March 2, 2024

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Birkenstock Expands Amid Economic Concerns, Expects Double-Digit Sales Growth

Birkenstock, the German shoemaker known for its sturdy two-strap sandals, is increasing investments in store openings and production expansion, anticipating sustained demand despite evolving fashion trends. The company, which recently went public in the US, foresees sales growth of over 15% in its 2024 fiscal year after a remarkable 20% surge to nearly €1.5 billion (£1.29 billion) in 2023.

While executive optimism about the future abounds, the market response was muted, with Birkenstock shares declining over 8% as profits dipped last year and margins are expected to contract further in 2024 due to ongoing investments. This financial update marks the company’s first since its US listing, subjecting it to scrutiny in the public market.

Birkenstock’s journey has seen shifts in perception from its traditional image to collaborations with designers and prominent features in films like Barbie. Despite being buoyed by strong consumer spending, especially driven by a summer sales surge following the Barbie film, the company faces skepticism regarding the sustainability of this growth amid slowing economic expansion and weakened luxury sales in key markets like the US.

CEO Oliver Reichert remains undeterred by broader financial concerns, emphasising continued demand without a significant slowdown. He notes the company’s distinction from desire-driven luxury brands, stating, “We are not; we see growth everywhere.”

Birkenstock’s shares have experienced volatility since their October debut but have stabilised around $45 per share in New York, reflecting a market value of approximately $9 billion. Reichert acknowledges the challenge of comparing Birkenstock to listed companies, emphasising that they are neither luxury nor fashion nor footwear in the conventional sense.

While the company reported a loss of €28 million (£24 million; $30 million) in the three months to September 30, attributed to increased administrative expenses ahead of the listing, Birkenstock sees growth opportunities as shoppers increasingly opt to buy directly from the brand. The conservative full-year forecast for 2024, anticipating sales growth of 17–18%, reflects caution amid inflation risks and shifting market sentiments.