Birkenstock Q1 2025 Earnings Report

Birkenstock EPS Results

• Actual EPS: $0.19
• Consensus EPS: $0.16
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

Birkenstock Revenue Results

• Actual Revenue: $385.88 million
• Expected Revenue: $355.80 million
• Beat/Miss: Beat by +$30.08 million
• YoY Revenue Growth: N/A

Birkenstock Announcement Details

• Quarter: Q1 2025
• Date: 2/20/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 20, 2025
• Conference Call Time: 8:00AM ET

Birkenstock (NYSE:BIRK) manufactures and sells footwear products. It also offers sandals, shoes, closed-toe silhouettes, skincare products, and accessories. The company sells its products through e-commerce sites and a network of owned retail stores, as well as business-to-business channels. It operates in the United States, Brazil, Canada, Mexico, Europe, APMA, and internationally. Birkenstock Holding plc was founded in 1774 and is based in London, the United Kingdom. Birkenstock Holding plc is a subsidiary of BK LC Lux MidCo S.à r.l.

Birkenstock Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning and thank you for standing by. Welcome to Birkenstock's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. The company allocated sixty minutes in total to this conference call.

[Operator]

I would like to remind everyone that this conference call is being recorded. I will now turn over the call to Megan Kulik, Director of Investor Relations.

[Megan Kulick, Director Investor Relations at Birkenstock]

Hello, and thank you, everyone, for joining us today. On the call are Oliver Reiser, Director of Birkenstock Holding Plc and Chief Executive Officer of the Birkenstock Group Eric Mossman, the outgoing Chief Financial Officer of the Birkenstock Group and Evitsa Krolo, Chief Financial Officer of the Birkenstock Group as of February 1. Klaus Baumann, Chief Sales Officer David Khan, President Americas Nikko Boyaj, President EMEA Alexander Hoff, Vice President, Global Finance will also join us for the Q and A. Today, we are reporting the financial results of our fiscal first quarter of twenty twenty five ending 12/31/2024. You may find the press release and a supplemental presentation connected to today's discussion on our Investor Relations website at birkenstockholdings.com.

[Megan Kulick, Director Investor Relations at Birkenstock]

We would like to remind you that some of the information provided during this call is forward looking and accordingly is subject to the safe harbor provisions of the federal securities laws. These statements are subject to various risks, uncertainties and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties and assumptions are detailed in this morning's press release as well as in our filings with the SEC, which can be found on our website at birkenstockholdings.com. We undertake no obligation to revise or update any forward looking statements or information except as required by law. During the call, all revenue growth rates will be cited on a constant currency basis unless otherwise stated.

[Megan Kulick, Director Investor Relations at Birkenstock]

We will also refer to certain non IFRS financial information. We use non IFRS measures as we believe they represent the operational performance and underlying results of our business more accurately. The presentation of this non IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS. Reconciliations of IFRS to non IFRS measures can be found in this morning's press release and in our SEC filings. As a reminder, this quarter marks the first quarter we are reporting under our new Operating and Reporting segments, The Americas, EMEA and APAC.

[Megan Kulick, Director Investor Relations at Birkenstock]

We filed a six ks on January 16 with a recast of fiscal twenty twenty three and twenty twenty four segment results to align with the new reporting structure and to aid in your analysis of our results. With that, I'll turn it over to Oliver.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Good morning, everybody, and thank you for joining today's call. Before I start the quarterly review, I want to thank Eric for his strong leadership and guidance over the past two years as we navigated the IPO process and first year as a public company. Eric, I wish you all the best in your future personal and professional life. And of course, I want to welcome EBITDA Krollo to the Birkenstock family. EBITDA brings the operational background we need as we allocate our resources to the most attractive opportunities for both revenue growth and cost containers.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

EBITDA also brings the technical background to continue Eric's efforts to level up our finance functions across all areas, including audit, tax and FP and A. I look forward to working with you as we write the next chapter of our success story. Welcome, Ewica. We are proud to report very strong start to our fiscal twenty twenty five with record first quarter results, which came in ahead of our expectations, driven by very strong holiday demand for business shocks products. We delivered 19% revenue growth in the first quarter, above the high end of our 15% to 17% target for the full year.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Revenue growth was supported by double digit volume growth and mid single digit growth in average selling price. Growth in our B2B business benefited from very strong sell through and reorders from our key wholesale partners throughout the holiday season. And our D2C business also strengthened during the critical holiday shopping period as strong gifting demand for styles such as the Boston clock led to record traffic to our website. We are starting fiscal twenty twenty five much in the same way we exited fiscal twenty twenty four with strong and growing demand from our core markets and products by leaning into the white space growth opportunities we have identified: closed toe shoes, the Airpack region and own retail. During the quarter, revenue from closed toe silhouettes grew at over twice the rate of the overall group and increased share of business by 600 basis points, accounting for well over half of the revenue in the quarter, our peak winter quarter.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

During the first quarter, '12 of our top 20 selling silhouettes were closed toe, including six in clogs and six in traditional lace up shoes and boot category. We are very successfully turning Wittgenstock into a four season brand. Our APAC business grew at 47%, two point five times the pace of the overall business. And we opened four new owned retail doors during the first quarter, bringing the total to 71 stores globally. By channel, as expected, we saw continued strength in our wholesale business, which grew by 30% during the first quarter of twenty twenty five.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Once again, over 90% of the growth came from within existing doors as our partners continue to allocate more shelf space to the Bittenstock brand. Our DTC business grew 10%, a strong result when compared to the 30% growth in the year ago quarter. As we look to Q2 and the remainder of 2025, we expect more balanced growth between our D2C and B2B businesses. With D2C likely to grow slightly faster than B2B in the second half of the year as we continue to add additional stores and invest in our digital business globally. Our membership base continued to grow nicely, reaching 8,800,000 loyal members, up nearly 30% year over year.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Now let's move to a brief discussion of segment performance for the year. Within our largest segment, The Americas, we experienced strong consumer demand for our brands throughout the quarter, especially around the peak holiday shopping period. Revenue in the region was up 16% compared to the first quarter of twenty twenty four. Closed toe share of business reached nearly two thirds, driven by the incredibly strong demand for clocks, a category like sandals that is becoming synonymous with the name Bittenstock and making us a year round wardrobe staple. B2B was especially strong as many of our strategic partners allocated more space to Birkenstock and experienced very strong holiday sell through with many high demand styles, such as the Boston clock selling out at most retail partners.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

