Financial Data and Key Metrics Changes - The company reported revenues of €574 million for the second quarter, representing a 19% increase year-over-year and an 18% increase in constant currency, exceeding the annual guidance of 15% to 17% [8][18] - Gross margin improved to 57.7%, up 140 basis points year-over-year, driven by better cost absorption and selected price adjustments [19] - Adjusted EBITDA for the quarter was €200 million, up 23% year-over-year, with a margin of 34.8%, an increase of 110 basis points [20] - Adjusted net profit reached €103 million, a 33% increase year-over-year, with adjusted EPS rising to €0.55 from €0.41 [20] Business Line Data and Key Metrics Changes - Revenue growth was balanced between B2B and DTC channels, with B2B up 18% and DTC up 17% in constant currency [10][18] - Closed toe silhouettes revenue grew at twice the rate of the overall group, increasing their share of business by 400 basis points [11] - The DTC channel accounted for 24% of total business, consistent with the prior year [18] Market Data and Key Metrics Changes - In the Americas, revenue increased by 23% in reported currency and 20% in constant currency, with strong growth in both B2B and DTC channels [12] - EMEA region saw a 12% revenue growth, with DTC outpacing B2B growth by 1.5 times [13] - The APAC region was the fastest growing segment, with a 30% increase driven by strong DTC growth [14] Company Strategy and Development Direction - The company aims to expand its retail presence, targeting 100 owned stores by the end of the fiscal year, having opened six new stores in the second quarter [10][11] - The strategy includes tapping into white spaces such as closed toe shoes and expanding in the APAC region [10][14] - The company is confident in its ability to manage inflationary pressures and tariffs due to its vertical integration and European sourcing [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience amid macroeconomic uncertainties, viewing the situation as an opportunity rather than a risk [7][34] - The company expects to meet or exceed its financial targets for fiscal year 2025, with adjusted EBITDA margin guidance raised to 31.3% to 31.8% [25][29] - Management noted that consumer demand remains strong, with no significant changes observed despite macroeconomic pressures [35][36] Other Important Information - The company ended the quarter with cash and cash equivalents of €235 million and improved its inventory to sales ratio to 36% [21] - Capital expenditures for the quarter were approximately €21 million, with plans to invest around €80 million for the year [21][80] Q&A Session Summary Question: Confidence in outlook despite macro uncertainty - Management views the current situation as an opportunity and is confident in offsetting tariff impacts [34][35] Question: D2C strength and implied top line deceleration - Management acknowledged reduced visibility in the second half but emphasized strong order books and growth in closed toe products [43][44] Question: Plans for tariff mitigation - The company is less exposed to tariffs due to European sourcing and has pricing flexibility without impacting consumer demand [50][52] Question: Gross margin drivers and retail store rollout - Management expects gross margin improvements from better absorption and pricing adjustments, with ongoing retail expansion [58][60] Question: Membership growth and its impact on DTC sales - Membership has grown significantly, contributing to higher average purchases and overall DTC performance [117][132]
Birkenstock plc(BIRK) - 2025 Q2 - Earnings Call Transcript