Birkenstock Holding plc (“BIRKENSTOCK”, the “Company” or “we”, NYSE: BIRK) today announces financial results for the second quarter of fiscal 2024, ended March 31, 2024. The Company reports record second quarter 2024 revenue and year-over-year growth of 23% on a constant currency basis, driven by continued strong consumer demand for its products across all segments, channels and categories.
As a result of the strength in the first half of fiscal 2024 and continued demand growth, BIRKENSTOCK is increasing its fiscal 2024 revenue growth guidance to 20% in constant currency, up from prior guidance of 17-18% and expects an Adjusted EBITDA margin in the range of 30.0-30.5%. The Company remains confident in its medium to long-term profitability objectives, including a gross profit margin of approximately 60% and an adjusted EBITDA margin over 30%.
Financial highlights for the second fiscal quarter 2024 ended March 31, 2024, (compared to the fiscal quarter ended March 31, 2023, unless otherwise stated):
- Revenue of EUR 481 million, an increase of 22% on a reported basis and 23% on a constant currency basis
- Strong double-digit revenue growth across all segments including revenue growth of 21% in the Americas, 21% in Europe and 42% in APMA on a constant currency basis
- DTC revenue growth of 32% and B2B revenue growth of 20% on a constant currency basis
- Gross profit margin of 56.3%, down 320 basis points from 59.5% primarily due to the temporary impact of production capacity expansion and planned, inflation-related wage adjustments and one-time bonuses for employees at the Company’s production facilities
- Net profit of EUR 72 million, up 45% year-over year from EUR 49 million; EPS of EUR 0.38, up 41% from EUR 0.27
- Adjusted Net profit of EUR 77 million, up 3%, and Adjusted EPS of EUR 0.41, flat year-over-year, due to higher depreciation and amortization from recent capital investments and IPO-related share increase
- Adjusted EBITDA of EUR 162 million, up 7%. Adjusted EBITDA margin of 33.7% was down 470 basis points from 38.4% a year ago with the decrease consisting of 320 basis points from the decline in Gross profit margin and the remainder split between incremental public company and administrative costs and investments in retail expansion
- Cash flows from operating activities of EUR 50 million, compared to EUR 57 million a year ago, reflecting an increase in trade receivables due to the growth in wholesale shipments (expected to be monetized in the third quarter)
Oliver Reichert, CEO of BIRKENSTOCK Group and Member of the Board of Directors of the Company: “Our results for the second quarter of 2024 once again demonstrate the strength of our business model and growing demand for our products. Given our engineered distribution model, demand continues to outpace supply in all segments, channels and categories. We see strong demand growth in the largely untapped white space areas we have identified across geographies, channels, categories and usage occasions. At the same time, we continue to see very strong growth in our established markets and products. Revenue from our five core silhouettes (most of which have been in market for close to 50 years) grew above 20%, in-line with our overall growth – proof of our limited exposure to fashion cycles and the longevity of our brand’s relevance. Given the strong results we have achieved in the first half of fiscal 2024, we are pleased to be raising our fiscal 2024 revenue growth guidance. We now expect revenue growth of 20% in constant currency, up from our prior guidance of 17-18%, continuing our 10-year trend of 20% compound annual growth in revenue. We expect our Adjusted EBITDA margin for fiscal 2024 to be in the range of 30-30.5%. We remain confident in our ability to deliver on our medium to long-term objectives for gross profit margin of approximately 60% and Adjusted EBITDA margin of over 30%.”
Fiscal second quarter 2024 results demonstrate continued strong consumer demand
BIRKENSTOCK reports record second quarter revenue of EUR 481 million, up 23% compared to fiscal second quarter 2023 on a constant currency basis, continuing its track record of strong double-digit revenue growth. Top-line growth was the result of strong consumer demand supported by new production capacity and category expansion. Revenue growth benefitted from increased sales of closed-toe silhouettes, which increased to over 25% of total revenue compared to the high-teens a year ago.
During the fiscal second quarter, BIRKENSTOCK saw strong growth across all segments and channels and continued to benefit from significant geographic expansion, increased usage occasions and distribution white space. The Company opened 6 new owned stores, bringing the total number of owned retail stores to 57.
DTC revenue grew 32% on a constant currency basis in fiscal second quarter 2024 compared to fiscal second quarter 2023, resulting in a DTC penetration rate of 24%, an increase of 200 basis points year over year. B2B revenue grew 20% year-over-year as wholesale demand, supported by strong sell-through, remains very strong. The second quarter is the seasonally highest B2B quarter due to sell-in for the Spring Summer seasons.
