((Automatic translation by Reuters, see disclaimer https://bit.ly/rtrsauto))
(Updated operations in paragraph 1 and added analysts’ commentary in paragraphs 5 and 6)
Birkenstock
BIRK.N
failed to meet quarterly profit expectations on Thursday as the German sand maker squeezed margins due to global expansion and increased production, sending its shares down 12% in early market trade.
The company has opened more stores in new markets such as India and Japan due to strong global demand and to increase sales in its own channels, where products are usually sold at full price.
Birkenstock is also building additional production capacity and strengthening existing facilities, such as Pasewalk, Germany, to ensure adequate supply of the fashionable cork-based sandals and closed-toe shoes.
As a result, gross profit margin fell 220 basis points to 59.5% in the third quarter.
“Companies are investing for future growth so they have set up various factories and facilities to increase production,” said Simeon Siegel, an analyst at BMO Capital Markets.
He said that the market dynamics suggested that the recent stock increase was slightly more than expected and not the health of the brand.
The company’s shares have gained 24% in the year to date.
Birkenstock reported adjusted third quarter earnings of 0.49 euros per share, missing LSEG estimates of 0.52 euros.
The company’s revenue grew 15% in America and 19% in Europe. However, revenue growth slowed compared to the second quarter, reflecting some consumer caution.
Birkenstock has increased its market share at retailers such as Nordstrom and Foot Locker as companies stock their shelves with the best-performing and most popular brands, including On.
FOR.N
sponsored by Roger Federer, and Hoka
DECK.N
the Deckers.
Birkenstock’s revenue rose 19.3% to €564.8 million ($626.76 million), slightly beating estimates of €565.2 million.
The company maintained its baseline sales and earnings guidance.
(1 $ = 0.9011 euro)
2024-08-29 11:48:22
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