Shares of Birkenstock (NYSE:BIRK) dropped more than 11% in premarket trading on Wednesday after the footwear group reported second-quarter profit figures that fell short of analyst expectations despite continued revenue growth.
Earnings and margins come in below expectations
Birkenstock posted second-quarter operating profit of €155.5 million, down 11% from the same period last year and below the Bloomberg consensus forecast of €168.1 million.
Quarterly revenue increased 7.7% year-on-year to €618.3 million, slightly under analysts’ estimates of €620.3 million.
Adjusted earnings per share came in at €0.50, compared with €0.55 a year earlier and below the expected €0.59. Net income declined 22% to €81.9 million, missing analyst forecasts of €109.4 million.
Adjusted EBITDA totaled €198.3 million, down 0.9% from a year earlier and slightly below expectations of €199.5 million.
Adjusted EBITDA margin contracted by 270 basis points to 32.1%, while adjusted gross profit margin declined 310 basis points to 54.6%, compared with 57.7% in the prior-year quarter.
Currency and tariffs weigh on profitability
The company said adjusted gross profit margin was negatively impacted by foreign exchange pressures amounting to 230 basis points, along with additional U.S. tariffs that reduced margin by 90 basis points.
Birkenstock also pointed to a non-cash negative revaluation of senior notes totaling €15 million during the quarter.
“Our business proved very resilient in the fiscal second quarter,” Chief Executive Officer Oliver Reichert said.
“Despite the ongoing instability in the Middle East, persistent inflationary pressures, US tariff policy evolving unfavorably for us and continued F/X headwinds, we delivered constant currency revenue growth of over 14%,” Reichert said.
Regional performance mixed as Middle East conflict impacts EMEA
Revenue in the Americas rose 3.8% to €324.4 million, slightly below analyst estimates of €325.9 million.
EMEA revenue increased 10% to €235.1 million, while revenue in the Asia-Pacific region climbed 22% to €58.6 million.
Birkenstock said the conflict in the Middle East reduced EMEA revenue by around €6 million and created an estimated 300 basis point drag on regional growth during the quarter.
Guidance for fiscal 2026 maintained
Business-to-business revenue advanced 9.1% to €471.7 million, below analyst expectations of €479.3 million.
Direct-to-consumer revenue rose 4% to €146.4 million, slightly ahead of consensus estimates of €145.9 million.
Despite the weaker quarterly profitability, Birkenstock maintained its fiscal 2026 outlook and continues to expect constant-currency revenue growth of between 13% and 15%.
The company also reaffirmed guidance for adjusted EBITDA margin of 30% to 30.5% and adjusted gross profit margin of 57% to 57.5%.
Birkenstock further maintained its fiscal 2026 adjusted earnings-per-share forecast in a range of €1.90 to €2.05, including the expected impact of tariffs and foreign exchange movements.