Birkenstock plc(BIRK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported full-year revenue growth of 18% in constant currency, reaching €2.1 billion, exceeding the initial guidance of 15%-17% [6][13] - Gross margin increased by 30 basis points to 59.1%, while adjusted EBITDA margin rose by 100 basis points to 31.8%, meeting the high end of the target range [7][16] - Adjusted net profit for the fourth quarter was €94 million, up 71% year over year, with adjusted EPS of €0.51, a 76% increase from the previous year [16] Business Line Data and Key Metrics Changes - The Americas segment grew by 18% in constant currency, EMEA by 14%, and APAC by 34% in constant currency [13] - B2B channel revenue increased by 21%, while D2C channel revenue grew by 12% in constant currency [14] - The closed-toe share of revenue increased by 500 basis points year over year to 38% [10] Market Data and Key Metrics Changes - The company sold over 38 million pairs in fiscal 2025, a 12% increase, with average selling price (ASP) up by 5% in constant currency [8] - The APAC segment now accounts for 11% of global revenue, with the highest ASP among regions [10] Company Strategy and Development Direction - The company plans to open about 40 new stores in 2026, aiming for a total of 150 stores ahead of schedule [9][23] - The focus remains on maintaining brand scarcity and managing distribution tightly, with full price realization over 90% [9][40] - The company is investing in production capacity and innovation to meet growing demand, particularly in the premium product segment [11][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong brand demand despite external challenges such as tariffs and currency fluctuations [6][24] - The company anticipates significant headwinds from foreign exchange and tariffs in fiscal 2026, projecting a slower revenue growth rate of 13%-15% [18][20] - Management emphasized that growth is limited by production capacity rather than demand, with plans to increase capacity to meet future needs [45] Other Important Information - The company repurchased shares worth $200 million and reduced net leverage from 3.3 times to 1.5 times [5][17] - Capital expenditures for the year were approximately €85 million, focused on increasing production capacity [17] Q&A Session Summary Question: What is driving the more conservative growth outlook for 2026? - Management noted strong demand globally, particularly in the U.S., but highlighted production capacity as the limiting factor for growth [26][28] Question: Can you elaborate on the margin outlook for 2026? - Management indicated that FX and tariffs would significantly impact margins, with a total drag of about 200 basis points expected [31][33] Question: How do you see channel growth in 2026? - Management expects B2B to continue outpacing D2C growth, driven by strong performance in the youth market and in-person shopping [36][40] Question: What are the expectations for closed-toe shoes in the long term? - Management anticipates continued growth in closed-toe shoes, projecting a share increase beyond 40% as new silhouettes gain popularity [57][58]