Birkenstock Holding plc (BIRK) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue EUR 402 million, up 11% on a reported basis and 18% in constant currency. The increase was driven by strong demand and brand momentum during the holiday shopping season.
B2B Revenue Up 24% in constant currency. Growth was driven by strong holiday demand at key partners.
DTC Revenue Up 12% in constant currency. Growth was sustained in double digits.
APAC Revenue Up 37% in constant currency. Growth was more than double the pace of growth of the Americas and EMEA, driven by strong performance in underpenetrated markets.
Gross Profit Margin 55.7%, down 460 basis points year-over-year. Adjusted gross profit margin was 57.4%, down 290 basis points. The decline was due to FX pressure (220 basis points) and incremental U.S. tariffs (130 basis points). Excluding these, adjusted gross profit margin was up 60 basis points year-over-year.
Selling and Distribution Expenses EUR 126 million, representing 31.2% of revenue, down 150 basis points from the prior year. The decrease was mainly due to a higher B2B share year-over-year.
Adjusted General and Administration Expenses EUR 29 million, 7.2% of revenue, up 50 basis points versus prior year.
Adjusted EBITDA EUR 106 million, up 4% year-over-year. Adjusted EBITDA margin was 26.5%, down 170 basis points year-over-year. Excluding FX and tariff impacts, adjusted EBITDA margin was up 190 basis points to 30.1%.
Adjusted Net Profit EUR 49 million, up 47% year-over-year. Growth was driven by strong operational performance, lower interest expenses, income from the change in valuation of the embedded derivative, a lower effective tax rate, and lower share count following a share repurchase.
Adjusted EPS EUR 0.27, up 50% from EUR 0.18 a year ago. Growth was driven by strong operational performance and other financial factors.
Operating Cash EUR 28 million used, compared to EUR 12 million used in Q1 '25. The increase was due to working capital seasonality and income taxes paid of EUR 48 million.
Cash and Cash Equivalents EUR 229 million at the end of the quarter.
Inventory-to-Sales Ratio 39%, flat year-over-year.
DSO (Days Sales Outstanding) 20 days, up from 15 days a year ago, primarily due to the higher B2B mix.
CapEx EUR 38 million, including investments in production capacity, retail, IT, and the purchase of the Wittichenau facility.
Net Leverage 1.7x as of December 31, 2025, up from 1.5x at September 30, 2025, due to normal cash seasonality.
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Operating Highlights
Closed-toe product expansion: Closed-toe products, including clogs like the Boston, Naples, and Lutry, now account for nearly 60% of revenue in Q1, showcasing a successful shift towards becoming a 4-season brand.
APAC market growth: APAC revenues grew 37% in constant currency, with plans to double APAC revenue by 2028, driven by underpenetration in key markets like China, Japan, South Korea, and India.
Americas and EMEA growth: Americas grew 14% and EMEA grew 17% in constant currency, with strong potential in underpenetrated markets like France, Spain, UK, and GCC.
B2B and DTC channel performance: B2B grew 24% in constant currency, outpacing DTC growth of 12%, driven by strong holiday demand and in-person shopping trends.
Retail expansion: Added 9 new stores in Q1, reaching 106 stores, with a target of 40 new stores for the fiscal year to capture in-person demand and showcase product range.
Profitability and margin management: Focused on maximizing profitability per pair and optimizing margins by steering growth between geographies and channels, despite FX and tariff headwinds.
Vertically integrated supply chain: Investments in production capacity and IT to support growth targets, including EUR 38 million in CapEx during Q1.
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Risk or Challenges
Tariffs and FX Headwinds: Margins in the U.S. are facing headwinds from additional tariffs and a weaker dollar. This is expected to continue impacting gross profit and adjusted EBITDA margins, with a 200-250 basis point margin impact in Q2 and 200 basis points for the full year.
Geographic and Channel Growth Imbalance: B2B growth is outpacing DTC growth, which may create challenges in balancing channel growth. Additionally, while APAC is growing rapidly, other regions like the Americas and EMEA are growing at a slower pace, potentially leading to uneven geographic performance.
Supply Chain Constraints: The company’s vertically integrated supply chain is capacity constrained by design, which could limit its ability to meet growing demand efficiently.
Currency Depreciation: The depreciation of the U.S. dollar and Asian currencies has created a 670 basis point headwind to revenue growth in Q1 and is expected to continue impacting financial performance.
Tariff Impact: Incremental U.S. tariffs are causing a 100-150 basis point margin pressure, adding to the cost challenges.
Working Capital Seasonality: The company experienced a EUR 28 million use in operating cash in Q1 due to working capital seasonality and income tax payments, which could strain liquidity during certain periods.
Inventory Management: The inventory-to-sales ratio remains flat at 39%, but any inefficiencies in inventory management could impact operational performance.
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Guidance & Outlook
Revenue Growth: The company expects second quarter revenue growth in constant currency within the annual guidance of 13% to 15%. For fiscal 2026, constant revenue growth is projected at 13% to 15%, with FX headwinds reducing reported growth to 10% to 12%, resulting in revenue of EUR 2.30 billion to EUR 2.35 billion.
Adjusted Gross Margin: Expected to be 57% to 57.5% in fiscal 2026, inclusive of 100 basis points pressure from FX and 100 basis points from incremental U.S. tariffs.
Adjusted EBITDA: Projected to be at least EUR 700 million for fiscal 2026, implying an adjusted EBITDA margin of 30% to 30.5%, inclusive of 200 basis points pressure from FX and tariffs. Excluding these factors, the margin would be 32% to 32.5%.
