Birkenstock (NYSE:BIRK) reported fiscal first-quarter 2026 results that management said exceeded internal targets despite foreign exchange and tariff headwinds, while reiterating its full-year constant-currency growth and profitability outlook. The company’s fiscal Q1 ended December 31, 2025.
Revenue growth led by B2B and APAC
Revenue totaled EUR 402 million, up 11% on a reported basis and 18% in constant currency. CFO Ivica Krolo said currency moves created a 670-basis-point headwind to reported growth due to depreciation of the U.S. dollar and Asian currencies versus the euro.
Channel performance skewed toward wholesale. In constant currency, B2B revenue grew 24% while DTC grew 12%. Management said B2B growth continued to be driven largely by existing wholesale doors, and Reichert said the company tightly manages distribution to maintain scarcity.
Brand health indicators: full-price sell-through and allocation discipline
Executives repeatedly pointed to full-price sell-through as a core metric. Reichert said sell-through at full price remained “very high,” over 90% across channels. He added that Birkenstock fulfills roughly 70% to 80% of wholesale demand, leaving 20% to 30% unfulfilled, and said the company has seen no pushback from partners on price increases implemented so far.
On demand, Reichert said the company’s order book for 2026 and the next years remains very strong. Asked about early second-quarter trends, he said the company continues to see momentum in line with its constant-currency revenue growth guidance of 13% to 15%, while noting the company does not provide intra-quarter outlook.
Margins pressured by FX and tariffs, but management cites operational improvement
Gross margin in the first quarter was 55.7%, down 460 basis points year-over-year. Adjusted gross margin, which included a reversal of distributor markup tied to the acquisition of the Australian distribution partner, was 57.4%, down 290 basis points.
Krolo said that excluding 220 basis points of FX pressure and 130 basis points of incremental U.S. tariffs, adjusted gross margin was up 60 basis points year-over-year.
Adjusted EBITDA was EUR 106 million, up 4% year-over-year, with an adjusted EBITDA margin of 26.5%, down 170 basis points. Excluding FX and tariffs, Krolo said adjusted EBITDA margin would have been 30.1%, up 190 basis points.
On operating expenses, selling and distribution expenses were EUR 126 million, representing 31.2% of revenue and improving 150 basis points versus last year, which management attributed mainly to the higher B2B mix. Adjusted G&A expenses were EUR 29 million, or 7.2% of revenue, up 50 basis points.
Addressing potential SG&A leverage, Krolo said the company is balancing margin expansion with reinvestment, including accelerated investments in manufacturing, retail, e-commerce, and logistics. He also described DTC as still 80% online, which he said has “little operating leverage” due to a high variable cost structure, while increased store growth could provide “four-wall operating leverage” over time.
EPS, cash flow, and capital allocation
Adjusted net profit was EUR 49 million, up 47% year-over-year. Adjusted EPS was $0.27 compared with $0.18 a year earlier. Krolo attributed the increase to operational performance, lower interest expense, $10 million of income from a change in valuation of an embedded derivative, a lower effective tax rate, and a lower share count following a $200 million share repurchase executed in May 2025.
Operating cash flow was seasonally negative, with $28 million used in the quarter versus $12 million used in Q1 2025, which management attributed to working-capital seasonality and $48 million of income taxes paid. Cash and cash equivalents ended at $229 million. Inventory to sales was 39%, flat year-over-year, while days sales outstanding were 20, up from 15, reflecting higher B2B mix.
Capital expenditures were approximately EUR 38 million, including production capacity additions in Arouca, Görlitz, and Pasewalk, continued retail and IT investment, and the EUR 18 million purchase price for the Wittichenau facility announced last year. Net leverage was 1.7x as of December 31, 2025.
On share repurchases, Krolo reiterated the company’s intention to repurchase $200 million of shares during fiscal 2026, subject to market conditions. He said both open-market repurchases and a structure similar to last year’s buyback executed alongside a secondary offering are options, noting the company’s limited free float. Asked about insider buying, Krolo cited recurring blackout periods and transaction-related restrictions, adding it was “not the lack of desire to buy shares at this price.”
Outlook: guidance reiterated amid heavier FX headwinds in Q2
For fiscal 2026, management reiterated guidance for 13% to 15% revenue growth in constant currency, while calling out FX as a meaningful reported headwind. Krolo said the company expects about a 350-basis-point FX headwind for the full year, implying reported revenue growth of 10% to 12% and revenue of EUR 2.3 billion to EUR 2.35 billion.
For the second quarter, Krolo said constant-currency revenue growth is expected to be within the annual guidance range, but FX pressure is expected to be particularly heavy. At current rates, he said Birkenstock expects roughly a 700-basis-point headwind to Q2 reported revenue growth and a 200- to 250-basis-point margin impact to gross profit and adjusted EBITDA. Tariffs are expected to pressure margins by roughly 100 to 150 basis points in Q2, similar to Q1.
Full-year margin and earnings targets were reiterated:
- Adjusted gross margin: 57% to 57.5% (including ~100 bps FX pressure and ~100 bps incremental U.S. tariff pressure)
- Adjusted EBITDA: at least EUR 700 million (30% to 30.5% margin, including ~200 bps combined FX and tariff pressure)
- Effective tax rate: 26% to 28%
- Adjusted EPS: EUR 1.90 to EUR 2.05 (including approximately 20 to 50 cents of FX pressure, and excluding any impact of additional repurchases)
- CapEx: EUR 110 million to EUR 130 million
- Net leverage target: 1.3x to 1.4x by fiscal year-end 2026 (excluding the impact of additional share repurchases)
Strategically, Reichert reiterated the company’s three-year framework, calling for 13% to 15% constant-currency top-line growth and 30%+ EBITDA margins, and said the company expects to add EUR 1 billion of revenue by fiscal 2028 at the midpoint of its growth target. He also pointed to product momentum beyond sandals, highlighting the seasonal strength of closed-toe styles in Q1, with closed-toe representing close to 60% of revenue and strong sales in clogs including the Boston silhouette.
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.
