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While other brands may be scrambling to figure out how to deal with tariffs, Birkenstock Holding plc has little to worry about on that front.
“Birkenstock is less exposed to tariffs with 100 percent of our production and 96 percent of our materials sourced from Europe, and no contract manufacturing from Asia,” the company’s CFO Ivica Krolo told investors Thursday at a company conference call on second-quarter earnings. Looking ahead to the balance of fiscal 2025, he said the company is “well positioned” to meet or exceed its growth and profitability objectives.
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He told investors the company will “offset the tariff impact.” It has a goal of maintaining its global price structure, and the tariffs in the U.S. won’t change that. Moreover, consistent consumer demand gives the brand pricing flexibility.
“We already have taken appropriate actions to mitigate the impact on tariffs, both near term and long term, with multiple levers to pull and are in a strong position with experience in managing inflationary pressures, including tariffs,” he said.
Krolo said consistency in demand, together with its engineered distribution and scarcity model, allows for pricing flexibility. “For a full offset of tariff impact, we would need only a low-single-digit price increase globally, which is consistent with our historical level of pricing actions,” he said.
The CFO was quick to note that pricing isn’t the company’s only lever. Because the German brand is vertically integrated, other levers include “efficiencies in production, vendor negotiations, the optimization of product mix and the allocation of products between the different regions,” he said.
“The current context is a stress test for the resilience of business models. As our results for the second quarter show, we have passed this test very well. Our company is in a good shape and we are confident about our future,” Oliver Reichert, Birkenstock’s CEO, said on the call.
The company on Thursday posted a second-quarter decline in net profits by 16.1 percent to 105.1 million euros, on a net revenue gain of 19.3 percent to 574.3 million euros. With sales in the quarter helped by double-digit unit growth and midsingle-digit growth in ASP (average selling price), the company raised guidance for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin to between 31.3 percent and 31.8 percent. That compares with the prior adjusted EBITDA margin guidance range of 30.8 percent to 31.3 percent.