Adjusted EPS: Expected to be EUR 1.90 to EUR 2.05 for fiscal 2026, including EUR 0.15 to EUR 0.20 of pressure from FX.
CapEx: Projected to be in the range of EUR 110 million to EUR 130 million for fiscal 2026.
Net Leverage: Targeted at 1.3 to 1.4x by the end of fiscal 2026, excluding the impact of additional share repurchases.
APAC Growth: APAC revenue is expected to double by 2028, with growth steered at double the pace of other segments over the next 3 years.
B2B and DTC Growth: B2B growth is expected to continue outpacing DTC growth, driven by in-person shopping trends. Investments in retail and e-commerce are planned to balance channel growth.
Geographic Growth: The Americas segment continues to grow double-digit, with substantial room for growth in the U.S. EMEA shows strong growth potential in underpenetrated markets like France, Spain, U.K., and GCC. APAC countries such as China, Japan, South Korea, and India are highly underpenetrated but show strong margins and high ASPs.
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Shareholder Return Plan
Share Repurchase Program: Birkenstock intends to repurchase shares for a total consideration of USD 200 million during fiscal 2026, subject to market conditions.
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Key Q&A
Q:What are the drivers supporting confidence in durable demand momentum for the brand globally?
A:The brand has a long runway for growth with a total addressable market including every human being. Market penetration in established markets like the Americas is below 5%. Growth continues in double digits with 90%+ full price realization across all channels. The order book for 2026 and beyond remains strong, with 70%-80% of wholesale demand fulfilled. New customer acquisition is driven by B2B channels and a membership program up over 20% year-over-year. Retail stores are also a key growth pillar.
Q:How is inventory allocated across channels and geographies to optimize brand strength and EBITDA dollars per pair?
A:Inventory is allocated to the most profitable channels and regions to balance revenue, unit needs, and resilience. Channel drives margin more than geography. Allocation is done mindfully and precisely.
Q:What is the year-over-year inventory increase in units?
A:The company does not disclose inventory details in units and has no intention to do so in the future.
Q:Why is there a slowdown in growth for the rest of the year despite strong Q1 performance?
A:The company remains conservative early in the year due to uncertainties in the second half, which has a heavier mix of DTC. Q1 is the smallest quarter, contributing only 17% of annual revenue. Seasonal factors like FX impact, tariffs, and capacity absorption also affect margins.
Q:What is the outlook for SG&A and margin improvement for the rest of the year?
A:Tariff and FX drag impact margins by 200 basis points. Without this, EBITDA margin would have improved. The company balances margin expansion with reinvestments in DTC, manufacturing, retail, e-commerce, and logistics. DTC is 80% online, with high variable costs, but store growth is expected to drive operating leverage over time.
Q:What are the key products and trends for spring and summer?
A:Elevated styles in both closed-toe and open-toe sandals are in demand. Open-toe styles like Big Buckle EVA, Naples Wrapped, and Florida are popular. The Gizeh thong sandal is making a comeback. High-priced, elevated styles are gaining momentum, especially in APAC.
Q:What is the company's approach to share buybacks and insider stock purchases?
A:The company plans to repurchase $200 million in shares in fiscal 2026, subject to market conditions. Insider buying has been limited due to blackout periods related to fiscal quarters and acquisitions.
Q:What are the metrics and performance of the company's retail stores?
A:The company has 106 stores globally, with 60 opened in the past 2.5 years. Retail is the fastest-growing segment, up over 50% year-over-year in Q1. Same-store sales growth is high single digits. CapEx per store ranges from EUR 400,000 to EUR 800,000, with cash returns expected within 12-18 months.
Q:What factors support confidence in higher prices resonating with customers?
A:The company achieves 90%+ full price selling across channels. Pricing is adjusted mindfully by product group, price level, and region. Customers are moving to higher price points and elevated styles. The company has consistently increased prices year-over-year.
Q:What is the company's wholesale strategy and distribution breakdown in the U.S. and Europe?
A:The company has 10,000 B2B doors in the Americas and 9,000 in EMEA, with low single-digit door growth since IPO. Growth is driven by existing doors, with 90%-95% of growth from them. U.S. distribution includes department stores and sports specialty stores, with strong sell-throughs above 30%.
Q:How is the company targeting Gen Z customers?
A:Gen Z customers are attracted to the brand's heritage and iconic products like the Boston silhouette. The company aims to build long-term relationships with these customers, who often purchase multiple pairs over time. The company is in the right B2B doors to target this cohort and is expanding its online presence to capture more Gen Z demand.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on inventory increases in units, stating they do not disclose such information and have no plans to do so in the future.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Americas segment
BB currency
Capital Markets
DTC BB
EUR basis
EUR cash
EUR dollar
EUR margin
FX basis
FX headwind
FX tariff
Markets Day
Relations website
USD
capability
chain
clog
country
digit market
dollar exchange
euro
exchange rate
face headwind
geography
headwind FX
health
holiday
income
margin pressure
penetration
point EUR
point headwind
point pressure
potential
pressure FX
reminder
runway
share repurchase
shopping
tariff basis
tax rate
BIRK Transcript
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.
Birkenstock Holding plc (BIRK) Q3 2025 Earnings Call Transcript
Positive8-14
Birkenstock's earnings call reveals strong financial performance with record revenue growth, optimistic guidance, and successful product expansion. Although there are capacity constraints and tariff impacts, the company is mitigating these through strategic investments and strong inventory management. The positive market response to price adjustments and expansion plans further supports a positive sentiment. Despite some management evasiveness on specifics, the overall outlook, including strong DTC and B2B growth, suggests a positive stock price movement in the near term.
BIRK Slides
BIRK Report
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