Birkenstock - comment

Bonds will be fractionally lower, as results undershot market estimates, but they were broadly in line with our projections. The company has reiterated its FY guidance despite the impact of the Gulf Conflict. We expect the FX headwinds to subside in H2, but the 90bp tariff impact is expected to persist. Birkenstock has made the decision to wear that. Price rises in future years will look to reverse this. A $200m stock buyback for FY26 is still authorised; initially, the company had expected this to be timed for a sale by LVMH. The LVMH stock sale has not yet been announced, but management has stated that it will continue to monitor the market. With the stock down 12% yesterday and 19% YTD, they may see the value in acquiring stock.

Adjusted EBITDA of €198 m was in line with our expectations; margins were 32% vs the 30% we had predicted. Margin headwinds of 250bp from currency and 90bp from Tariffs were balanced against over 90% of sales being at list price (rather than discounted), along with cost savings. The Tariff headwind will persist. A working capital outflow of €150m was lower than we expected (-€188m), but did contain a higher level of raw materials to avoid potential factory backlogs. Q2 usually sees outflows; the additional raw material build up (in the Portugal-based plant) was not something we had anticipated, but it looks like a precaution rather than a supply chain issue. This should even out during the rest of the year. Birkenstock had $200m in cash at the quarter end (plus an RCF of $225m available), leaving the company in a solid liquidity position going into H2.