Birkenstock Holding Plc Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Start: Fiscal 2025 began strongly with 19% revenue growth, above the 15%-17% target. Driven by double-digit volume growth and mid-single digit ASP growth. B2B grew 30% and DTC grew 10%. Membership base reached 8.8 million, up nearly 30% Y/Y.
• Product Expansion: Closed-toe silhouettes grew over twice the group rate, accounting for over half of Q1 revenue. APAC business grew 47%. Opened 4 new owned retail stores globally.
• Channel Performance: Wholesale grew 30% Y/Y with over 90% growth from existing doors. DTC grew 10%, and the membership base expanded.

Segment Performance

• Americas: Revenue up 16% compared to Q1 2024. Closed-toe share of business nearly two-thirds. B2B was strong with high-demand styles selling out. Americas DTC strengthened late in the quarter. Opened Boston, Newbury Street store. Revenue contribution significant.
• EMEA: Delivered 17% growth. Broad-based across countries. Closed-toe, including clogs, grew over 2.5 times faster than sandals. Shoes became the number two category. Opened new store in Amsterdam.
• APAC: Grew 47%, 2.5 times the pace of the overall business. Opened 4 new owned retail stores. Greater China made up approximately 30% of APAC revenue.

Guidance

• Revenue: Reiterates constant currency revenue growth of 15% to 17% for 2025.
• Gross Margin: Expected to improve year-over-year as production facility utilization increases towards the 60% target.
• EBITDA Margin: Sees adjusted EBITDA margin in the range of 30.8% to 31.3%, an increase of up to 50 basis points from 2024.
• CapEx: Expected in the range of €80 million. Net leverage expected to be approximately 1.5 times by year end.

Risks

• Macroeconomic Uncertainty: Inflation, interest rates, currency movements, and potential tariffs pose uncertainties to the global economy and consumer demand.
• Channel Mix Impact: B2B has a lower gross margin but slightly higher EBITDA margin, while DTC has higher selling and distribution expenses, which can impact overall margins.

Question and Answer

Q: Why aren't you raising the guidance for the full year given the strong beat in Q1?

A: Q1 is the smallest quarter of the year, with over 80% of the year ahead. There is macroeconomic uncertainty including inflation, interest rates, currency movement, and tariffs. The D2C business in the second half is less foreseeable.

Q: Drivers of EBITDA margin expansion in Q1?

A: The shift in channels; B2B has a lower gross margin but slightly higher EBITDA margin compared to DTC, and DTC has higher selling and distribution expenses.

Q: Perspective on APAC distribution?

A: Expanding in a mixed model with mono-brand stores and own fleet. Focusing on brand building and opening new stores across regions, with strong growth in the region.