Shares of Birkenstock (BIRK +3.67%) -- famous for its contoured footbed sandals -- were up 11% this week as of 3:30 p.m. ET Thursday, according to data provided by S&P Global Market Intelligence.
The vertically integrated footwear specialist reported second-quarter earnings on Thursday, delivering sales and adjusted earnings-per-share growth of 19% and 34%.
Management also said that 2025 revenue growth should hit the high end of its 15% to 17% guidance, and it also increased its expectations for profitability.
Birkenstock hopes to outrun the competition
In almost every measure, Birkenstock had an excellent Q2 as the company:
- beat analysts' expectations and raised guidance
- improved its margin profile
- grew sales by double digits across all three of its geographic regions
- increased both business-to-business and direct-to-consumer sales by 19%
- saw its younger closed-toe shoe category grow sales twice as fast as its sandals
- avoided tariff concerns thanks to its vertical integration and manufacturing in Germany and Portugal
Image source: Getty Images.
Not only is Birkenstock largely unaffected by tariff concerns, but it could also be positioned to thrive amid the uncertainty.
To this point, Chief Executive Officer Oliver Reichert explained,
We will navigate these uncertain times from a position of strength. Our decades-long track record of managing our brand through a consistent engineered distribution strategy puts Birkenstock in an enviable position to take additional shelf space and gain share.
Said another way, in a quarter where most footwear stocks scrambled to avoid tariffs and maintain profits, Birkenstock grew its profitability while experiencing double-digit unit-volume growth alongside a mid-single-digit increase in average selling price.
Growing sales by 20% annually over the last decade and sporting a 21% free-cash-flow (FCF) margin, Birkenstock deserves a long look from investors at a reasonable 26 times FCF.