Broad-based double-digit revenue growth across all segments, channels and categories
In the Americas, strong consumer momentum and demand for the brand continued to drive record sales in the fiscal second quarter of 2024. In a relatively flat US consumer market, BIRKENSTOCK delivered constant currency revenue growth of 21% in the second quarter, supported by continued strength in both the DTC and B2B channels, with DTC penetration in the US increasing by 200 basis points to 29% compared to 27% in the prior year second quarter. Sell-through at strategic wholesale accounts grew by 33% as these retailers continue to allocate more shelf space to BIRKENSTOCK in response to strong consumer demand for additional styles and usage occasions. Revenue growth was driven by both strong volume growth and ASP growth as premium and closed-toe silhouette penetration continues to improve year-over-year.
In Europe, BIRKENSTOCK continues to see market-leading growth and share gains across the region. Europe grew 21% on a constant currency basis, driven by strong demand in both the DTC and B2B channels. Sell-through rates at key retail partners increased an average of 24%, with some up well over 50%. This strength is directly related to the Company’s transformation efforts in the region designed to increase shelf space and ASP through strategic, disciplined distribution that drives more premium-priced products. ASP grew at a double-digit rate in the quarter as demand for premium styles priced at over EUR 100 grew by over 60% and demand for closed toe shoes grew by over 80%. The spring and summer orderbook proved very strong and resulted in the highest quarterly deliveries ever for the region.
In the APMA region, BIRKENSTOCK achieved revenue growth of 42% on a constant currency basis for the fiscal second quarter 2024, due to strong, emergent consumer demand throughout the region. Revenue growth in the region was driven equally by volume and ASP growth. Following the overall company trend, demand for closed-toe shoes was especially strong, up nearly 100% from the prior year second quarter. The Company opened 5 new owned stores, including 4 in India and 1 in Japan, bringing the total in the APMA region to 20. Additionally, the Company added 11 new mono-brand partner stores.
Investing in production capacity to meet consumer demand and expand footprint
BIRKENSTOCK continues to invest in increased production capacity to better meet the increasing consumer demand for BIRKENSTOCK products and expand in white-space markets. The Company invested EUR 17 million in capital expenditures in the quarter, bringing the total year-to-date to EUR 35 million. As previously communicated, the ongoing capacity expansion, including the new Pasewalk production facility provides the Company with the bandwidth and flexibility to expand its footprint into underpenetrated segments and categories. The Company estimates the temporary impact of this investment in reduced gross margin and Adjusted EBITDA margin by 220 basis points in the second quarter.
BIRKENSTOCK continues to have a strong balance sheet with cash and cash equivalents of EUR 176 million and net leverage of 2.6x as of March 31, 2024. On May 28, 2024, the Company announced its subsidiaries’ refinancing of the existing term loans and the replacement of the undrawn ABL facility with a new revolving credit facility, including the voluntary early repayment of approximately USD 50 million. The closing of the transaction and the associated actual repayment of the existing financing is expected to take place within the next 3 months. The Company remains committed to further deleveraging its balance sheet with free cash flow.
Financial outlook
Given the strong first half of 2024 and continued demand growth, the Company is raising its fiscal 2024 guidance. The Company now expects fiscal 2024 reported revenue of EUR 1.77-1.78 billion, reflecting overall revenue growth of approximately 19% on a reported basis and 20% on a constant currency basis, up from its prior guidance of EUR 1.74-1.76 billion, growth of 17-18% (in constant currency). Adjusted EBITDA is expected EUR 535-545 million, up from prior guidance of EUR 520-530 million, resulting in an Adjusted EBITDA margin of 30-30.5%. The Company is reiterating its medium to long-term profitability objectives for gross profit margin of approximately 60% and adjusted EBITDA margin over 30%.
Conference call information
BIRKENSTOCK hosted a call to discuss fiscal second quarter 2024 results on May 30, 2024, at 8:00 a.m. Eastern Time (1:00 p.m. Greenwich Mean Time). A webcast of the call will be accessible on the Company’s Investor Relations website at https://www.birkenstock-holding.com. To join the phone line, please dial 1-888-506-0062 (US) or 1-973-528-0011 (International). The access code for the call is 291165. To access the phone line replay after the conclusion of the call, please dial 1-877-481-4010 (US) or 1-919-882-2331 (International). The access code for the replay is 50256. An archive of the webcast will also be available on BIRKENSTOCK’s Investor Relations website.
ABOUT BIRKENSTOCK
Birkenstock Holding plc is the ultimate parent Company of Birkenstock Group B.V. & Co. KG and its subsidiaries (the “Birkenstock Group”). BIRKENSTOCK is a global brand which embraces all consumers regardless of geography, gender, age and income and which is committed to a clear purpose – encouraging proper foot health. Deeply rooted in studies of the biomechanics of the human foot and backed by a family tradition of shoemaking that can be traced back to 1774, BIRKENSTOCK is a timeless «super brand» with a brand universe that transcends product categories and ranges from entry-level to luxury price points while addressing the growing need for a conscious and active lifestyle. Function, quality and tradition are the core values of the Zeitgeist brand which features products in the footwear, sleep systems and natural cosmetics categories. BIRKENSTOCK is the inventor of the footbed and has shaped the principle of walking as intended by nature (“Naturgewolltes Gehen”).