Birkenstock's Q2 Revenue Rises 22%, Beats Expectations With Strong Global Demand: Details

Zinger Key Points
  • Birkenstock's Q2 FY24 revenue grew 22%, beating expectations, driven by strong consumer demand across all segments.
  • Birkenstock raised FY24 revenue and adjusted EBITDA guidance.

Birkenstock Holding plc BIRK shares are trading higher after the company reported the second quarter fiscal 2024 results.

Revenue grew 22% on a reported basis (+23% Y/Y on a constant currency basis) EUR 481 million, led by continued strong consumer demand for its products across all segments, channels, and categories.

Adjusted EPS stood at EUR 0.41, flat Y/Y, in the quarter.

In USD, revenue of $522.657 million beat the street view of $506.26 million, and adjusted EPS of $0.45 exceeded the consensus of $0.40.

The company witnessed strong revenue growth across all segments, with an increase of 21% Y/Y in the Americas, 42% Y/Y in APMA and, 21% Y/Y in Europe on a constant currency basis. DTC and B2B revenue grew 32% Y/Y and 20% Y/Y on a constant currency basis.

Gross margin declined 320 basis points Y/Y to 56.3% due to the temporary impact of production capacity expansion and planned, inflation-related wage adjustments and one-time bonuses for employees at the production facilities.

Adjusted EBITDA rose 7% Y/Y to EUR 162 million, with an adjusted EBITDA margin of 33.7% was down 470 basis points Y/Y in the quarter. Operating cash flow declined to EUR 50 million from EUR 57 million a year ago.

As of March 31, 2024, Birkenstock had cash and cash equivalents of EUR 176 million.

Outlook: The company raised FY24 revenue guidance to EUR 1.77 billion- EUR 1.78 billion (from EUR 1.74 billion- EUR 1.76 billion), reflecting growth of about 19% Y/Y on a reported basis and 20% Y/Y on a constant currency basis.

Also, Birkenstock upped adjusted EBITDA guidance to EUR 535 million – EUR 545 million (from prior guidance of EUR 520 million-EUR 530 million), resulting in an margin of 30%-30.5%.

The company reiterated its medium to long-term objectives of a gross profit margin of roughly 60% and an adjusted EBITDA margin of over 30%.

Birkenstock said that it is expanding its capacity, including the new Pasewalk production facility, which is expected to temporarily reduce gross margin and adjusted EBITDA margin by 220 basis points in the second quarter.

Oliver Reichert, CEO and Member of the Board of Directors, said, “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.”

Price Action: BIRK shares are up 11.6% at $55.80 premarket at the last check Thursday.

Image: nateen08650 from Pixabay

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