Birkenstock Holding plc Q1 FY2026 earnings call

• Birkenstock believes it is a purpose-driven brand with a large growth runway, aiming for 13%-15% top line growth in constant currency over the next three years and 30% plus EBITDA margins.
• Americas, the largest segment, continues to grow double-digit with still substantial growth room. EMEA, the highest margin segment, has growth potential in underpenetrated markets. APAC has the largest long-term growth opportunity with high margins and underpenetration.
• B2B growth is outpacing B2C, and the company is investing in own retail to capture in-person demand. Online, which accounted for 80% of revenue last year, is being transformed to convert more brand fan value.
• In the first quarter, revenues were €402 million, up 18% in constant currency. B2B was up 24% in constant currency, DTC was up 12% in constant currency. Closed-toe share of revenue reached close to 60% during the quarter. Strong sales in clogs, including the Boston silhouette celebrating its 50th birthday, were seen.

For the fiscal first quarter ended 12/31/2025, Birkenstock Holding plc generated revenues of €402 million. On a reported basis, revenue was up 11%, and in constant currency, it was up 18%. The Americas segment was up 14% in constant currency, EMEA was up 17% in constant currency, and APAC was up 37% in constant currency. By channel, B2B was up 24% in constant currency, and D2C sustained double-digit growth, up 12% in constant currency. Gross profit margin for the first quarter was 55.7%, down 460 basis points year over year. Adjusted gross profit margin, including the reversal of distributor markup, was 57.4%, down 290 basis points. Adjusted EBITDA in the first quarter was €106 million, up 4% year over year, with an adjusted EBITDA margin of 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%.

• Expect second quarter revenue growth in constant currency within annual guidance of 13%-15% but with significant FX and tariff headwinds. FX expected to be a strong headwind in Q2. Full-year constant currency revenue growth guidance is 13%-15%, but FX impact is expected to result in revenue growth of 10%-12% to €2.30-€2.35 billion.
• Adjusted gross margin expected to be 57%-57.5% in fiscal 2026, inclusive of FX and tariff pressure. Adjusted EBITDA expected to be at least €700 million, implying an adjusted EBITDA margin of 30%-30.5% inclusive of FX and tariff pressure. Excluding these impacts, forecasted adjusted EBITDA margin would be 32%-32.5%.
• Adjusted EPS expected to be €1.90-€2.05 including FX pressure. Intend to repurchase shares for total consideration of €200 million during fiscal 2026. CapEx expected to be in the range of €110-€130 million. Net leverage target for the end of fiscal 2026 is 1.3-1.4 times excluding the impact of additional share repurchases.

The information provided during this call includes forward-looking statements subject to the safe harbor provisions of federal securities laws. These statements are subject to various risks, uncertainties, and assumptions which could cause actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in the morning's press release as well as in filings with the SEC, which can be found on the website.

Q: Could you break down the drivers supporting your confidence in durable demand momentum for the brand globally? Maybe touch on current sell-through rates, full price demand indications from wholesale partners, and new customer acquisition? And near term, have you seen any change in brand momentum so far in the second quarter?

A: As shared, there's a very long runway for growth with below 5% penetration in some areas. Full price realization across all channels is over 90%. Order book for '26 and beyond remains very strong. Allocate partners to maintain scarcity with 20%-30% unfulfilled wholesale demand. New customer acquisition primarily from B2B channels, with membership program up over 20% year over year. See momentum continuing in line with 13%-15% revenue growth in constant currency guidance.

Q: Recognizing you guys are in this enviable position where you do supply less than demand, how are you deciding where to allocate your inventory across channels and geographies just to optimize the brand strength reaching new customers, and then, where your EBITDA dollars per pair come in? And then, Ivica, just recognizing tariffs and inflation, what were inventory up in units rather than in dollars?

A: Decide to allocate product in most profitable channels and regions to ensure brand balance. Channel drives margin more than geography. Ivica states they are not disclosing detailed inventory unit information as they haven't in the past and don't intend to in the future.

Q: Your first quarter growth came in at 18% in constant currency. That is nicely ahead of the 13%-15% guide for the year. Can you talk about where is that slowdown for the rest of the year coming from? And are you just being conservative? Just some more color on that would be great. And just as a follow-up to Ivica, can you help us with seasonal progression of how we should think about margins across the quarters for the rest of the year, just considering the outlook for FX, the tariff timing, capacity absorption and some other items?