America's B2C, which is almost entirely from our digital business, strengthened late in the quarter as shoppers thought out high demand holiday gifting items, including clocks, home shoes and our shielding executions, especially as the cold weather set in. Search for BURKSTORK LOGS was up 70% over the critical holiday shopping period versus last year, driving increased traffic to birkenstock.com. We expanded our physical retail presence, opening our Boston Newberry Street store during the quarter, the ninth location in The U. S, and we plan to add several additional stores later this year. In EMEA, we delivered growth of 17%, which was growth based across all countries.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

This result stands out in the current market environment, characterized by flat market growth, macroeconomic challenges and uncertainty. As consumers switch to their winter wardrobe, they remain loyal to the Birkenstock brands. Closed tone, including clogs, grew over 2.5 times faster than sandals, driving ASP higher. Lace up shoes and boots were up over 50% and increased share of business by 300 basis points. In our online channel, in EMEA, 16 of our top 20 selling styles were closed toe, including seven boots.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Shoes became the number two category in EMEA, showcasing strong growth in this important expansionary category. In our B2B channel, we doubled share of business in shoes compared to last year and continue to see strong growth in our order book for spring summer twenty twenty five. We were pleased to see that Buttonschok was a top choice on holiday wish list, with sell throughs at our key retail partners increasing up to 30% year over year during gifting season. We opened a new store in Amsterdam, Netherlands during the quarter, bringing our store count in EMEA to 35 and identified key locations throughout Europe for additional owned retail stores through 2025. The APAC region was again the fastest growing segment in the quarter, growing 47%, two point five times the pace of the overall business and now representing 13% of total revenue, up from 10.5 a year ago.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Growth in the quarter benefited from an accelerated pace of store openings and earlier shipments to some B2B partners as we continue to make progress toward penetrating this significant white space for the Birkenstock brand. Aligned with our roadmap and commitment to the region, we added two new owned retail stores, bringing our total to 27 in the APAC region. We also expanded our strategic partnerships, increasing our mono brand partner doors by 2019. We expect the pace of openings to moderate in the coming quarters, leading to a more normalized APAC growth rate of double the group average. Greater China made up approximately 30% share of APAC revenue and grew above segment average.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

We are still in the early stages of our market rollout there, but are steadily building brand awareness and demand through our increased retail and online presence. It is a market where we see a tremendous opportunity for strong brands to take share. We opened our first owned store in Chengdu in October and will turn our successful pop up store in Shanghai into a permanent store later this year. I will now turn it over to Erik to discuss our financial results in more detail.

[Erik Massmann, Former - Group CFO at Birkenstock]

Thanks, Oliver, and good morning, everyone. Before I jump into the quarterly results, I want to thank you all for your partnership, support and patience as we navigated the IBO process and first year as a public company together. I wish Evisa and the entire Babystock family continued success in the future. Now I'm happy to share with you one last time Babystock's exceptional performance for the first quarter of twenty twenty five, which came in ahead of our expectations. First quarter revenue were EUR362 million, grew of 19% in both reported and constant currency, above the high end of our 15% to 17% annual guidance for the year.

[Erik Massmann, Former - Group CFO at Birkenstock]

B2B was up 30% and our D2C was up by 10%, a strong result. B2C share of business was 49% in the quarter, down 400 basis points from a year ago. As Oliver mentioned, we expect more balanced growth between B2C and B2B for the remainder of 2025. Gross margin for the quarter was 60.3%, slightly down 70 basis points year over year, primarily due to the higher B2B mix this year. Selling and distribution expenditures were EUR118 million in the first quarter, representing 32.7% of revenue, down 130 basis points, primarily due to the lower D2C penetration compared to last year.

[Erik Massmann, Former - Group CFO at Birkenstock]

General administration expenses were EUR 24,000,000 or 6.7 percent of revenue in the quarter, down 120 basis points year over year, primarily due to the operating leverage from strong revenue growth and lower IPO related expenses. EBITDA in Q1 of EUR102 million was up 25% year over year, and margin of 28.2 was up 130 basis points year over year due to the strong improvement in SG and A. Adjusted net profit of EUR33 million in the first quarter was up 99% and earnings per share was EUR 0.18, up 100% from a year ago. Cash flows used in operating activities during the first quarter was EUR 12,000,000, an improvement of EUR 34,000,000 year over year. This was driven by the strong EBITDA growth combined with improved working capital efficiency.

[Erik Massmann, Former - Group CFO at Birkenstock]

We ended the quarter with cash and cash equivalents of EUR $299,000,000, down from EUR $356,000,000 at the end of fiscal twenty twenty four due to the normal seasonality of our working capital usage. We improved our inventory to sales ratio to 39%, down from 42 in Q1 twenty twenty four. Our DSO for the quarter were 15%, down from 19% a year ago, despite the higher B2B mix. During the quarter, we spent EUR 90,000,000 in capital expenditures adding to our production capacity in Parzweig, Gorlitz and Daruka. Our net leverage was 1.9 times as of 12/31/2024, up slightly from 1.8 times at the end of fiscal year twenty twenty four due to the seasonality of our working capital.

[Erik Massmann, Former - Group CFO at Birkenstock]

I'll now hand the call over to EBITDA to discuss the outlook for the second quarter and remainder of fiscal twenty twenty five.

[Ivica Krolo, Chief Financial Officer at Birkenstock Holding PLC]

Thank you, Erik, and I appreciate your support during this transition. As we look forward to the remainder fiscal twenty twenty five, we believe we are well positioned to meet our stated growth and profitability objectives. For the remainder of 2025, we see more balanced and healthy growth from both B2C and B2B with B2C coming in slightly ahead of B2B overall for the year. We are reiterating our growth and margin targets for the year. We forecast revenue growth of 15% to 17% in constant currency.

[Ivica Krolo, Chief Financial Officer at Birkenstock Holding PLC]

Gross profit margin should improve year over year as we increase utilization and efficiency at our production facility moving closer to our 60% target. And we expect adjusted EBITDA margin in the range of 30.8% to 31.3%, an increase of up to 50 basis points compared with 2024. CapEx are expected in the range of EUR 80,000,000 and we see net leverage of approximately 1.5 times by year end. As you know, the second quarter is an important quarter for our B2B business with significant shipments to our partners for the spring summer season. We feel good about where we are relative to our full year revenue growth guidance of 15% to 17%.

