Birkenstock margins fall to 53.9%

Birkenstock told investors on May 13 that a mix of U.S. tariffs, foreign-exchange pressure and disruption tied to the Middle East conflict cut into second-quarter profitability, even as constant-currency sales kept growing. The German sandal maker reported quarterly revenue of 618.3 million euros, just below analysts’ estimates compiled by LSEG, and said gross margin fell to 53.9% from 57.7% a year earlier. Chief Executive Oliver Reichert said on the earnings call that the company was dealing with “persistent inflationary pressures,” an unfavorable shift in U.S. tariff policy and continued currency headwinds. The company nevertheless reaffirmed its full-year outlook for revenue growth and profitability. ### Why did a company still growing sales report weaker margins? Birkenstock said second-quarter revenue rose 14% in constant currency, but the gains did not translate into better profitability because costs moved faster than prices. The company said unfavorable currency translation cut gross margin by 230 basis points, incremental U.S. tariffs reduced it by 90 basis points and channel mix shaved off another 30 basis points. Higher prices partly offset those pressures, but not enough to keep margin flat. (money.usnews.com) The 53.9% gross margin is the clearest measure of that squeeze. Birkenstock said adjusted EBITDA margin fell to 32.1% from 34.8% a year earlier, while adjusted earnings per share dropped to 0.50 euro from 0.55 euro. ### What exactly did the Middle East conflict cost Birkenstock this quarter? Birkenstock said the conflict produced a 6 million euro hit to its Europe, Middle East and Africa business. (birkenstock-holding.com) About half came from shipments the company could not complete into the region, according to the company, while the rest reflected softer demand in Europe tied to higher energy costs and inflation linked to the conflict. (rte.ie) Oliver Reichert told analysts that multiple conflicts in the Middle East were disrupting supply chains and driving higher energy costs. Reuters reported that the company also began rerouting shipments and reallocating inventory toward faster-growing markets, including Asia-Pacific, to limit the effect of those disruptions. (rte.ie) ### Where did demand hold up, and where did it weaken? Asia-Pacific was Birkenstock’s fastest-growing region in the quarter. The company said reported sales there rose 22%, compared with 10% growth in Europe, the Middle East and Africa and 4% growth in the Americas. On a constant-currency basis, Birkenstock said all three regions posted double-digit increases. (bluewaterhealthyliving.com) Europe was the region most directly affected by the conflict-related pressure cited by management. Reuters said the company pointed to muted consumer sentiment in Europe alongside delayed shipments to the Middle East. ### How did investors react to the update? Birkenstock shares fell sharply on May 13 after the results and management’s comments on second-half costs. (rte.ie) Reuters reported the stock dropped as much as 13% to trade near $33, touching a record low intraday after the company warned that tariff and conflict-related costs would remain a pressure. (money.usnews.com) The market reaction came even though Birkenstock left its annual guidance unchanged. The company said it still expects fiscal 2026 revenue growth of 13% to 15% and maintained its profit outlook, signaling that management expects stronger markets and pricing to help absorb part of the cost increase over the rest of the year. That last point is an inference from the unchanged guidance and company comments, not a separate company forecast. (bluewaterhealthyliving.com) ### What should readers watch next? Birkenstock’s next test is whether price increases and inventory shifts can offset higher duties and ongoing geopolitical disruption in the second half of fiscal 2026. The company said tariff pressure would rise in coming quarters, while keeping its full-year targets in place. (birkenstock-holding.com) March 31, 2026 was the end of the quarter covered in this report, and Birkenstock said it finished that period with about 201 million euros in cash and net leverage of 1.7 times. Investors will be looking to the company’s next quarterly update later in fiscal 2026 for whether gross margin stabilizes from the 53.9% level reported on May 13. (benzinga.com) (bluewaterhealthyliving.com)