Birkenstock shares fell 10 percent in pre-market trading on Thursday morning as third-quarter sales and earnings came in just below analyst estimates.
Revenue increased 19 percent in the third quarter to 565 million euros, up from 473 million in the same time last year. Net income was 74.6 million euros, or 40 cents a share, for the quarter, up from 63.1 million euros, or 35 cents a share, in the year-earlier period. Analyst had expected revenues of 566 million euros, and earnings of 51 cents per share.
The company, which touted record results, said top-line growth was the result of strong consumer demand supported by new production capacity and category expansion. Revenue growth benefited from increased sales of closed-toe silhouettes, which grew at over twice the brand average and closed-toe penetration increased 400 basis points year-over-year, the company added.
During the quarter, Birkenstock said its business-to-business revenue grew 23 percent year-over-year in Q3 as wholesale demand, supported by strong sell-through, remains very high. The company noted that over 90 percent of its B2B growth came from within existing doors as key retail partners continue to expand the breadth and depth of their Birkenstock offerings to meet growing consumer demand. Direct-to-consumer revenue grew 14 percent on a constant currency basis in the quarter resulting in a DTC penetration rate of 40 percent.
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By region, momentum in the Americas continued. Birkenstock delivered constant currency revenue growth of 15 percent in the third quarter, supported by continued growth in both the B2B and DTC channels. B2B growth was driven by over 25 percent growth in key department store partners, many of whom drove meaningful brand exposure with 250-year anniversary in-store highlight executions and allocated increased space in support of the initiatives.
In Europe, Birkenstock continues to see gains across the region. Revenue in Europe grew 19 percent on a constant currency basis, driven by strong demand in both the B2B and DTC channels. Better alignment with key retail partners led to increased orders and better sell-through performance throughout the region, with particular strength in France and Benelux, where distributor partners were recently phased out and replaced by healthy direct distribution.
In the APMA region, Birkenstock said it achieved revenue growth of 41 percent on a constant currency basis in the period, due to strong, emergent consumer demand throughout the region. The company opened 4 new owned stores, including 3 in India and 1 in Japan, bringing the total in the APMA region to 23. Additionally, the company added 10 new mono-brand partner stores.
“Our results for the third quarter of 2024 once again demonstrate the strength of our business model and our ability to achieve the growth and profitability goals we set out for you during our IPO and recent secondary offering roadshow,” Oliver Reichert, chief executive officer of Birkenstock Group, said in a statement. “We achieved the highest quarterly revenue in our history, driven by unbreakable and growing demand across all segments, channels and categories.”
“As a ‘superbrand’ we are gaining the attention of our key retail partners and their consumers, who are becoming increasingly selective and more intentional in their spending,” Reichert added. “They are also looking for more physical touchpoints with the products. Our Q3 results demonstrate our ability to meet consumer demand and align with shopping patterns while maintaining our disciplined engineered distribution approach, which remains our guiding principle.”
Looking ahead, the company confirms its fiscal 2024 guidance for revenue growth of approximately 19 percent with revenues between 1.77 and 1.78 billion euros on a reported basis and an adjusted EBITDA margin of 30 percent to 30.5 percent.