[Ivica Krolo, Chief Financial Officer at Birkenstock Holding PLC]

The mix in Q2 is more heavily weighted to B2B, so we expect the usual seasonal decline in gross margin and increased EBITDA margin when compared to the fiscal first quarter, but all within the context of our full year margin guidance. And now, I'll hand it back to Oliver for his closing remarks.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Thanks, EBITDA. We are off to an excellent start in 2025 with strong double digit revenue growth, excellent margins and success leaning into the white space areas we highlighted over a year ago. Our brand strength was evidenced as BILtenstock proved to be one of the clear winners this holiday season, and that strength continues with a very strong order book into the important springsummer season. We are leaning into the strong consumer demand in both our B2B and D2C channels and continue to carefully execute on our proven engineering distribution strategy to drive ASP growth, ensure healthy stock levels and maintain strong full price realization. We are entering the next chapter of growth as we tap into our white space opportunities and see a long runway for growth in all three: closed toe shoes, own retail and APAC.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Globally, we are increasing brand awareness, educating the consumer on the purpose of the Birkenstock footbed and growing our retail and digital presence to gain share. I would now kindly ask the operator to open our Q and A session. Thank you.

[Operator]

Thank you. And the first question today is coming from Jay Sole from UBS. Jay, your line is live.

[Jay Sole, Managing Director at UBS Group]

Great. Thank you so much. I have one question in two parts. The first question is, Albert, the quarter is really strong. Why aren't you raising the guidance for the full year given the strong beat that you had in first quarter?

[Jay Sole, Managing Director at UBS Group]

And then secondly, can you address the strong B2B growth that you had? What drove the strength? And why will the growth be more balanced between channels as you look over

[Jay Sole, Managing Director at UBS Group]

the rest of the year?

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Thank you. Hello, Jay. Thank you for your question. Yes, we are off to a great start into 2025. But keep in mind that Q1 is the smallest quarter of the year.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

In 2024, it was made up only 17% of the total annual revenue. So we still have over 80% of the year ahead of us. Also, we have a very strong order book, but keep in mind that there is a lot of macroeconomic uncertainty, interest rates, currency movements, tariffs. The inflation in The U. S.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Is over 3%. In the Euro Zone, we're facing inflation of 2.5% at the moment, and all this is before the impact of any new tariffs. So the potential impact on the global economy and global consumer is highly uncertain. And we have a big DTC business in the second half of the year, which is not that good foreseeable compared to our order book we're playing in the wholesale. So while we're off to a great start in business, it's strong.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

For all of those reasons, we think it's prudent to stick with our current guidance for the year. And coming back to your second question or second part of the question, our sell through was up around 40% full price, 40% up full price, with an average price increase of around 10%. I think these are very strong metrics for the wholesale business. And the average inventory was only up 10%, so stock to sales ratio is very healthy. Our B2B business continues to be a very strong indicator of the overall end user demand, especially in an environment where consumers, especially the younger target groups, are returning to in person shopping.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

So this is a great wholesale business, and we love our wholesale business. Be assured, our demand is super strong, and we will never, never compromise our distribution strategy from pull to push. Don't expect such a thing from us. Going forward, B2C will see more balanced growth as we accelerate our own global retail store growth. Our own retail business was up 70% in the quarter on a small base.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

But we are also seeing more global opportunities to grow our digital business in the future. Thank you.

[Jay Sole, Managing Director at UBS Group]

Great. Thank you so much.

[Operator]

Thank you. And the next question is coming from Laurent Vasilescu from BNP Paribas. Laurent, your line is live.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

Good morning. Thank you very much for taking my question. Eric, thank you for your leadership and support over the last eighteen months, and I wish you the best in the future. Avita, welcome. As you look at the opportunity to join Birkenstock, what was it that excited you most?

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

What do you see as the biggest challenge? And how do you plan to address that? And then I have a quick following up on the model. Thank you.

[Ivica Krolo, Chief Financial Officer at Birkenstock Holding PLC]

Thanks, Laurent, for the question, and I'm looking forward to be working with all of you in the future. It's a lot about the opportunity at Birkenstock, which is very attractive to me. To state the obvious, we have significant growth opportunities for the company over the next decade and beyond. It's really rare to find a company with a two fifty year old legacy that still has such substantial growth ahead, and that's very exciting. Then culturally, I think it's a great fit for me.

[Ivica Krolo, Chief Financial Officer at Birkenstock Holding PLC]

I love the brand. I love the history, its purpose, and it's a real and just really looking forward to help to guide the company through the next slack of growth together with a great team. On the biggest challenges, well, the challenges, obviously, any rapidly growing company is facing, so making sure that systems, infrastructure and team are scaling in line with the business. So keeping up with the growth that we're seeing is certainly a big challenge and be leading in terms of technology, processes and communication. The good news is I'm coming to a company with a very, very strong foundation and the resources to ensure the proper investments are made and scale the business right away.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

Very clear. And then it's good to hear that DTC and B2B should be balanced growth going forward. Should we assume that for the second quarter? And should we overall assume 2Q overall sales could be roughly in line of that revenue range of 15% to 17% or should we assume it's a little bit higher or a little bit lower? Thank you.

[Megan Kulick, Director Investor Relations at Birkenstock]

Hi, Laurent, it's Megan. I'm going to have to ask you to repeat that question. We had a firing going by right when you were in the middle of the question.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

I'm sorry to hear that.

[Megan Kulick, Director Investor Relations at Birkenstock]

Yes, I apologize.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

Okay. Hopefully, there's no fire. Yes. Thank you, Megan. Yes.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

So the quick question here is, it's great to hear that B2B and B2C will have balanced growth for the year. I think that's the big debate out there in the investment community. But just curious to know, should we assume that for the second quarter? And overall, I think last quarter you called out for 1Q to be on the slightly higher range of 15% to 17% growth. Should we assume a certain range for 2Q for overall sales?

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

Thank you very much.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hey, Laurent, this is Alexander speaking. Yes, overall, we said we want to achieve a balanced growth between the channels, B2B and B2C on a full year level 2025. We also called out that there are some fluctuations between the quarters. This can always happen depending on how we ship. But overall, with that outperformance in B2B in the first quarter, it is fair to assume that we expect over the next quarter's cumulative stronger growth in B2C compared to B2B.

[Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas]

Okay. Thank you very much. Best of luck.

[Operator]

Thank you. The next question will be from Mark Altschwager from Baird. Mark, your line is live.

[Mark Altschwager, Senior Research Analyst at Baird]

Great. Thank you for taking my question. And Eric, we wish you well. So you delivered some nice EBITDA margin expansion in Q1, well ahead of the run rate for the annual guide with improvement in SG and A. Was hoping you could talk us through the drivers here and the implications for the balance of the year.

[Mark Altschwager, Senior Research Analyst at Baird]

And could you see upside to the guidance for 50 basis points of EBITDA margin expansion given the strong start that you've delivered? Thank you.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hey, Max. This is Alexander. Great question, first of all, and let me guide you a little bit through the first quarter as a starting point. Essentially, the biggest driver of the improvement in the EBITDA margin was really the shift in channels in the quarter. So as you recall, we have always said that our B2B channel has a significant lower gross margin compared to D2C, but it has a slightly higher EBITDA margin.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

And this is what we are now seeing as a result in the first quarter because those channels, the D2C channels have a much higher selling distribution expenses compared to B2B. So with the stronger B2B growth in the first quarter compared to D2C, this had an impact on the SG and A comparison year over year. And as I said in the first question, as we look into the full year 2025 and the more balanced growth between the channels we expect the upcoming quarters not to be impacted in that way how it was in the first quarter. Based on those trends, there should be less an impact on SG and A as well as EBITDA margin year over year in the next quarters. So we stick here with our guidance in EBITDA margin of up to 50 basis points for the full year, and you shouldn't assume that the 130 basis points improvement in the first quarter carries through the remainder of the year.

[Mark Altschwager, Senior Research Analyst at Baird]

Thank you. And maybe just a quick follow-up there related to gross margin then. For the first quarter, you did not call out incremental pressure related to the facility expansion. So it sounds like that ramp must be going well. And then with the channel dynamics you talked about, perhaps less of a pressure on gross margin in the second quarter.

[Mark Altschwager, Senior Research Analyst at Baird]

So I guess as we put all that together, should we expect gross margin expansion beginning in the second quarter? Thank you.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Yes, you're absolutely right. We didn't call that out in the first quarter, any impact from It's quite the same than last year, so it has not an incremental margin impact in the first quarter of this financial year. And as we said before, we are expecting that in the second half of the year, we expect a positive impact from the utilization of our factories. So you can, at a full year basis, expect a modest improvement in gross margin.

[Mark Altschwager, Senior Research Analyst at Baird]

Great. Thanks again.

[Operator]

Thank you. The next question is coming from Matthew Boss from JPMorgan. Matthew, your line is live.

[Matt Boss, Equity Research Analyst at JP Morgan]

Thanks. Congrats on another nice quarter. So Oliver, maybe could you elaborate on key drivers of the revenue upside in the first quarter, maybe particularly the direct to consumer acceleration that you cited to exit the quarter? And then just relative to the larger picture comments on macro uncertainty, I guess, have you seen any softening at all in demand momentum post holiday in the second quarter? And just anything you're seeing in terms of visibility for the back half aside from just the larger picture macro uncertainty?

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Hi, Matt. Thank you for the question. I'll take the first part. We don't see any softening at all. I mean, we believe that the brand demand is super strong globally, by the way.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

I think the ultimate truth is in wholesale, if you perform as we do perform in wholesale with this full price realization, very high sell through ratio, It's an unbelievable strong demand out there. And the people and the customers, they should decide where they want to shop our product, and they do it, especially the younger target groups. But Niko and David can give you some more detailed color than this. We see a very strong order book. We see very strong demand globally, so we're fine on this.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Hi, Matt. This is Nikolas. Thank you for

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

your question. I'll touch a bit on the growth drivers in Q1. So as we heard in the earlier part of this call, it is really a broad based demand across all regions. So that's something that we have to consider that we're very pleased with. Particularly, we had a very strong holiday and gifting season.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

So as consumers, even in the areas of our globe where it was getting colder, as they switched into the winter wardrobe, they really remained loyal to us. We are becoming much more of a full year brand. Furthermore, I really like to share that we see a very strong growth contribution from the white space opportunities we shared during our IPO. Closed Home, as we shared earlier, is going at twice the speed as compared to our overall growth and the share of business is up 600 basis points and now making up more than 50% of revenues. In the Americas region, it's two thirds of the business driven by close toe.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

In EMEA, our online business is the same, two third of the business is close toe. Retail is our fastest growing channel and be reminded that we just opened four new stores, totaling now at 71 stores globally. And the bigger part of expansion is still to come. So we're bringing this 71 stores closer to 100 in this fiscal year. So you see us opening many more stores again across all the regions.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

And finally, I want to touch on the APAC region. Again, a very, very strong growth, strong results with accelerated partner store openings. We opened 19 partner stores, and that's also paying into the B2B revenue recognition. And we generally see an increasing brand awareness in that region that results in strong demand, especially in higher price points. That's also something really worth mentioning compared to other brands.

[Operator]

Thank you. And the next question is coming from Randy Konik from Jefferies. Randy, your line is live.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Hey, good morning. Maybe give

[Randal Konik, Managing Director at Jefferies & Company Inc]

us some perspective on the amount of allocation improvement or space shelf space gain that you got in 2024, maybe dimensionalize that for us and maybe give us some perspective on what you see in 2025? And maybe kind of characterize how you also see pricing versus units looking into the year to come up with your guidance on overall top line? And then relatedly, maybe just give us some perspective on APAC. It's obviously growing extremely well in its early days. Just maybe give us some, again, some perspective on where you are with allocation there, wholesale partners, etcetera, just the building blocks of that business or that geography would be super helpful?

[Randal Konik, Managing Director at Jefferies & Company Inc]

Thanks guys.

[David Kahan, President of Americas at Birkenstock]

Hey, Randy, this is David. Thanks for the question. As you know, the word allocation ties to the term engineered distribution we use. We are a true sell through company, not a sell in company. So as we take share, we manage the allocation to make sure the stock to sales ratios are always healthy.

[David Kahan, President of Americas at Birkenstock]

As Oliver said when he answered the opening question, when you're delivering selling results in an aggregate of retail partners that's 30% to 40%, and above 40% increases on an average stock level that's only up 10%, your stock to sales ratios are incredibly healthy. And where we're taking share goes beyond our traditional sandal category. I think that's the beauty of this. The growth rate in closed toe shoes is twice the rate of the rest of the collection. In The Americas, closed toe shoes was two thirds of the revenue in the quarter.

