By Ananya Mariam Rajesh
(Reuters) -Birkenstock on Thursday raised its annual sales and core profit expectations, betting on full-price sales and strong demand for its cork-based sandals and newer closed-toe models, mainly in its own stores, sending its shares up rose 14.3%.
Most wholesalers are still stocking up on popular Birkenstock (NYSE:) products, despite broader efforts to reduce inventory in light of tepid demand for durable items like shoes.
Birkenstock CEO Oliver Reichert said the company was increasing shelf space at its wholesale partners, with key retailers buying more and shifting volumes to an earlier delivery date.
The German sandal maker has also expanded its own stores, where its products are sold at full price, well above the average wholesale retail price.
That helped direct-to-consumer (DTC) sales grow more than 30% in the second quarter, while wholesale sales rose 19.2%.
“There were fears that the ‘Barbie’ boom would wane, but with the brand still an influencer favorite, the sandals are on fashion wish lists and demand is translating into a surge in sales,” says Susannah Streeter, head money and markets. at Hargreaves Lansdown.
Birkenstock expects sales of between 1.77 and 1.78 billion euros for the 2024 financial year, up from a previous forecast of 1.74 billion euros to 1.76 billion euros.
It expects adjusted annual earnings before interest, taxes, depreciation and amortization (EBITDA) of between 535 million euros and 545 million euros, up from the previously expected 520 million euros to 530 million euros.
However, Birkenstock’s quarterly adjusted EBITDA margin fell 470 basis points to 33.7%, pressured by plans to expand and invest in manufacturing globally.
“Investors are focused on the impact of this DTC expansion… if done successfully, it will reduce volatility in the business that traditionally comes with large-scale exposure and they will have stronger control over the brand” , said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.
Birkenstock’s second-quarter sales rose 21.6% to 481.2 million euros ($520.23 million), compared with LSEG estimates of 466.1 million euros. Adjusted earnings per share amounted to 0.41 euros, exceeding expectations of 0.36 euros.
($1 = 0.9246 euros)