Birkenstock - Not Stepping in - Model Update

At 95.7c/€, we have spent time reassessing Birkenstock following the recent results and June refinancing. One thing is clear: there is no obvious problem with the business. Growth is strong, margins remain exceptional and there is a lot of equity sitting underneath the bonds. So why aren't we buying? The answer is less obvious, and increasingly has little to do with whether Birkenstock can sell another pair of sandals. The headline leverage only tells part of the story; the more interesting question is what the new capital structure could mean for bondholders. At current levels, the question is not whether the credit can survive a downturn, but what bondholders are being asked to give up while the business is still performing this well.