Birkenstock is increasing expenditures to establish stores and expand production in anticipation that demand for its durable two-strap sandal will remain strong notwithstanding the possibility of fashion shifting.
The German footwear manufacturer anticipates a revenue increase of over 15% in its fiscal year 2024, following a 20% surge to nearly €1.5 billion (£1.29 billion) in 2023. The investors, however, were unimpressed with the forecast, which caused shares to decline.
These were the first results since the firm's initial public offering in the United States. It has exposed the long-established family business to public scrutiny.
In spite of the optimistic prognosis expressed by executives, Birkenstock shares declined by more than 8% in response to the results, which revealed a decline in profits from the previous year and increased investment-related margin contraction in 2024.
As economic development decelerates in key markets, including the United States, and luxury sales decline, the company is also encountering scepticism regarding the sustainability of the robust consumer spending that has propelled its sales.
Oliver Reichert, the headmaster, stated that he was "undeterred" by the general economic downturn and had not observed a major deceleration in demand.
Birkenstock, which was once associated with a certain nerdy, granola-obsessed persona, has experienced a transformation in image over the past decade, owing to designer collaborations and prominent roles in films including Barbie.
However, the stock market performance of the company has been unreliable, which raises concerns regarding its valuation given that it operates in an undefined industry as a manufacturer of "luxury" footwear for the general public.
When trading commenced in October, its shares declined significantly, but they have since recovered.
Thursday morning in New York, they were trading at approximately $45 per share, following the dissemination of the results.
That was comparable to the price they achieved during the company's initial public offering, valuing it at approximately $9 billion.
"Inviting investors to discuss the results, we recognise the difficulty in comparing Birkenstock to other publicly traded companies," Mr. Reichert stated.
The company incurred a loss of €28 million (£24 million; $30 million) in the three months leading up to September 30 due to an increase in administrative expenses preceding the listing.
This failed to meet the expectations of analysts who had anticipated a modest profit, following a surge in summer sales inspired by the Barbie film, wherein the titular character dons a pair of the company's pastel pink sandals rather than her heels. However, Birkenstock stated that the proceeds from the sale of shares were being used to reduce debt and that the company saw growth potential as an increasing number of consumers bypass brick-and-mortar stores in favour of purchasing directly from the brand.
According to Mr. Reichert, the brand has not experienced a substantial deceleration thus far subsequent to its quarterly sales growth of 22% that concluded in September.
He explained that the company opted for a conservative full-year forecast due to inflationary risks and the fact that its executives were "novices" at navigating the fluctuating sentiments of financial markets.
An increase in sales of 17-18% is anticipated for the fiscal year 2024. He stated, "We want to ensure that we are on the correct track."