Birkenstock improved its sales outlook after raising prices. Is its stock worth buying?
Since the beginning of the year, the company's capitalization has fallen by almost 20%
German sandal maker Birkenstock raised its full-year revenue forecast amid steady demand for footwear. Higher prices due to US duties did not reduce the interest of buyers. Investors took the news optimistically: at the pre-market quotations jumped by more than 5%. Nevertheless, this year the company's shares are down by almost 20%. Is it worth buying them?
Details
Birkenstock on Sept. 25 raised its revenue forecast for fiscal 2025, which ends Sept. 30. The company expects strong demand for shoes from affluent customers despite price increases.
The company now expects revenue of at least €2.09 billion ($2.45 billion), which implies growth of about 17.5% in comparable currency terms year-on-year. Previously, Birkenstock said it expected full-year revenue growth at the upper end of its guidance range of 15-17%.
The company also expects to record at least €520 million in revenue in the fourth quarter, which translates into 18% year-on-year growth. This is slightly above analysts' estimates, Bloomberg writes.
The company's shares jumped by 5.6% on the premarket. its capitalization fell by almost 20% at the beginning of the year.
What will help the company?
Birkenstock is raising prices to offset the impact of 15 percent U.S. duties on European imports. However, this has not reduced demand for items such as Boston suede closed-toe sabots, which cost up to $275 online, Reuters notes.
The company, which produces 95% of its shoes in Germany, is also looking to improve factory and logistics efficiency and cut costs to cope with the impact of the imposed levies, the agency wrote.
Birkenstock said on Thursday it had bought a manufacturing site near Dresden for €18 million to increase production capacity. The facility is expected to be operational by the end of fiscal 2027.
What the analysts are saying
In early August, UBS raised its target price on Birkenstock shares to $77 and reiterated a "buy" recommendation. Its assessment assumes growth of the securities by 70% relative to the closing price on September 24.
Of the 18 analysts covering Birkenstock stock, 16 of them advise buying it, while two advise holding it.
This article was AI-translated and verified by a human editor
