Due to strong global demand and to increase sales through its own channels, where products are typically sold at full price, the company has opened more stores in newer markets such as India and Japan.
The sandal manufacturer’s CEO, Oliver Reichert, said that customers are increasingly shopping in stores, which is why it is important to increase the number of its own retailers.
Birkenstock is also building additional production capacity and expanding existing facilities, for example in Pasewalk, Germany, to ensure an adequate supply of its trendy sandals and closed shoes made of cork.
As a result, the gross profit margin decreased by 220 basis points to 59.5% in the third quarter.
“They are investing in future growth and have therefore started up various factories and facilities to ramp up their production,” said Simeon Siegel, analyst at BMO Capital Markets.
Birkenstock reported adjusted earnings of EUR 0.49 per share in the third quarter, missing LSEG estimates of EUR 0.52.
However, sales growth slowed from the second quarter onwards, indicating some caution on the part of consumers.
Birkenstock’s sales rose 19.3 percent to 564.8 million euros (626.76 million dollars), just below estimates of 565.2 million euros.
“Last year’s Barbie boom may also have died down somewhat and some shoppers are clearly becoming more cautious. Nevertheless, this does not appear to be the beginning of a dark chapter. Birkenstock is still alive and kicking in the fashion world,” said Susannah Streeter, head of finance and markets at Hargreaves Lansdown.
The company maintained its annual revenue and core profit forecasts.
(1 dollar = 0.9011 euros)
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Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sonia Cheema, Shounak Dasgupta, Sriraj Kalluvila and Krishna Chandra Eluri
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