Ethan SwopeAllbirds (BIRD) is out, Birkenstock (NYSE:BIRK) is in. Though investors have a bad taste in their mouths from the near-failure of the San Francisco-based wool shoemaker, Birkenstock is in another category entirely. German-made and a bastion of quality and endurance for over 200 years, Birkenstock went public at the tail end of last year at $46 per share. After initially falling to the low $40s, the stock is rallying again this year in sympathy with the broader markets - and in my view, it's w ...

Key PointsBirkenstock Holdings stock is stabilizing after a sharp drop after the company's initial earnings report. The company expects margin pressure in 2024 as it expands its retail footprint, but analysts seem to be looking at the upside. BIRK stock has only been trading since October, so investors may not have a clear picture of how to interpret the price action.  5 stocks we like better than BirkenstockShares of Birkenstock Holdings plc NYSE: BIRK made a decent recovery after falling more than 10% fro ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Birkenstock warned its annual earnings will face pressure as it focuses on global expansion, disappointing investors in its first results since IPOing and causing shares to drop by as much as 14%. Executives at the sandal maker revealed plans to increase prices on its products this year, acknowledging they had "underestimated the inflation effects" in fiscal 2023. For 2024, Birkenstock anticipates an underlying earnings margin of approximately 30%, down 2.4 percentage points from 2023, citing a "modest head ...

(146) (85) 15 (4) (26) (1) (28) (28) BIRKENSTOCK September 30, September 30, 20 27 39 83 69 BALANCE SHEET IN € MILLION 2022 2023 | --- | --- | --- | --- | --- | |--------|------------|-----------------------------------------|-------|-------| | | | | | | | | | Goodwill | 1,674 | 1,594 | | | | Intangible assets (other than goodwill) | 1,815 | 1,706 | | | NON-CURREM | Property, plant and equipment | 205 | 286 | | | | Other assets | 134 | 161 | | | | Total non-current assets | 3,829 | 3,747 | | ASSETS | | Inve ...

Financial Data and Key Metrics Changes - The company achieved remarkable revenue growth of 20% in fiscal 2023, with fourth-quarter growth of 22% [14][116] - Gross profit margin for fiscal 2023 was 62.1%, up 180 basis points compared to fiscal 2022, although it slightly decreased by 20 basis points when adjusting for prior year effects [14][15] - Adjusted EBITDA for fiscal 2023 was EUR 483 million, up 11% compared to fiscal 2022, with an adjusted EBITDA margin of 32.4% [18][117] - Pro forma fully diluted adjusted earnings per share for fiscal 2023 were EUR 1.10, representing growth of 19% [20] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) revenues grew by 26% in fiscal 2023, significantly outperforming B2B growth [32] - In the fourth quarter, revenues increased by 40%, primarily driven by a strong B2B quarter with 73% growth [33] - DTC revenue growth in Europe was 24%, significantly outperforming B2B, which saw 15% growth [46][44] Market Data and Key Metrics Changes - The Americas region achieved a revenue growth of 20% in fiscal 2023, making it the largest contributor to overall revenue growth [119] - The APMA segment showed the highest growth rates of all segments in fiscal 2023 with 27% [49] - In Europe, fiscal 2023 revenues increased by 18%, with DTC penetration reaching 40% [42][117] Company Strategy and Development Direction - The company aims to provide guidance on a full-year basis rather than quarterly, reflecting a long-term success strategy [27] - The company plans to invest approximately EUR 150 million in capital expenditures in fiscal 2024, primarily for production capacity expansion and global retail store expansion [30] - The company is focused on maintaining scarcity in the market to drive demand, with a disciplined approach to distribution [36][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong consumer demand for the brand and a unique position in the market [116][100] - The company anticipates modest headwinds to adjusted EBITDA margins in fiscal 2024 due to planned ramp-up costs and initial under-absorption [29] - Management noted that inflationary pressures were underestimated, impacting margins, but they remain confident in their pricing power [80][105] Other Important Information - The company achieved cash flow from operating activities of EUR 359 million, up 53% compared to the prior year [23] - The company has been actively deleveraging post-IPO, reducing leverage to below 2.5 [26] - The new factory in Pasewalk is expected to significantly increase production capacity, with benefits anticipated in fiscal 2024 and beyond [28][104] Q&A Session Summary Question: Clarification on fiscal 2024 revenue growth expectations - Management indicated that the fourth-quarter growth rate of 22% is a good indicator for early fiscal 2024 revenue growth, with a full-year guidance of 17% to 18% [12][27] Question: Insights on the new factory's impact on unit volume growth - Management confirmed that the new factory will enhance distribution and capacity, with benefits expected to materialize later in fiscal 2024 [12][28] Question: Discussion on land grabs in the U.S. market - Management explained that "land grabs" refer to aggressively capturing market share, particularly in challenging consumer spending environments [36] Question: Changes in U.S. consumer demand - Management noted that despite challenges, the demand for their products remains strong, with intentional purchasing patterns observed [64][83] Question: Regional growth expectations for fiscal 2024 - Management indicated that Europe and the Americas are growing at similar rates, while APMA is experiencing higher growth due to increased DTC penetration [79] Question: Insights on inventory levels and SKU performance - Management reported a decrease in inventory compared to revenue, with over 75% of inventory already allocated to customers [98]

EX-99.1 2 birk_ex991.htm EX-99.1 EXHIBIT 99.1 MEDIA CONTACT Birkenstock Holding plc ir@birkenstock-holding.com | --- | --- | --- | |-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...

