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The stock market is sometimes eternally dissatisfied.<\/p>\n
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Birkenstock<\/strong><\/b>, the flagship brand of Generation Z, may have achieved historic sales in its third quarter 2023-24<\/strong><\/b>, which closed at the end of June, but the market still didn’t think it was good enough.<\/p>\n <\/p>\n Its share price <\/strong><\/b> fell by more than 12% to $50.9<\/strong><\/b> on the very day the results were published, August 29<\/strong><\/b>, as performance fell short of the market’s even more optimistic forecasts.<\/p>\n <\/p>\n <\/p>\n Nevertheless, the outlook is still very promising for the sandal brand, majority-owned since 2021 by L Catterton and Financi\u00e8re Agache, the holding company of the Arnault family<\/strong><\/b>, and listed on Wall Street in October 2023<\/strong><\/b>.<\/p>\n\n <\/p>\n As a reminder, the IPO price<\/strong><\/b> of Birkenstock shares was $46.<\/strong><\/b> After a poor start, it ended 2023 up by around 19%.<\/p>\n <\/p>\n <\/p>\n \u201cWe recorded the highest quarterly sales in our company’s history<\/strong><\/b>, thanks to strong and growing demand in all product areas, sales channels and categories,\u201d enthused Oliver Reichert, Managing Director of the Birkenstock Group.<\/strong><\/b><\/p>\n <\/p>\n He emphasized that these financial results \u201conce again confirm the robustness of\u201d<\/strong><\/b> the brand’s \u201cbusiness strategy\u201d<\/strong><\/b> and its \u201csuccess in achieving the growth and profitability targets\u201d presented to investors \u201cduring the IPO and subsequent presentations for the secondary share offering\u201d.<\/p>\n <\/p>\n More concretely, Birkenstock sales grew by 19% at constant exchange rates<\/strong><\/b>to 564.8 million euros in the third quarter of 2023-24. Yes, but… this handsome sales growth was slightly below analysts’ consensus forecasts<\/strong><\/b> of $566.15 million…<\/p>\n <\/p>\n <\/p>\n All channels performed well for the sandal brand, with wholesale billings up 23% and retail sales up 14% at constant exchange rates.<\/strong><\/b> Yes, but… the latter are not as high as analysts had expected.<\/p>\n <\/p>\n In the retail channel, however, the company continued to flourish both online and in the field.<\/p>\n <\/p>\n With strong growth in e-commerce, it now boasts a remarkable digital penetration of 40%<\/strong><\/b>. This has not prevented the company from continuing to open new physical stores.<\/strong><\/b><\/p>\n <\/p>\n On the earnings front, the company announced quarterly profits of $0.40 per share<\/strong><\/b>. Analysts were expecting an average of $0.52.<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n Birkenstock’s third-quarter gross profit margin<\/strong><\/b> fell by 2.2 points to 59.5%<\/strong><\/b>. However, this decline is mainly attributable to temporary investments to increase production capacity<\/strong><\/b> in Pasewalk, Germany, and Arouca, Portugal.<\/p>\n <\/p>\n Proof that Birkenstock still has a lot left in the tank, and believes that its future will continue to flourish.<\/p>\n <\/p>\n Lastly, the adjusted EBITDA margin came in at 33%,<\/strong><\/b> just short of the forecast margin of 32.9%.<\/p>\n <\/p>\n Geographically, the APMA region (Asia-Pacific, Middle East, Africa), boosted in particular by Japan and Australia, saw the fastest growth.<\/strong><\/b> But Europe and the Americas also performed well<\/strong><\/b>, as price increases on the old continent had no impact on consumer demand. Analysts did, however, note a slowdown in growth in the Americas.<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n Looking at the first nine months, sales rose by 21%<\/strong><\/b> to 1,348.93 million euros, compared with 1,117.37 million euros a year ago. Net income rose by 35%<\/strong><\/b> to 139.14 million euros from 103.31 million euros.<\/p>\n <\/p>\n Finally, basic earnings per share<\/strong><\/b> from continuing operations reached 0.74 euros<\/strong><\/b>, compared with 0.57 euros the previous year.<\/p>\n <\/p>\n Birkenstock is looking to the future with optimism, thanks to sustained demand.<\/strong><\/b><\/p>\n <\/p>\n The company expects total sales growth of 19% as is, and 20% taking currency fluctuations into account, for the 2023-2024 fiscal year<\/strong><\/b> (ending September).<\/p>\n <\/p>\n Lastly, it confirmed its<\/strong><\/b> medium- and long-term profitability targets<\/strong><\/b>, i.e. a gross margin close to 60% and an adjusted EBITDA margin in excess of 30%.<\/p>\n <\/p>\n <\/p>\n This should reassure financial analysts for the long term, notes the financial press.<\/p>\n <\/p>\n In any case, Birkenstock continues to forge ahead.<\/p>\n <\/p>\n In France, Birkenstock inaugurated<\/strong><\/b> its first directly-operated store in Paris, in<\/strong><\/b> the trendy Marais district, on July 20<\/strong><\/b> (i.e., in the last quarter of its 2023-24 fiscal year).<\/p>\n <\/p>\n The brand had already had stores in France in the past, but these had been closed a few years ago and opened by its distributor<\/strong><\/b> rather than directly.<\/p>\n <\/p>\n The brand, which now spans the globe, also has other branches in Europe, North America and Asia,<\/strong><\/b> including Spain, the Netherlands, the United States, Canada, Dubai and Singapore…<\/p>\n <\/p>\nPromising outlook<\/h2>\n
Historic sales<\/h2>\n
Yes, but…<\/h2>\n
Increased production capacity<\/h2>\n
Fine performance in the first nine months<\/h2>\n
First French store<\/h2>\n
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