Shares in Birkenstock plunged 9% Thursday after the German shoe retailer warned tariffs will likely weigh heavily on its profit margins.
The company – known for its chunky cork sandals – said it expects its annual gross margins will drop by a full percentage point due to US tariffs in the new fiscal year, which runs through Sept. 30, 2026.
It expects adjusted earnings before interest, 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 year’s EBITDA margin of 31.8%.
Birkenstock, which listed in New York in 2023, still operates the majority of its production in Germany – leaving it exposed to the Trump administration’s 15% tariff on the European Union, which it reached after a trade deal with the 27-nation bloc over the summer.
The company said it has been trying to minimize the impact of tariffs with targeted price hikes, vendor negotiations, manufacturing efficiency and product optimization.
It also expects revenue growth to slow in the new fiscal year to 10% to 12%, or roughly $2.7 billion to $2.8 billion, when counting several basis points of negative currency effects.
The company forecast adjusted earnings per share between 1.90 and 2.05 euros – missing expectations of 2.08 euros.
In the previous fiscal year, tariffs knocked off roughly 30 basis points from both the adjusted EBITDA margin and gross margin, the company said.
Revenue for the previous fiscal year, meanwhile, rose 16% to roughly $2.5 billion – beating estimates of 15%, which the company attributed to robust demand.
Quarterly revenue 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 statement 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 stores globally in 2026 to keep up with demand, and buy back $200 million worth of shares.
Analysts at brokerage firm Bernstein warned in a note that investors should be cautious about the momentum, since Birkenstock has been performing better in wholesale than the retail sector.
It reported direct-to-consumer sales growth of just 11% for the previous fiscal year, compared to 20% in wholesale.
“Lower fiscal 2026 guidance compounds these concerns,” Bernstein said.
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