Financial Performance - Total sales for the reportable segments reached €461.775 million, with Americas contributing €223.110 million, Europe €191.226 million, and APMA €47.439 million[32]. - Adjusted EBITDA for the total reportable segments was €152.742 million, with a breakdown of €78.767 million from Americas, €61.649 million from Europe, and €12.326 million from APMA[32]. - The company reported a profit before tax of €(13.777) million, reflecting operational challenges and transaction-related costs[32]. - Cost of sales for the year ended September 30, 2023, was €566.1 million, up from €493.0 million in the previous year[138]. - Personnel costs rose to €153.9 million for the year ended September 30, 2023, compared to €119.3 million in the prior year[138]. - Shipping and handling costs for the fiscal year ended September 30, 2023, amounted to €155.2 million, up from €101.1 million in the previous fiscal year[89]. Acquisitions and Goodwill - The acquisition of the predecessor resulted in a total consideration transferred of €3.751 billion, with identifiable net assets valued at €2.223 billion, leading to goodwill of €1.528 billion[34]. - The company anticipates future growth potential, which is reflected in the goodwill recognized from acquisitions, primarily due to expected future growth and an assembled workforce[37]. - As of September 30, 2023, total goodwill is €1,593,917, a decrease from €1,674,293 in September 30, 2022, reflecting a foreign currency translation impact of €(80,376)[42]. Customer and Revenue Diversification - The company did not have any customers contributing 10% or more to total revenue during the reporting period, indicating a diversified customer base[33]. - As of September 30, 2023, the company had no concentration of receivables exceeding 10% with any single customer, minimizing credit risk[37]. - For the fiscal year ended September 30, 2023, sales through third parties in the B2B channel accounted for 60% of total revenues[81]. Inventory and Receivables - Total inventories as of September 30, 2023, amount to €595,092, an increase from €535,605 in September 30, 2022[48]. - Trade receivables increased to €91,694 as of September 30, 2023, compared to €64,604 in the previous year[49]. Capital Expenditures and Investments - The company invested in a new production facility in Pasewalk, Germany, which commenced operations in September 2023[46]. - The average CapEx investments for 2023-2027 are projected at €39,879, with significant investments planned for the Americas region[43]. Personnel and Operating Expenses - Personnel costs surged to €113,905 thousand in the year ended September 30, 2023, compared to €41,267 thousand in the previous year, an increase of 175.5%[66]. - The company has experienced a significant increase in general administration expenses, primarily due to share-based compensation related to IFRS 2, totaling €171.4 million for the fiscal year ended September 30, 2023[89]. Risks and Compliance - The company is exposed to liquidity risk but manages it by ensuring sufficient liquidity for operations and capital expenditures through operating cash flows and short-term borrowings[38]. - The company faces risks from potential disputes with third-party sales and distribution channels that could damage its brand and reputation[81]. - The company is subject to various privacy laws and regulations, which could lead to additional costs and operational impacts if compliance is not maintained[112]. - The company faces risks related to compliance with security standards for payment card information, which could lead to significant fines and impact its ability to accept payment cards[114]. Debt and Financial Obligations - The company reported a term loan in EUR valued at €375 million and a term loan in USD valued at $781.3 million as of September 30, 2023[102]. - The company has a vendor loan of €299.6 million and senior notes of €428.5 million as of September 30, 2023[102]. - As of November 30, 2023, the company had total indebtedness of €1,306.2 million, primarily from Senior Term Facilities, ABL Facility, Notes, and Vendor Loan[166]. Market and Economic Conditions - The company operates in various international markets, facing risks such as political instability, trade disputes, and economic fluctuations, which could materially impact its operations and financial results[121]. - The company is subject to evolving government regulations regarding internet and e-commerce, which could affect its operations and compliance costs[117]. - The company may face increased costs and operational disruptions due to climate change and extreme weather conditions affecting its supply chain[183]. Internal Controls and Governance - The company has identified two material weaknesses in internal control over financial reporting, one of which has been remediated as of September 30, 2023, while the second remains unremediated[210][211]. - The company is subject to Section 404 of the Sarbanes-Oxley Act, requiring a report on internal control effectiveness in its second annual report on Form 20-F[211]. Strategic Initiatives - The company has a balanced shift towards direct-to-consumer (DTC) channels, promoting direct relationships and capturing real-time customer data[220]. - The company operates a complementary multi-channel distribution strategy, optimizing growth and profitability through both DTC and B2B channels[220].