Dive Brief:
- Birkenstock executives are optimistic in the footwear brand’s ability to weather tariff-related pressures and even capture market share from rivals in the industry, according to a Thursday earnings call.
- To offset tariff impact, the company would need a low, single-digit price increase globally, “which is consistent with our historical level of pricing actions,” Chief Financial Officer Ivica Krolo said.
- The footwear brand reported a 19% Q2 increase in global revenue to 574 million euros (about $646 million at press time). Net profits were up 47% to 105 million euros, a jump from 72 million last year.
Dive Insight:
Birkenstock cited the company’s vertically integrated manufacturing platform as a key reason for maintaining control of pricing and inventory. Some 96% of the brand’s raw materials are sourced from within Europe and 100% of the manufacturing and final assembly is in the EU.
“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,” Krolo said. “The consistency in demand, together with our engineered distribution and scarcity model allows for pricing flexibility.”
Additional courses of action include vendor negotiations, product allocation between different regions and efficiencies in production.
A number of retailers have already warned of price increases due to uncertainties surrounding global tariffs. Walmart CEO Doug McMillon responded to tariff questions on a Thursday earnings call by saying the big-box retailer is “positioned to manage the cost pressure from tariffs as well or better than anyone. But, even at the reduced levels, the higher tariffs will result in higher prices.”
Sneaker standout On said it will be increasing the price on a number of its styles beginning in July, but not because of tariffs. Rather, the brand said it would help to further differentiate the company from competitors as a high-end, premium athletic footwear label.
Birkenstock has been riding high since its IPO of October 2023. In December the company reported a 21% revenue increase for its first fiscal year since going public. Revenue for the Q4 period was also up 21.7%, and the company opened 20 stores during the year.
As of today, Birkenstock has 77 store locations with six added in the second quarter. There will be close to 100 company-owned stores open by the end of this fiscal year and around 150 by the end of 2027.