Birkenstock reports a jump in profits and record sales – but the share price drops by double digits. What’s behind it?
Despite a jump in profits, shoe manufacturer Birkenstock did not earn as much as hoped in the third quarter. In addition, management only confirmed its expectations for the current year, which apparently disappointed some investors. The share price lost eleven percent in pre-market trading in the US compared to the closing price on Wednesday evening. Up until then, it had gained 32 percent since the IPO in the US in mid-October.
In the months April to June, sales rose by almost a fifth to 565 million euros compared to the same period last year, Birkenstock announced in London. This was the highest sales figure ever achieved in the company’s history, said CEO Oliver Reichert in a statement. Closed shoes were particularly in demand. Profits rose just as sharply as sales, to 75 million euros.
Analyst: Market expectations narrowly missed
The figures are “robust,” wrote Bernstein analyst Luca Solca in an initial assessment. However, Birkenstock narrowly missed market expectations, which had risen after the company raised its annual forecast after the second quarter.
Since then, CEO Reichert has been anticipating sales growth of 19 percent in the current financial year and an adjusted earnings margin before interest, taxes, depreciation and amortization (EBITDA) of 30 to 30.5 percent. In the third quarter just ended, it fell by 1.4 percentage points year-on-year to 33 percent. Birkenstock attributed the decline, among other things, to the expansion of production capacity.
Source: Stern
