Birkenstock Holding PLC executives detailed continued wholesale growth and intentional production constraints at its Investor Day meeting — and Wall Street is pleased with what it heard.
The Investor Day meeting was held in N.Y.C. on Wednesday, with CEO Oliver Reichert, CFO Ivica Krolo, chief product officer Markus Baum and vice president of operational excellence Jakub Nachtigall among the speakers.
Shares of Birkenstock closed Thursday’s trading session on the Big Board up 0.40 percent to $37.72. While the shares are off their 52-week high of $62.66, Wall Street has high hopes for the stock.
Telsey Advisory Group
Chief investment officer Dana Telsey said the three-year targets unveiled by the Birkenstock executives were mostly aligned with current expectations. She has an “Outperform” rating on Birkenstock shares.
Telsey noted that the Americas region is the company’s largest market and is projected to grow over 10 percent year-over-year in the next three years. The B2B channel is expected to outpace direct-to-consumer (DTC) growth over the next three years, while DTC growth will be fueled by new store expansion that is expected to include 30 more new stores in the Americas to add to the existing 15 in operation.
She noted that Nachtigall in his presentation said he is confident in the brand’s ability to deliver on a 10 percent unit CAGR (compound annual growth rate) through Fiscal Year 2028 form a supply chain perspective. The company is increasing its production capabilities, but “will remain capacity constrained by design.” Currently, 95 percent of pairs of Birkenstocks are assembled in company-owned factories in Germany, and 100 percent are made in the EU across seven owned and operated facilities.
The company employs 5,000 workers throughout its vertically integrated supply chain and it continues to expand production capacity, she noted. Telsey said the vertical supply chain is a differentiator in the footwear space because it gives the company “total control over its [intellectual property] and quality throughout the entire process,” allowing Birkenstock the ability to react to changes in consumer demand that in turn insulates its business from some of the disruptions in global trade.
She also noted that the company has a strong B2B business, where over 70 percent of all units are contracted with five to nine months of visibility. And she said future plans include three large expansion projects that are already underway. That includes the expansion of the Görlitz facility and increasing the production capacity for footbeds, sandals and clogs; the refurbishing of the Wittichenau brownfield development that the company acquired and is expected to go live in Fiscal Year 2027, and the expansion of the Arouca facility to house and prep more leather components.
On the logistics front, Birkenstock is adapting its network to support future growth through consolidation of warehouses in Europe to be more centralized, direct shipping of units to the APAC (Asia Pacific) and Americas regions from factories, the opening of a regional APAC hub that will be key to replenishing stores in the region, and the opening of a leather hub for better quality control.
BTIG
Janine Stichter on Thursday reiterated her “Buy” rating on Birkenstock shares. “While shares have pulled back over concerns around the moderating top line, we believe estimates have been appropriately set here and have confidence in the company’s ability to meet (or beat) these targets which should help to drive multiple expansion,” the analyst wrote in a research note.
As for production, Stichter said the company indicated that some capacity constraints are due to the “outperformance of premium styles,” adding that clogs take 2x the production minutes of the average sandal. And while DTC has higher gross margins, at about 75 percent versus 50 percent for B2B, the adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margins are higher for B2B, at more than 30 percent versus less than 30 percent for DTC, partly due to less operational complexity.
“Birkenstock stands out in the industry for its vendor-managed allocations, where the company dictates the product assortment for retailers, leading to high full-price sell-through rates (over 90 percent),” Stichter wrote. “This approach often results in strong incremental orders, and management intends to preserve a ‘healthy’ level of unmet demand (20 percent-30 percent of total) to support ongoing growth, with about 90 percent of new B2B sales coming from existing doors.”
Stichter said Birkenstock stands out as a unique retail growth story, citing to the quality of the brand’s distribution network, where wholesale serves as the key customer acquisition vehicle, along with its highly profitable DTC business. Also important are investments in doubling production capacity that “allow [the company] to realize its growth opportunities and reach the global scale of peers.”
Jefferies
“Analyst Day was a clear positive, sharpening both strategy and clarity around numbers. We continue to view Birkenstock as best-in-class on durability and profitability, with multiple white-space avenues to extend growth while keeping profits stably industry-leading,” noted Jefferies analyst Randal J. Konik. Konik also has a “Buy” rating on shares of Birkenstock.
Konik pointed to the iconic orthopedic footbed as the brand’s key differentiator, “anchoring [long term] durability” and giving it its “moat,” or defense from competitors. He noted that the average Birkenstock consumer owns on average 3.6 pairs as evidence of “stickiness and loyalty” among the brand’s followers. Moreover, Birkenstock is innovating with new franchises and leaning into loyalty programs, as well as creator-led storytelling to engage and convert younger consumers and drive long term brand growth.
Konik sees runway growth ahead, with APAC set to grown 2x by Fiscal Year 2028 and EMEA (Europe, Middle East and Africa) and the Americas regions expected to grow double-digits. Birkenstock shares are currently trading in the $38 range, while Konik has a per share target price of $60.00.
Given all the pluses such as brand strength and best-in-class growth and earnings power, the analyst believes “shares are too cheap” and recommends that investors “aggressively [buy] at these levels.”
UBS
Jay Sole has an even higher 12-month price target for shares of Birkenstock at $77.
“Th market it concerned Birkenstock’s wholesale channel is growing faster than its DTC channel. Out view is the more important factors are strong brand momentum with consumers, a steady pipeline of new product innovation, and ample market share gain opportunities in categories such as closed-toe shoes and non-core silhouettes, and underpenetrated geographies, such as Asia,” the UBS analyst noted.
Sole said the brand has three drivers for ASP (average selling price) gains: ongoing strong full price realization, selective price increases and mix shifts to higher priced products and more premium geographies such as APAC.
