NEW YORK: Birkenstock shares slump 13% after the sandal maker warned of rising second-half cost pressures from US tariffs and the Middle East conflict, with chief executive officer Oliver Reichert saying war-driven inflation is crimping consumer spending.
The comments echo broader challenges across the apparel and sportswear sector, with companies, such as Nike and Under Armour, also grappling with rising costs and a more cautious consumer backdrop.
“We face multiple conflicts in the Middle East, disrupting global supply chains and driving higher energy costs,” Reichert said.
The company, which missed estimates for second-quarter (2Q) results, recorded a €6mil hit to its Europe, Middle East and Africa (EMEA) segment, due to shipment disruptions to the region and weaker demand due to the conflict.
To mitigate the disruption, the company is re-routing shipments to faster-growing markets such as Asia-Pacific, and reallocating inventory.
“The company’s commentary shows geopolitical disruption is now flowing through both logistics and demand, so further regionalised pressure cannot be ruled out if the conflict persists,” said Sam North, market analyst at eToro.
Shares of the company were trading at US$33, after dropping as much as 14% to a record low.
Birkenstock is also contending with higher tariffs following changes in US trade policy, with its average tariff burden rising from just over 10% earlier to above 20%, its executives said.
“If the current tariff structure were to hold, we could see some additional increase in margin pressure in the 4Q,” chief financial officer Ivica Krolo said.
Tariffs are expected to weigh on margins by about 100 basis points in the 3Q and 50 basis points in the 4Q.
Birkenstock, which produces 95% of its footwear in Germany and sells heavily into the United States, has been attempting to offset some of the cost pressure through price hikes and inventory management.
The German shoemaker, whose price points range from US$50 to up to US$2,000, kept its annual forecasts intact, citing resilient demand in its key markets.
It expects 13% to 15% constant-currency sales growth in fiscal 2026, and profit between €1.90 and €2.05 per share.
The company’s revenue growth was led by Asia-Pacific, where sales jumped 22% on reports during the quarter, while the Americas grew 4% and EMEA rose 10%.
It posted quarterly revenue of €618.3mil, missing analysts’ estimate of €620.07mil, according to LSEG. — Bloomberg
