Birkenstock sandals may be more expensive than ever, and the popular shoes are popular with shoppers, too. But despite all that, the company says it still expects lower profits next year.
The German shoemaker, which became a publicly traded company in October, reported its first quarterly results after its IPO on Thursday. Despite the strong sales, the company gave a cautious outlook for 2024, saying it expects “modest headwinds impacting margins.”
Birkenstock shares fell nearly 8.5% following the news on Thursday.
The company said it expects a full-year adjusted earnings margin of about 30% under pressure from “planned incremental costs” compared to 32% in 2023.
It also expects revenue to grow 17% to 18% in 2024, compared to last year, as the company expands into more markets and invests in more retail stores and its distribution system.
The company reported a 20% increase in sales for 2023 compared to last year, driven by a 6% increase in unit sales and a 14% increase in average selling price.
“Their sales did well this quarter. Their full-year sales guidance also came in above consensus for next year. The biggest thing that caused the stock to decline was “It’s their comment about the margins.”
“They have really strong profitability that was really eating into them during the IPO and after the IPO. For this year, the margins are down largely due to inflation, and they’ve been guided a little bit more conservatively.”
Due to the constant demand for the brand, she said the company did not have to resort to any major discounting during the holiday season. Investments in distribution centers this year represent a “near-term headwind” necessary for future growth, Gilmartin said.
“We expect margins to accelerate again as additional capacity comes online,” she said. “Overall, the brand continues to be healthy with strong sales growth in the fourth quarter and encouraging Q1 trends so far. The company has really high-quality products. Once you wear a Birkenstock shoe, you’ll realize that the footbed it has makes it really comfortable.”
Birkenstock sandals, which cost from about $50 for a low-priced waterproof foam version to upwards of $200 for their signature luxury leather styles, are being embraced by older consumers seeking comfort and younger shoppers inspired by the market, said Beth Goldstein, a market footwear analyst. TikTok. Circana research company.
“It’s a premium product, but compared to other luxury goods, Birkenstock is fairly accessible,” she said.
Birkenstocks saw a resurgence 10 years ago, driven by collaborations with high-end fashion brands and novelties such as fur-lined versions, she said. Then the pandemic hit.
“The comfort of these sandals coincided with and accelerated the trend of relaxed, casual clothing that was already prevalent before the pandemic. “Birkenstock was at the forefront of this idea,” Goldstein said. It is possible that he will remain there for the time being.
“There is no evidence that consumers are moving towards more elegant styles. Casual comfort remains important to consumers,” she said.