through strategic pricing and production efficiencies. The Q&A session supports these positives, highlighting strong consumer demand and confidence in sustaining growth. Although there are some uncertainties in production capacity, the overall sentiment remains positive, suggesting a likely 2% to 8% stock price increase.
BIRK Slides
BIRK Report
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