BIRK — Birkenstock Holding plc

Summary of Birkenstock's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: EUR 402 million, up 11% reported and 18% in constant currency, exceeding the full-year guidance of 13% to 15%.
• Adjusted EBITDA: EUR 106 million, up 4% year-over-year; adjusted EBITDA margin at 26.5%, down 170 basis points year-over-year.
• Adjusted Net Profit: EUR 49 million, a 47% increase year-over-year; adjusted EPS at EUR 0.27, up 50% from EUR 0.18.
• Gross Profit Margin: 55.7%, down 460 basis points year-over-year; adjusted gross profit margin at 57.4%, down 290 basis points.
• Cash and Cash Equivalents: EUR 229 million; net leverage at 1.7x, up from 1.5x in the previous quarter.
• CapEx: EUR 38 million spent on production capacity and retail investments.

2. Strategic Updates and Business Highlights

• Growth Strategy: Birkenstock aims for 13% to 15% top-line growth in constant currency over the next three years, with a focus on maximizing profitability per pair while protecting brand equity.
• Market Penetration: The U.S. market is underpenetrated at approximately 5%, with significant growth potential in EMEA and APAC regions, where revenue growth was 37% in APAC.
• Channel Performance: B2B sales grew 24% in constant currency, outperforming DTC growth of 12%. The company is investing in retail to capture in-person shopping demand.
• New Store Openings: 9 new stores added, totaling 106, with a target of 40 new stores for the fiscal year.

3. Forward Guidance and Outlook

• Q2 2026 Expectations: Revenue growth in constant currency expected within the annual guidance of 13% to 15%, but facing significant headwinds from foreign exchange (FX) and tariffs.
• Full-Year Guidance: Anticipated revenue growth of 10% to 12% due to FX headwinds, with adjusted EBITDA expected to be at least EUR 700 million, implying a margin of 30% to 30.5%.
• Share Repurchase Plan: Intention to repurchase USD 200 million in shares during fiscal 2026, subject to market conditions.

4. Bad News, Challenges, or Points of Concern

• FX and Tariff Headwinds: Significant pressure on margins due to FX fluctuations and tariffs, with expected impacts of 200 to 250 basis points on gross profit and adjusted EBITDA in Q2.
• Margin Compression: Adjusted gross profit margins have declined due to external pressures, and there is a cautious outlook on maintaining margins amid rising costs.
• Seasonality in Cash Flow: Operating cash usage increased to EUR 28 million, compared to EUR 12 million in Q1 2025, primarily due to working capital seasonality and tax payments.

5. Notable Q&A Insights

• Demand Momentum: CEO Oliver Reichert emphasized strong demand and brand momentum, with over 90% full-price sell-through rates and a robust order book.
• Inventory Allocation: The company is strategically allocating inventory to optimize margins and brand strength, focusing on high-demand regions and channels.
• Gen Z Engagement: There is a noted increase in interest from Gen Z consumers, particularly in classic styles like the Boston silhouette, indicating a successful brand connection with younger demographics.
• Retail Growth: Retail is becoming increasingly important for DTC, with same-store sales growth in high single digits and a significant increase in retail's share of DTC revenue.

Overall, Birkenstock's Q1 2026 results reflect strong operational performance and growth potential, despite facing external challenges related to FX and tariffs. The company's strategic focus on expanding its retail presence and optimizing inventory allocation positions it well for future growth.