Written by: Susannah Streeter | Hargreaves Lansdown
- Birkenstock beats market expectations for first quarter revenue, which rose 22%
- It benefited from strong full price sales and rising global demand especially in the US
- However, adjusted underlying margins were down to 26.9%, compared with 29.1% a year earlier
- Net losses have narrowed to 7.12 million euros for the quarter compared to 9.19 million euros a year earlier.
Birkenstock has put its better foot forward with these results, with revenue leaping upwards and beating expectations. Fashion trends for casual footwear have helped keep full price sales ticking up with the Barbie bounce continuing to help the company make strides forward, particularly in the US market.
Crucially, it wasn’t forced into big discounts with the fashionistas still flocking to its iconic cork-soled sandals. Demand still proved buoyant even with higher price tickets slapped on the shoes. However, margins have still been squeezed due to rising input costs. Keeping the brand front and centre on the fashion pages doesn’t come cheap and there is a risk that once its movie-star status wanes, stylish shoppers could move onto the next big thing. Branching out into other markets is also an expensive business and there will be some concern about expansion in China for example, where there is ongoing consumer weakness and where it may be harder to replicate buoyant demand among fashion fans.
For now, the Birkenstock style is proving to be a fashion staple and even if this diminishes, comfort will always be valued by other core customers, which should keep offering resilience even if fashion fans prove more fickle.
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