[David Kahan, President of Americas at Birkenstock]

So you're seeing a much broader based acceptance of the brand. Clogs are leading the way, but it's clogs, it's shoes, it's shearling and sandals. So very broad based success in the quarter and we continue to allocate against that. And as Oliver said in the opening question, we will never compromise the allocation, the scarcity. So, suffice to say, as much as the demand increases and as much as there's an appetite in the wholesale market to increase our shelf space, we manage that very strictly.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hi, Randy. This is Alexander. Second part of the question, brief and quite straightforward. So we expect and reiterate two thirds unit growth and one third in ASP. And ASP were continuously driven on the one hand by product mix with consumers continuously buying into more higher price points and secondly, like for licensing.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

And with a balanced growth between channels for 25%, you should not expect an impact from channel mix.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Just on Asia?

[Megan Kulick, Director Investor Relations at Birkenstock]

Hi. Can you just repeat the question on Asia?

[Randal Konik, Managing Director at Jefferies & Company Inc]

Just give us some just further give us some perspective on where we are with that. Obviously, we're early days. Where are we with distribution? Where can we expect to go with distribution over the next couple of years? That would be super helpful.

[Klaus Baumann, Chief Sales Officer at Birkenstock]

Hello, Andy. This is Claus. So as we always said, we are expanding in a mixed model. So we are having partners in Asia running mono brand stores. As you have seen, we are very strong in opening our own fleet in B2C.

[Klaus Baumann, Chief Sales Officer at Birkenstock]

And also this season, we had the first holiday season with this setup and we said that coming in very strong. So we will keep the pace of opening, but very in a very good premium way. And important is to really do the brand building the brand awareness and being strong on spreading the word of the brand in the territory, the consumer is really getting the right message here.

[Operator]

Thank you. The next question will be from Louise Singlehurst from Goldman Sachs. Louise, your line is live.

[Louise Singlehurst, Managing Director at Goldman Sachs]

Hi, good morning, everyone. Thank you for taking my question. Just wanted to have some commentary with regards to lots of new product coming through on the new launches and the opportunities for price mix that that might provide for you as you work your way through 2025, but also looking further down the line. And the new products, are they can you just give us a bit of color in terms of the appetite from the consumer? Is that more of a loyal customer coming in and broadening out the Birkenstock range at home?

[Louise Singlehurst, Managing Director at Goldman Sachs]

Or is that a good new customer acquisition tool as well? That would be very helpful. Thank you.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Hey, Luis. This is Niko again. I can give you some color on the latest launches in Q1 in EMEA. So we are very pleased to see that in EMEA shoes, one of our expansionary categories, had a record quarter. So as Oliver was referring to, the majority of the top 20 and the top 10 selling styles was closed shoes, but also boots at a price point of So how we usually spearhead that success is we venture into our DTC business where we have the most loyal customers and what we see is we can easily migrate them into new styles, into higher price points and that's also what we saw with the shoes category.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Now you might recall that we also doubled the order intake because what we do is for B2B, we take the success from B2C and bring it into B2B. We doubled the order intake for AUTOMIN twenty four on shoes and we're just seeing now very promising sell through results. So this is how we expand with our expansionary categories, starting with PTC with our most loyal customers and then going into B2B to reach a more critical mass and drive penetration in the market. And there's more to come on this one.

[Louise Singlehurst, Managing Director at Goldman Sachs]

Thank you.

[Operator]

Thank you. The next question will be from Paul Lejuez from Citi. Paul, your line is live.

[Analyst]

Hi, this is Kelly on for Paul. Thanks for taking your question.

[Analyst]

Just want to clarify a comment from earlier

[Analyst]

on the gross margin. Did you say the capacity of Rands of your Passawak facility was still a drag in 1Q? Any way to quantify that? I believe it was only a 50 basis point drag in 1Q last year. And just given it was a pretty significant headwind to gross margin in 2Q last year, should we expect that to flip to a tailwind beginning in 2Q this

[Analyst]

year?

[Analyst]

And then just any other if you could just give us any more detail on the puts and takes to the gross margin in 1Q, how much did pricing benefit gross margin and what we should expect for pricing going forward? Thanks.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hey, Kelly. This is Alexander speaking. Yes, on the gross margin in the first quarter, you're right, it was still an impact, but the same impact than the previous year's first quarter. So not an incremental pressure on margin. And we expect in the back half of the year, So starting second, third, fourth quarter to be a little bit positive against that 150 basis points on full year or the year '24.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

And we confirm also that we want to completely offset this 150 basis points margin pressure in the third quarter of twenty six. So you will see a constant improvement quarter by quarter on the gross margin fees from the underutilization from the positive factory.

[Analyst]

And just on pricing?

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Yes. On pricing, I mean, we are regularly reviewing our pricing structure. I mentioned before that ASP will be not only driven by product mix, but also by like for like pricing. We are doing it very surgically, those kind of adjustments. So it will be in the single digit low single digit amount each year.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

We are doing style by style, not on average for all of those products depending on how we want to price each of the products. And yes, on inflation, so clearly the goal is to offset inflation by pricing, but we are also working internally on cost structures and supply chain to further gain shares here.

[Analyst]

Got it. And just one follow-up on just the flow of the year from the top line perspective. Is it fair to assume that given we're coming up on some of your biggest quarters here and the share of closed toe, I assume, given as we move to spring becomes a lower penetration of the assortment. Will we assume 2Q, 3Q or sort of

[Analyst]

towards the low end of

[Analyst]

the guidance range? Just any color you can provide there would be helpful. Thank you.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Yes. We are not guiding specifically for quarters, Kelly. I think we've given a little bit of guidance around how we see margins in the next quarters, but we are not specifically guiding quarters.

[Analyst]

Got it. Thanks. Best of luck.

[Operator]

Thank you. The next question will be from Simeon Siegel from BMO. Simeon, your line is live.

[Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets]

Thanks. Hey, everyone. Nice broad based growth. Eric, it's been great getting to know you. Best of luck in the next chapter and Avika, welcome aboard.

[Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets]

Looking forward to meeting you in the future. So we can hear your comfort in the health of the B2B business in the qualitative comments, but you also offered some quantitative color. I mean, you brought up the DSOs in your remarks. Any further color you could share on composition of receivable health, maybe talk about how much of the B2B growth has come from deeper going deeper within existing doors versus new? David, I assume from your comments, safe to say your retail partners would still love to take more if you're willing to give them more.

[Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets]

So anything further on that would be helpful. Thanks guys.

[David Kahan, President of Americas at Birkenstock]

Yes. Hey, Simeon. Just a quick comment on that. As we've said, 90 plus percent of our wholesale growth is coming from existing partners and existing doors. So that indicates that on this growth level, it's clearly taking share and it's clearly expansion from our basis business.

[David Kahan, President of Americas at Birkenstock]

So the stronger the business is, the more we continue to expand slowly and very deliberately. We had a very, very strong holiday sell through and the business was strong going into the holiday season. So obviously results correspond to future order book and demand And clearly, you're absolutely right, there's probably not a retailer out there that would not want more product. And then it's contingent upon us to determine how much they get and in what quantities and how the brand shows up at retail. So we can be very intentional right now about where we're taking our business and continue what we've been doing based on the results.

[Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets]

That's great. And then would you guys be able to quantify the gross margin drivers this quarter at all anymore? Just thinking through product, geo, channel mix shifts, higher ASP, etcetera, anything in terms of how Q1 played out? Thank you.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hey, Simeon. This is Alexander again. Yes, I think I touched a little bit already on the first quarter gross margin. So it's quite straightforward in this quarter. So really the biggest part of the 70 bps decline is relating to the change of the channel mix with 400 basis points less B2C penetration.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

That gives you approximately the gap you're looking for. And yes, all other drivers have been not material. So we managed to offset inflation. So this was not a big driver by the targeted price actions. Product mix was not a big driver.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

So essentially, it's I called also out Parzovag, so essentially, it's only then the channel mix.

[Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets]

Great. Thanks a lot guys. Best of luck for the rest of the year.

[Operator]

Thank you. The next question is coming from Dana Telsey from Telsey. Dana, your line is live.

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

Thank you. Good morning, everyone. Nice to see the progress. As you've touched on faster DTC growth than B2B as we go through the year, any more perspective on e commerce versus owned stores? How you're seeing current store opening performance versus the base?

[Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group]

And how you're thinking about store openings by region this year? Thank you.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Hey, Dana. This is Niko speaking. It's a great question. I'm happy to take the question. So as I touched on, retail is the fastest growing channel and will remain the fastest growing channel when we look into the future.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

We operate 71 stores. We just opened four stores in this quarter, and we're going to bring the total number closer to 100 this year. So we will be opening many, many stores. What we see is the newly opened stores, they deliver higher ASP, a better conversion rate and a better square meter productivity. So it's a proven store model that you know.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

We are not looking for locations at a AAA location. We are going to the site suite next to the AAA location. We operate stores at 120, one hundred and 50 square meters. The CapEx payback is and will be at between twelve and eighteen months. So it's a really highly proven store model, and we definitely see success.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

On some locations that we are that we have secured, so there will be locations across all three regions where we open the stores. There will be a new store in London, another store in Paris. We'll also look into the Spanish region, but you'll see opening every quarter dynamically growing into every region. So on the online business, we do believe we have a very strong online business. As you know, it's 90% of our DTC, and we still do see a significant growth opportunities from a regional perspective, but also from a customer perspective.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Just be reminded, in our Asia region, in the APAC region, we just opened four new countries as new.com destinations. Our businessin.com in Middle East Africa is just two years old, so really in its infancy, and you see further growth coming from those regions. And just to close off with new customer audiences, as we expand with expansionary categories in our online business and we just shared the great results there, we also acquire new customers, and that's going to continue also into the next quarters and the next two years. So we are very, very positive about the DTC and the outlook that we have with this channel.

[Operator]

Thank you. The next question will be from Lorraine Hutchinson from Bank of America. Lorraine, your line is live.

[Lorraine Hutchinson, Managing Director at Bank of America]

Thank you. Good morning. As you run scenarios around potential tariffs into The U. S, what levers are you considering? Do you plan to offset potential tariffs with pricing?

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Thank you, Lorraine, for your question. It's Ito speaking. As you know, our final assembly is entirely in Germany, so we would only be impacted by tariffs on imports from Germany. And the good news is here that we have historically had the ability to take pricing action globally that offsets these inflationary pressures, including tariffs, without any impact on our business. This is something that we will obviously monitor closely and do whatever we can do to mitigate the impact through cost initiatives and pricing adjustments.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

So it's not about just pricing adjustment, but it's overall for us to gain efficiency through cost initiatives. One point I want to mention in addition is that besides, we may see a couple of indirect impacts as tariffs may drive inflation generally and may impact also consumer sentiment, which certainly adds to the uncertainty also mentioned in his initial statement. But overall, we're watching that closely.

[Lorraine Hutchinson, Managing Director at Bank of America]

Thank you.

[Operator]

Thank you. The next question is coming from Michael Binetti from Evercore ISI. Michael, your line is live.

[Michael Binetti, Senior Managing Director at Evercore ISI]

Hey, guys. Thanks for taking our question and for all the detail on the call here. Congrats on a great quarter. Just to double click on the earlier question on gross margin. I think in second quarter last year, there was a pretty big step up in the gross margin pressure from the factory deleverage relative to 1Q.

[Michael Binetti, Senior Managing Director at Evercore ISI]

I know you did speak to it. I can hear your confidence in the gross margin in the second half. Is there any puts or takes that are unusual that we should think about on the gross margin in the second quarter that holds you back from saying there's a step up in the gross margin there? Or is it just conservatism given it's a bigger wholesale quarter? I guess and then maybe bigger picture, one for David, as you look across some of the parts of the wholesale channel in The U.

[Michael Binetti, Senior Managing Director at Evercore ISI]

S. That's stocked out, which we saw in a lot of our work, stocked out as key gifting items this Christmas. How do you think about adjusting the strategy relative to that level of unmet demand for next holiday? I know you're always balancing this, David, with managing the corporate first principles at Birkenstock for managing scarcity. Just any thoughts you have as you look across the results in this holiday?

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Michael, Alexander here speaking for the first part of the question regarding gross margin. Yes, the puts and takes, again, we are not guiding specifically quarters, but what I can say is that we are not seeing a substantial impact from channel mix in the second quarter. And on the Baselberg impact, as I said before, we are not expecting additional pressure. So but quarter by quarter, you will see now that 150 bps from last year turning into a positive impact quarter by quarter.

