Birkenstock (NYSE:BIRK) reported fiscal second-quarter revenue growth within its target range on a constant-currency basis, while management said foreign exchange, tariffs, inflation and disruptions tied to conflict in the Middle East weighed on reported results and margins.
The footwear company generated second-quarter revenue of EUR 680 million for the period ended March 31, 2026, up 8% on a reported basis and 14% in constant currency. Chief Executive Officer Oliver Reichert said demand for the brand remained strong despite a more difficult macroeconomic backdrop, including higher energy costs, elevated inflation and tariff uncertainty.
“In this challenging environment, we performed strongly,” Reichert said. “We once again demonstrated the resilience of our business model.”
Adjusted EBITDA was EUR 198 million, down 1% from a year earlier, primarily because of tariffs and currency translation effects. Chief Financial Officer Ivica Krolo said foreign exchange reduced adjusted EBITDA by EUR 27 million; excluding that impact, adjusted EBITDA would have risen 13%. Adjusted EBITDA margin was 32.1%, down 270 basis points year over year.
Foreign exchange and tariffs pressure margins
Krolo said the depreciation of the U.S. dollar, Canadian dollar and Asian currencies against the euro created a 640-basis-point headwind to reported revenue growth in the quarter. The company’s adjusted gross profit margin was 54.6%, down 310 basis points from a year earlier. Excluding 230 basis points of pressure from foreign exchange and 90 basis points from incremental U.S. tariffs, adjusted gross profit margin would have been up 10 basis points, Krolo said.
Adjusted net profit fell 10% to EUR 93 million, while adjusted earnings per share declined to EUR 0.50 from EUR 0.55 a year earlier. Krolo said adjusted net profit and EPS were affected by EUR 17 million, or EUR 0.09 per share, from currency translation and by a EUR 15 million non-cash expense, or EUR 0.08 per share, tied to a change in the valuation of an embedded derivative in the company’s senior notes.
During the question-and-answer session, Krolo said current tariff rates are “just over 20%,” including temporary Section 122 tariffs, following a U.S. Supreme Court ruling related to IEEPA tariffs. He said the company estimates refund claims at about EUR 30 million, but timing remains uncertain because of the administrative process for customs refunds.
Regional growth led by APAC
Birkenstock reported constant-currency growth across all three of its regional segments. The Americas grew 14%, EMEA increased 11% and APAC rose 30%.
Reichert said APAC grew at more than twice the pace of the company’s other regions, in line with plans. Growth was strongest in India, China and Japan, and the region had the highest closed-toe penetration and average selling price in the quarter, according to management.
In the Americas, Reichert said growth was driven by strong business-to-business performance and sell-through at partner doors, which was up more than 30% at key partners. He cited youth retailers and sporting specialty retailers as continuing to lead B2B growth. The company added two new stores in the Americas during the quarter, bringing its total in the region to 17.
In EMEA, management said growth was held back by conflict in the Middle East. Reichert estimated the direct and indirect effects reduced EMEA revenue by about EUR 6 million and lowered growth by roughly 300 basis points. Nico Bouyakhf, president of EMEA, said roughly half of the impact came from the company’s inability to complete shipments into the Middle East, while the other half reflected weaker European consumer sentiment, reduced tourism in key cities and inflationary pressure.
Bouyakhf said the company has identified approximately EUR 10 million to EUR 12 million of revenue risk in EMEA for the second half of the fiscal year, but management believes it can offset that risk with other regional segments.
DTC, retail stores and closed-toe products remain priorities
By channel, B2B revenue increased 15% in constant currency, while direct-to-consumer revenue rose 12%. Krolo said B2B growth remained stronger than DTC as consumers, particularly younger newer customers, continued to prefer shopping in stores.
Birkenstock’s owned retail business grew more than 60% in constant currency, and same-store sales increased by double digits. The company opened five owned retail locations in the quarter, bringing its global total to 111. Management said Birkenstock remains on track to reach about 140 owned retail stores by the end of fiscal 2026.
Bouyakhf said owned physical retail is expected to remain the company’s fastest-growing channel. He added that newer stores continue to outperform the longer-standing fleet, with higher average selling prices, more units per transaction and higher transaction values, while still meeting the company’s targeted 12- to 18-month return on capital expenditure.
The company also continued to develop its closed-toe business. Reichert said closed-toe penetration increased by 300 basis points, driven by strong growth in clogs. In response to an analyst question, Bouyakhf said Boston and its variations remain a major part of closed-toe sales, but non-Boston silhouettes are growing at a much faster pace. He said 11 of the company’s top 20 styles are currently closed-toe products.
Inventory, cash flow and capital spending
Birkenstock generated EUR 29 million in operating cash flow in the quarter, compared with a use of EUR 18 million in the prior-year period. The company ended the quarter with EUR 201 million in cash and cash equivalents.
Inventory as a percentage of sales rose to 39% from 36% a year earlier. Krolo said the increase was primarily due to currency effects, and that on a constant-currency basis the ratio was 37%. He also attributed the increase to higher work in progress as the company pre-produces semi-finished goods, particularly clogs, to reduce bottlenecks in final assembly.
Capital expenditures totaled EUR 21 million in the quarter, including investments in production capacity in Arouca, Görlitz, Ströth and Pasewalk, the beginning of the build-out of Wittichenau, and continued spending on retail and information technology. Net leverage was 1.7 times as of March 31, up from 1.5 times at the end of fiscal 2025, which Krolo attributed to normal cash seasonality.
Full-year outlook reaffirmed
Birkenstock reiterated its fiscal 2026 guidance for constant-currency revenue growth of 13% to 15%. The company expects foreign exchange to create a roughly 350-basis-point headwind to full-year revenue growth, resulting in reported revenue growth of 10% to 12% and revenue of EUR 2.3 billion to EUR 2.35 billion.
The company continues to expect adjusted gross margin of 57% to 57.5%, including 200 basis points of combined pressure from foreign exchange and U.S. tariffs. Adjusted EBITDA is expected to be at least EUR 700 million, implying an adjusted EBITDA margin of 30% to 30.5%. Adjusted EPS is forecast at EUR 1.90 to EUR 2.05, including roughly EUR 0.15 to EUR 0.20 of pressure from foreign exchange.
Management also reaffirmed plans to repurchase shares for total consideration of $200 million during fiscal 2026, subject to market conditions. Krolo said the company had not yet used the authorization and would consider all available options, including open-market repurchases, as it enters a seasonally stronger cash generation period.
“We are confident in our business model and its resilience, even in the face of pressures from war, inflation, tariffs and FX,” Reichert said.
About Birkenstock (NYSE:BIRK)
Birkenstock Group AG, listed on the New York Stock Exchange under the symbol BIRK, is a global footwear manufacturer renowned for its anatomically contoured footbeds and iconic sandal designs. The company’s core product lines include classic models such as the Arizona, Boston and Madrid, alongside a range of clogs, shoes and orthotic insoles. In addition to footwear, Birkenstock offers complementary accessories, including socks and leather care products, reinforcing its commitment to foot health and comfort.
Birkenstock reaches consumers through a diversified distribution network that combines direct-to-consumer channels—such as branded retail stores and e-commerce platforms—with wholesale partnerships spanning specialty footwear retailers, department stores and select online marketplaces.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
The article "Birkenstock Q2 Earnings Call Highlights" first appeared on MarketBeat.
