Birkenstock Has A Tariff Advantage Going In Q2: Analyst

Telsey Advisory Group analyst Dana Telsey reiterated the Outperform rating on Birkenstock Holding BIRK with a price forecast of $70.

The company is set to report its second-quarter results on May 15, before the market opens.

Telsey projects total revenue to grow 17.7% year-over-year to 566.4 million euros, slightly trailing the consensus estimate of 568.2 million euros.

The analyst sees a 30-basis-point expansion in gross margin to 56.6%, narrowly topping the consensus forecast of 56.5%, which implies a 20-basis-point improvement.

Also Read: Birkenstock's US Expansion Has Significant Upside With Fewer Than 10 Stores Today, Analyst Says

Additionally, Telsey analyst pointed out that Birkenstock holds a relative advantage in terms of tariff exposure, as the company manufactures in Germany and only derives 52% of its fiscal 2024 revenue from the Americas, limiting its vulnerability compared to peers in the footwear industry.

The analyst also anticipates that operating expenses will remain flat year-over-year at 27.6%, which is slightly below the consensus figure of 27.7%, reflecting a minor 10-basis-point deleverage.

In aggregate, Telsey forecasts a 180-basis-point improvement in pretax profit margin to 24.8%, which comes in just under the Street's expectation of a 230-basis-point rise to 25.3%.

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For the fiscal second quarter, Telsey maintains an adjusted EBITDA estimate of 193.3 million euros, up from 162.3 million euros in the prior-year quarter and closely aligned with the consensus view of €192.9 million.

This projection corresponds to an adjusted EBITDA margin of 34.1%.

Telsey noted that the brand is maintaining strong demand across multiple regions and distribution channels, continuing to execute well despite ongoing global macroeconomic challenges.

The analyst also highlighted the firm's successful efforts in expanding its closed-toe shoe segment across different markets while also driving average selling price growth.

As consumers become more selective with their spending, Telsey sees Birkenstock as a brand well-positioned to thrive due to its premium lifestyle appeal and distinct focus on comfort, a value proposition that's difficult for competitors to replicate.

Price Action: BIRK shares are trading lower by 0.36% to $52.28 at the last check on Friday.

Read Next:

• Consumers Go Discount As Tariff Pressures Mount, Warns Analyst

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