[David Kahan, President of Americas at Birkenstock]

Michael, I'll take the second part of that. This is David. As you know from following our brand in the market, allocation and distribution is half art and half science. I mean, we do it with a lot of data. We have planners.

[David Kahan, President of Americas at Birkenstock]

We have analysts on a door by door on a style by style basis. We're always going to make sure that the stock to sales ratios are always healthy. So while we don't want stock outs all over the market, clearly some of that unrequited love and the demand that it creates for the brand is part of this flywheel impact that we get. And that's why demand keeps increasing. And what we keep finding continually is the more we put additional product into the wholesale market, the more the demand continues to increase.

[David Kahan, President of Americas at Birkenstock]

And again, just remember, our D2C base is already at 40% penetration with 90 plus percent of it being digital. So as we open more of our own doors, the white space category that we've been talking about, that's just more points of distribution where we can fulfill that demand. So it's all really part of one ecosystem. Suffice to say, the stock to sales ratios that are maintained very healthy in the wholesale market are basically the foundation for the entire business model.

[Michael Binetti, Senior Managing Director at Evercore ISI]

Okay. And maybe just one quick follow-up on the model. Is there related to your very last comment there, is there anything in the guidance for the year assuming a price increase that's directly earmarked for tariffs or would that be incremental if tariffs happen and it's not included in the guidance at this point?

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

Hey, this is Oliver. I think there's no big sense in discussing the possible tariffs up and down because it's really impossible to foresee this. I think the tariffs will have more an impact to overall inflation and the overall macroeconomic because

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

as

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

I mentioned in my first question and the answer, it was inflation in U. S. Is above 3%, and that's before all the tariffs kicks in. So this is why we are concerned about the tariffs. As you know, we constantly adjust our pricing every season very precisely, style by style.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

It's the opposite what you can see from the luxury industry where they with pricing all over by 10%, twenty %, fifteen %, thirty %. We go step by step, very precise, leather, this articulated group, textile, different one. And that's what we're doing. So I would call it price adjustments. And yes, if something happens, some price increases on raw material side, on tariffs, whatever, then of course, we try to balance it out within our collection, but don't expect an overall price increase to happen with us.

[Michael Binetti, Senior Managing Director at Evercore ISI]

Okay. Thanks again, guys. Congrats.

[Operator]

The next question will be from Anna Andreeva from Piper Sandler. Anna, your line is live.

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Great. Thank you so much for all the color and taking our questions. Could you provide a little bit more color on your loyalty program? I think you said 8,800,000 people this quarter, so nice growth versus I think 8,000,000 you called out last quarter. Just curious how is it performing versus expectations?

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

And what are some of the recent KPIs of how you measure how success is going to look like in 2025? And then we had a quick follow-up.

[David Kahan, President of Americas at Birkenstock]

Yes, thanks. Great question. Our members are very important to us. As you know, people who wear Birkenstock aren't just consumers. They become our fans.

[David Kahan, President of Americas at Birkenstock]

They become our brand missionaries. And the more we wrap our arms around them, the better the return on investment is for us. Our membership at over $8,000,000 right now is 30% higher year on year. I can certainly see it moving to $10,000,000 quite quickly when you do the math on it. Marketing to our members has been very successful.

[David Kahan, President of Americas at Birkenstock]

I believe almost 50% of our D2C business came from members in the past quarter. And just remember, our members tend to spend 30% higher per transaction. So the return on investment as we market to them and as we share new products, if you've worn Birkenstock in any product, if you came to us by way of the sandal or the clog and you've experienced the footbed, odds are much higher you're going to adapt for another use occasion, a closed toe shoe or an outdoor shoe or recovery or if you work in healthcare or hospitality or professional shoes. So as our membership grows, we see that as a key driver for our D2C business. And just remember also the more touch points we have as we open retail stores around the world, those retail stores also become vehicles for membership.

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

That's awesome. That was very exciting. Thank you, David. And just as a follow-up, so APAC was up very nice 47% in 1Q and you mentioned accelerated pace of door openings and also deliveries during the quarter. Should we think there's a timing shift which could negatively impact the second quarter growth rate in the region or that shouldn't affect the current quarter?

[Klaus Baumann, Chief Sales Officer at Birkenstock]

Hello, Anas, it's Claus. We always said we are very fine with the growth rates in APAC having double of our mature markets, and this is also what we keep. So I think that answers the question, right?

[Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Got it. Well, thank you so much.

[Operator]

The next question is coming from Sam Poser from Williams Trading. Sam, your line is open.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thank you. Thank you for taking my question. Just quickly, you mentioned that Q2 is another big sell in quarter and I'm just trying to balance out how the DTC for the year is going to grow faster. Do you anticipate DTC to grow faster than wholesale in Q2 or is that DTC growth going to be driven a lot by these new stores that are going to open and impact the second half of the year?

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Hey, Pam, this is Alexander speaking. We cannot be that specific. What we said is that we want to grow in the remaining quarters more in D2C to come then on a full year basis

[Alexander Hoff, Vice President Global Finance at Birkenstock]

to a balance number.

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Will it be quarter two, three, four? That would be really too specific and it's also depending on how we ship into the wholesale accounts.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

I understand.

[Oliver Reichert, Chief Executive Officer and Director at Birkenstock Holding PLC]

In general, as you know, Sam, because you know the business best probably, the first half is wholesale heavy and the second half of the year is more D2C heavy. So that probably gives you the best direction how to think about it.

[Sam poser, Equity Analyst at Williams Trading LLC]

And so that also would be a balance of the gross margin. Another reason for the gross margin in the second quarter, while it may increase year over year to being the biggest wholesale quarter to keep it well underneath Q1 and underneath the full year advertising thing. Is that a good way to think about it?

[Alexander Hoff, Vice President Global Finance at Birkenstock]

Absolutely. That's correct.

[Sam poser, Equity Analyst at Williams Trading LLC]

Thanks very much.

[Operator]

Thank you. The next question will be from Erwin Ramberg from HSBC. Erwin, your line is live.

