Financial Data and Key Metrics Changes - Birkenstock achieved a record quarterly revenue of EUR 565 million, reflecting a 19% growth year-over-year on a constant currency basis [18][19] - Gross profit margin for Q3 was 59.5%, down 220 basis points compared to the previous year, primarily due to a shift in mix from D2C to B2B [19] - Adjusted EBITDA for the quarter was EUR 186 million, marking a 15% increase year-over-year, with an adjusted EBITDA margin of 33% [20][21] Business Line Data and Key Metrics Changes - B2B business grew by 23% in constant currency, while D2C business saw a growth of 14% [18][19] - Revenue from closed-toe silhouettes grew more than double the rate of the overall brand, with revenue share increasing by 400 basis points year-over-year [10] - The membership program grew by 36% year-over-year, reaching 6.9 million members, who spend over 25% more per transaction than non-members [9] Market Data and Key Metrics Changes - Revenue in the Americas increased by 15%, with B2B channel growth particularly strong, especially in department stores [11][12] - Europe experienced a 19% growth, with strong performance in countries where Birkenstock replaced distributors with its own distribution [14] - The APMA region was the fastest-growing segment, with a revenue increase of 41%, driven largely by DTC channel growth [16] Company Strategy and Development Direction - The company is focused on expanding into identified white space opportunities, including closed-toe silhouettes and owned retail [6][9] - Birkenstock aims to maintain a disciplined approach to distribution, ensuring supply remains comfortably under demand [9] - The company is committed to achieving a net leverage ratio of 2x by the end of the year and plans to use free cash flow to reduce debt [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's strength and consumer demand, noting that there has been no observed softness in consumer spending [27] - The company confirmed its fiscal year 2024 guidance for total revenue growth of 20% and an adjusted EBITDA margin of 30% to 30.5% [25] - Management highlighted the importance of in-person shopping for the brand, as consumers prefer to see and touch the product [27] Other Important Information - The company opened seven new stores in Q3, bringing the total to 64 owned retail stores worldwide [9] - Cash and cash equivalents increased to EUR 404 million, with total cash flow for the quarter reaching EUR 229 million, up 93% year-over-year [21][22] - Capital expenditures totaled EUR 15 million in Q3, with expectations to remain below EUR 100 million for the fiscal year [22] Q&A Session Summary Question: Insights on unit sales and ASP performance - Management confirmed strong unit sales and an increase in like-for-like ASP, attributing revenue growth to a higher B2B mix [26][27] Question: Future cash use and leverage reduction - Management indicated plans to continue reducing leverage and investing in business expansion while maintaining a strong cash position [31][32] Question: Trends in US consumer demand - Management noted increasing consumer demand for the brand, emphasizing intentional purchasing behavior despite macroeconomic challenges [33] Question: Sell-through performance in B2B business - Management highlighted strong sell-through rates across regions, with traffic to the DTC website remaining robust [34][35] Question: Factory capacity and production constraints - Management confirmed ongoing capacity expansion, with no current constraints on meeting demand [37][38] Question: Current demand trends globally - Management expressed confidence in strong global demand, with positive signals from wholesale partners across categories [40][41] Question: Pricing actions for 2025 products - Management reported encouraging sell-throughs for new product introductions and noted that price increases have not negatively impacted consumer demand [48][51]
Birkenstock plc(BIRK) - 2024 Q3 - Earnings Call Transcript