Birkenstock beat forecast due to demand for shoes without discounts. Why did the stock fall?

Strong demand has allowed Birkenstock to beat Wall Street's profit expectations despite price increases and U.S. duties. The latest financial report showed that the iconic shoe maker is successfully attracting wealthy customers and selling to them at full price. The company's shares initially soared but then went into negative territory - after its management warned investors that a weak dollar would negatively impact future financial performance.

Birkenstock generated €635 million in revenue in the April-June quarter (the third fiscal quarter of 2025 for the company), just below LSEG's consensus forecast (€636.7 million). But the company's adjusted quarterly earnings of €0.62 per share came in above Wall Street expectations (€0.6).

Birkenstock shares at the preliminary trading in New York first jumped by 5%, but then went deep into the negative - at some points the fall exceeded 6%. The collapse occurred after the management of the German footwear manufacturer warned that in the current quarter the weakening of the dollar will negatively affect revenues and margins when they are converted into euros, reports Reuters. Investors were also not convinced by the fact that the company maintained its full-year forecast for margins and sales, citing strong demand.

Birkenstock shares are still trading in negative territory after the opening of the main session on the New York Stock Exchange.

The company, whose shoes are particularly popular in the U.S., has seen steady demand from key retail partners in the Americas and elsewhere. Last quarter, it was a factor in the 18 percent growth of its B2B division. That figure beat expectations, while the direct-to-consumer (DTC) segment grew slower than forecast, Bloomberg notes.

The agency cites Williams Trading analyst Sam Poser, who named Birkenstock as one of five "must-have" brands (along with On, Brooks, Hoka and UGG) that retailers need to keep in stock. The popularity of Birkenstock shoes, especially the $180 suede Boston Klogs, continues to grow among affluent shoppers despite recent price increases. This has allowed the company to increase its gross margin by 10 percentage points to 60.5%, Reuters notes.

Demand for the brand's closed shoes, boots and slippers, which often cost more than classic sandals, has increased in recent years. Birkenstock has also expanded its line of cheaper plastic shoes, attracting new customers and offering regular customers models for the beach and wet climates. The company has found ways to raise prices on those items as well, releasing versions with larger buckles, Bloomberg writes. All this contrasts with the situation at rivals such as Crocs, whose shares fell by a quarter a week ago after a weak sales and earnings forecast.

According to FactSet, almost all analysts following Birkenstock are convinced that its shares are attractive. 18 out of 20 experts consider them a good buy at the current price (Buy and Overweight ratings). The average target price of €60.52 per share, calculated by MarketScreener, implies a 41% year-over-year increase in the stock price.

This article was AI-translated and verified by a human editor