Iconic footwear maker Birkenstock (BIRK -1.86%) reported mixed fourth-quarter earnings on Wednesday, Dec. 18. Adjusted earnings per share (EPS) of 0.29 euros ($0.32) exceeded analyst consensus expectations of 0.27 euros and jumped a whopping 107% from the previous year's quarter. However, revenue came in at 456 million euros ($501 million), missing the estimate but still showing robust year-over-year growth of 22%.
The quarter underscored solid performance amidst some challenges, particularly in maintaining gross profit margins.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | 0.29 euros | 0.27 euros | 0.14 euros | 107% |
| Revenue | 456 million euros | 461 million euros | 375 euros | 22% |
| Gross profit margin | 59% | N/A | 65.4% | (6.4 pps) |
| Adj. EBITDA | 125 million euros | N/A | 96 million euros | 31% |
Source: Birkenstock. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Birkenstock Business Overview
Founded in 1774, London-based Birkenstock is synonymous with comfort and quality footwear. Its product line extends beyond sandals to shoes, closed-toe silhouettes, and even skincare. This diversification drives its stable revenue across various segments.
The company's recent focus has been on channel expansion, particularly in direct-to-consumer (DTC) and business-to-business (B2B) sales. Both channels saw substantial growth, contributing to overall sales and profitability. As Birkenstock taps into newer product categories, such as closed-toe shoes, it continues to innovate while maintaining its traditional sandal market stronghold.
Quarter Highlights and Developments
Birkenstock's revenue jump of 22% and was driven by strong demand across all segments and markets, with the APMA region leading at 37% year-over-year growth. Adjusted EBITDA was notable, reaching 125 million euros, reflecting a 31% year-over-year increase. This growth exceeded expectations, highlighting the company's strong sales execution and operational efficiencies. The adjusted EBITDA margin of 27.4% was up 190 basis points year over year
However, gross profit margin fell to 59% from 65.4% in Q4 2023. This decline was due to production capacity increases, channel mix changes, and currency fluctuations. Addressing these challenges will be necessary to sustain profitability.
Among product categories, closed-toe shoes outpaced overall growth, doubling their revenue share and marking a successful diversification strategy.
Outlook and Future Prospects
Looking ahead, Birkenstock is optimistic about fiscal 2025, projecting a 15%-17% constant currency revenue growth and adjusted EBITDA margin expansion to 30.8%-31.3% (up 50 basis points). This outlook is backed by strategic market expansions and channel developments. ”As we look into 2025 and beyond, we are confident in our ability to deliver on our medium to long-term objectives for mid-to-high teens revenue growth, gross profit margin of around 60% and adjusted EBITDA margin of over 30%,” explained CEO Oliver Reichert.
Investors should keep an eye on evolving distribution strategies and gross margin management. The company anticipates further growth driven by global market penetration and product innovation, with a continued focus on multi-channel customer engagement.