A: Q1 is the smallest quarter in terms of revenue, so it doesn't carry the same weight for the remainder of the year. FX impact will be heaviest in Q1 and Q2, with Q1 headwind 670 basis points and Q2 around 700 basis points. Incremental tariff impact will have more pronounced impacts in Q1 to Q3. Expect similar margin pressure as Q1 in Q2 2026. Will complete absorption, especially of Pasewalk facility by Q3 2026.

Q: I just wanted to ask a little bit on maybe on the OpEx or the SG&A. I think the guidance for the rest of the year flattens out from some nice leverage in the first quarter a little bit. Maybe you could just talk about why there is I am curious if we are going to be going through the rest of the year with double digit growth, what is there a chance to find some more leverage on SG&A? Or how should we think about SG&A at a double digit growth pace even if it slows from first quarter? And then I also just wanted to ask as we head into the spring and summer, Oliver, maybe just a quick thought on some of the products that are the ones that the retailers are the most excited about, maybe something that we can Google or watch your social media trends? What are the big products that we are going to see for the summertime here as we get into the main season?

A: Tariff and FX drag impact margin by 200 basis points for fiscal 2026. Need to balance expanding margin with reinvesting into business for sustainable growth. Accelerating store growth to drive more retail as part of D2C mix for potential four-wall operating leverage. Globally, there's strong momentum in elevated styles in both closed toe and open toe sandal, with strong open toe in elevated styles in every price segment, including Gizeh thong sandal and Naples Wrap closed-toe silhouette.

Q: Was hoping we could touch on the balance sheet and your uses of cash. With the stock trading where it is, I was wondering if you were thinking about being more in the open market with your €200 million buyback rather than waiting for private equity. And then wondering if you could talk about your willingness or the insiders' willingness to buy stock at current levels?

A: The stock is too cheap and doesn't reflect fundamental value. Intend to execute the €200 million share repurchase in fiscal 2026 subject to market conditions. There has been a blackout period for insiders due to various reasons like fiscal quarter end, acquisitions, and secondary transactions, but it's not a lack of desire to buy at current prices.

Q: Good morning. Thank you very much for taking my question. I want to ask about your own stores, which are becoming increasingly important into your DTC business. I think, Oliver, you mentioned that last year, e-commerce was 80% of the mix, 20% stores. Do some rough math about, with regards to revenue per store? Can you provide us some store profitability metrics? What is your same-store sales growth? And how are the new doors performing? And how long are they taking to ramp up to full profitability?

A: Own retail is becoming more important. Retail share of D2C revenue was up about 400 basis points year over year in fiscal 2025 and similar in Q1 2026. Retail is the fastest growing segment, up over 50% year over year in constant currency in the quarter. Same-store sales growth was high single digits in Q1 2026. CapEx per store is typically €400,000-€800,000, and stores are expected to return that cash within 12-18 months.

Q: Oliver, at the CMD, you indicated, right, that you expect to grow volume about 10% per annum over the next three years, which obviously is close to doubling or an acceleration versus, you know, pre-IPO. Sorry to come back on the wholesale and so on, but, and I know you provided over the years qualitative comments, but can you share with us, we do not need the exact figure, but the rough end of the number of doors and the number of the accounts in the U.S. and Europe kind of since IPO, how it has trended? And then related to that, you know, if you could give us a rough breakdown or at least some indication of, you know, your distribution maybe just in the U.S. by channel between, let us say, you know, department store, mass merchant, family channels, whatever, that would be helpful to understand your wholesale strategy.

A: In the U.S., demand is going to physical in-person shopping, favoring B2B channel. Have 15 stores in the U.S. Sell-throughs in the U.S. with top 10 strategic partners are above 30%. Americas has about 10,000 B2B doors currently, EMEA has about 9,000. In the U.S., there are about 600 potential B2B doors, and in EMEA, around 1,400 potential new doors, targeted to expansionary categories like youth and sports specialty.

Q: Thank you. Good morning. Just following up on that point, as your customer base shifts more toward the newly acquired Gen Z customers, is there any deeper pruning you need to do, adding and subtracting, to make sure your B2B partner portfolio can successfully target this cohort?

A: Gen Z is attracted by the heritage, purpose of the brand, and unique easy-on and easy-off of the Boston silhouette. Don't have specific product units for this target group. Build long-term relationships with these customers, who typically end up having multiple pairs. Continue to be in contact with them and expand usage occasions for the brand.