[Erwan Rambourg, Global Head of Consumer & Retail Research at Future Luxe]

Yes. Hi, good afternoon. And best of luck to the outgoing and incoming CFOs, if I can put it that way. Two little follow ups. First of all, on closed toe shoes being comfortably above 50% of the business in Q1, where do you see this going in Q2 and maybe for the full year?

[Erwan Rambourg, Global Head of Consumer & Retail Research at Future Luxe]

I think you mentioned 600 basis points of incremental contribution in Q1. How should we think about the full year? I think you were a bit above 30% contribution for the full year last year. And can you I don't know if you've said what difference the ASP is relative to average? And then secondly, a follow-up on wholesale for David or possibly Niko and Klaus as well.

[Erwan Rambourg, Global Head of Consumer & Retail Research at Future Luxe]

It's quite stunning that you're growing 30% given that 90% of the growth is with existing doors. So sorry for the naive question, but how much more space can you actually can they actually accommodate? And at some stage, even though I understand you're more pull than push, will you not need to sign up with new partners at some stage to increase the visibility of the brand?

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

This is Niko. Thank you for your question. I'll take the first part and then I guess I was going to share a bit the second part of your question. So yes, you're right. So closed toe increased by 600 basis points.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

It's two times faster than the rest of the business. While our open toe business is also growing double digits, and I think that's really worth mentioning. We have given I'll be reminded that this quarter is probably one of the quarters with the highest closed door penetration due to seasonality. So don't expect us to deliver the same share of business in the coming quarters. We have given not ourselves a specific target for quarter, but we see great opportunity coming out of this quarter in the closed toe business and also specifically in closed shoes, as I just shared early on with the great results we have seen in closed

[Erwan Rambourg, Global Head of Consumer & Retail Research at Future Luxe]

2s. And maybe just on the ASP point, how much more expensive in terms of ASP if closed versus the average of the business?

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

So just as you can imagine, close shoes is a much higher ASP than sandals. So I referred to the boots example that we had great success in Q1 with boots and they are sold at EUR 200 price point. And that's adopted by the consumer. So you can imagine what's the sort of potential difference in ASP between those categories between sandals and closed

[Operator]

Thank you. The next question will be from Jim Duffy from Stifel. Jim, your line is live.

[James Duffy, Managing Director at Stifel Financial Corp]

Thank you. Very clear momentum in the B2B. Following up on that last question, very interested in the evolving product mix at wholesale. Can you speak to what you're seeing in the order book by product type and ASP mix within the orders, specifically interested in whether the wholesale channel partners are embracing more premium offerings and how that's balancing with interest in EVA offerings like the Berkey? Thanks.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

Thank you, Jim, for your question. Great question. What we do definitely see is with the consumer, consumer continue to seek our premium product. The leather share is increasing, Klok's category is doing extremely well, not just the Boston, but also Klok's derivatives. So that's another premium category that is doing extremely well.

[Mehdi Nico Bouyakhf, President EMEA at Birkenstock]

And what we also just shared is the great adoption of boots in Q1. So yes, the consumer is seeking for our most premium product and that's also reflected in the B2B buys and the B2B order book as retailers expanding their assortment and widening their assortment with us beyond plus candles.

[James Duffy, Managing Director at Stifel Financial Corp]

Thank you.

[Operator]

Thank you. And the next question will be from Janine Stitcher from BTIG.

[Janine Stichter, Managing Director at BTIG]

Hey, Thanks so much for all the color and for taking our questions. One more on B2B. I was hoping you could comment on what you're seeing in some of the newer doors as an adjacent categories like outdoor, professional and run specialty. So how penetrated are you in these categories? And maybe what you see in terms of shelf space potential?

[Janine Stichter, Managing Director at BTIG]

Thank you.

[David Kahan, President of Americas at Birkenstock]

Hey, Janine, it's David. In the new distribution, which again is a little bit limited to our traditional base, we're seeing immediate adoption of the brand, whether we show up as a recovery sandal, a recovery product in run specialty. It's the exact same place that we were in when we went into some of these other accounts ten to twelve years ago. The expansionary categories in our heritage business have been adopted very quickly. I mean, again, when we talk about over half of our business being non sandals, that's pretty substantial compared to a couple of years ago.

[David Kahan, President of Americas at Birkenstock]

And when you see the brand out at retail, you're certainly no longer seeing a sandal based brand. So as we go into some of these other categories where it's a different use occasion, but it's the same footbed, whether you're outdoors, whether you're wearing house slippers, whether you're professional and wearing it in a work environment, it's the footbed. And the more we bring the footbed to different use occasions, the more it's being adopted. So I think it's more a matter of how many use occasions do we continue to expand into and what's the share of closet. I mean, as you remember, the average Birkenstock consumer has owned 3.4, three point six pairs of our product.

[David Kahan, President of Americas at Birkenstock]

Anecdotally, we think that's even higher. So I don't think there's a limit to how many Birkenstock products our fans can own in their closet. And the more they see it out in those environments where it's validated, the quicker it's being adopted.

[Janine Stichter, Managing Director at BTIG]

Great. Thanks so much for the color.

[Operator]

Thank you. There were no other questions. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Megan Kulick, Director Investor Relations
• Oliver Reichert, Chief Executive Officer and Director
• Erik Massmann, Former - Group CFO
• Ivica Krolo, Chief Financial Officer
• Alexander Hoff, Vice President Global Finance
• Mehdi Nico Bouyakhf, President EMEA
• David Kahan, President of Americas
• Klaus Baumann, Chief Sales Officer

Analysts

• Jay Sole, Managing Director at UBS Group
• Laurent Vasilescu, Managing Director & Senior Equity Analyst at Exane BNP Paribas
• Mark Altschwager, Senior Research Analyst at Baird
• Matt Boss, Equity Research Analyst at JP Morgan
• Randal Konik, Managing Director at Jefferies & Company Inc
• Louise Singlehurst, Managing Director at Goldman Sachs
• Analyst
• Simeon Siegel, Managing Director & Senior Analyst at BMO Capital Markets
• Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group
• Lorraine Hutchinson, Managing Director at Bank of America
• Michael Binetti, Senior Managing Director at Evercore ISI
• Anna Andreeva, Managing Director & Senior Research Analyst at Piper Sandler Companies
• Sam poser, Equity Analyst at Williams Trading LLC
• Erwan Rambourg, Global Head of Consumer & Retail Research at Future Luxe
• James Duffy, Managing Director at Stifel Financial Corp
• Janine Stichter, Managing Director at BTIG