Shares in Birkenstock plunged 9% Thursday after the German shoe retailer warned tariffs will probably weigh closely on its revenue margins.
The company – recognized for its chunky cork sandals – said it expects its annual gross margins will drop by a full share level due to US tariffs in the new fiscal 12 months, which runs through Sept. 30, 2026.
It expects adjusted earnings before curiosity, taxes, depreciation and amortization of at least 700 million euros, or roughly $821.8 million, with a margin of 30% to 30.5% – a compression from last 12 months’s EBITDA margin of 31.8%.
Birkenstock CEO Oliver Reichert said the company expects sturdy demand to proceed through 2026. Getty Images for Birkenstock
Birkenstock, which listed in New York in 2023, still operates the majority of its manufacturing in Germany – leaving it uncovered to the Trump administration’s 15% tariff on the European Union, which it reached after a commerce deal with the 27-nation bloc over the summer time.
The company said it has been making an attempt to decrease the impression of tariffs with focused price hikes, vendor negotiations, manufacturing effectivity and product optimization.
It also expects income growth to sluggish in the new fiscal 12 months to 10% to 12%, or roughly $2.7 billion to $2.8 billion, when counting several foundation factors of unfavorable currency results.
The company forecast adjusted earnings per share between 1.90 and 2.05 euros – lacking expectations of 2.08 euros.
In the earlier fiscal 12 months, tariffs knocked off roughly 30 foundation factors from both the adjusted EBITDA margin and gross margin, the company said.
Revenue for the earlier fiscal 12 months, meanwhile, rose 16% to roughly $2.5 billion – beating estimates of 15%, which the company attributed to strong demand.
The company said it expects a 100 foundation factors hit to annual gross margins due to US tariffs in the new fiscal 12 months. AP
Quarterly income hit roughly $617.2 million, above estimates of $612.9 million.
“As we look forward into fiscal 2026, we see a continuation of the strong consumer demand and double-digit growth,” CEO Oliver Reichert said in a assertion Thursday.
“Our growth is currently only limited globally by our production capacity and desire to maintain scarcity; consumer demand remains robust globally,” he added.
Birkenstock announced plans to open about 40 new shops globally in 2026 to keep up with demand, and buy back $200 million value of shares.
Analysts at brokerage firm Bernstein warned in a observe that traders should be cautious about the momentum, since Birkenstock has been performing higher in wholesale than the retail sector.
It reported direct-to-consumer gross sales growth of just 11% for the earlier fiscal 12 months, in contrast to 20% in wholesale.
“Lower fiscal 2026 guidance compounds these concerns,” Bernstein said.