Feb 12 (Reuters) - Birkenstock missed Wall Street expectations for first-quarter revenue on Thursday, as cautious consumers and uneven demand in some regions weighed on overall sales. The company
Birkenstock Faces Tariff Challenges but Maintains Revenue Outlook
Birkenstock's Financial Outlook and Challenges
By Angela Christy M
Impact of Tariffs on Profit Margins
Feb 12 (Reuters) - Birkenstock warned of tariff pressures in the first half of the year even as the German sandal maker stuck to its annual revenue and profit forecasts on Thursday, on the back of strong holiday demand.
Pricing Strategy and Consumer Trends
Its shares fell about 4% in early trading after company executives warned that tariff impact would continue to weigh on results in the coming quarters, with the effect likely to taper off by the fourth quarter.
Global Expansion Plans
The company, which produces 95% of its footwear in Germany, has been grappling with higher tariff costs like many global firms that make discretionary products.
Adjusted gross profit margin was 57.4% in the first quarter, down from 60.3% last year, hurt by a weaker dollar and a 130-basis-point hit from U.S. tariffs.
"Tariffs remain a pressure point for most, and Birkenstock is no different. However, on an underlying basis, their ability to tactfully raise price(s) and further ramping of their new facilities should offer a buffer," said Simeon Siegel, analyst at Guggenheim Securities.
PRICING POWER
Birkenstock, known for its pricey sandals and clogs, has, however, benefited from its strategy to hike prices and sell its products at full price, limiting discounts.
"We are seeing customers moving up in terms of price points to more elevated styles, and not downwards," CEO Oliver Reichert said in a post-earnings call.
Birkenstock reiterated its annual revenue growth target of 13% to 15%, against analysts' estimate of growth of 11.6%, according to data compiled by LSEG. Its annual profit forecast of 1.90 euros to 2.05 euros per share was also reiterated.
The footwear company plans to launch 40 more stores globally in 2026 as it seeks to expand business and strengthen its strategy of selling directly to consumers.
It reported first-quarter revenue of 401.9 million euros ($477.58 million), confirming preliminary numbers from last month. Analysts had estimated revenue of 402.1 million euros.
Birkenstock posted profit of 0.27 euros per share for the reported quarter, narrowly beating analysts' estimate of 0.26 euros per share.
($1 = 0.8415 euros)
(Reporting by Angela Christy in Bengaluru and Helen Reid in London; Editing by Pooja Desai)
