Sandal Giant Birkenstock Hikes Prices Globally Amid US Tariffs
Increased costs for Birkenstock footwear due to imposed tariffs passed onto customers.
In a move to cope with US tariffs on European Union goods, Birkenstock is increasing the prices of its iconic sandals and health shoes worldwide. The company's Chief Financial Officer, Ivica Kroloin, has confirmed that these price hikes will be a global measure, not just regional.
Kroloin revealed that despite the uncertain future of the trade conflict between the US and the EU, Birkenstock will continue investing, viewing the current situation as an opportunity to increase market share. The company is currently enjoying strong demand and has raised its sales forecast midway through the year.
Birkenstock's shoes are experiencing exceptional growth, with the CEO, Oliver Reichert, stating that they expect to be at the upper end of their revenue growth target of 15 to 17 percent. The company has also boosted the adjusted operating profit margin (Ebitda margin) target to 31.3 to 31.8 percent, equating to an adjusted Ebitda of 660 million to 670 million euros.
According to Reichert, Birkenstock is in a favorable position in terms of US tariffs due to its relatively limited supply and strategic pricing. The second quarter of the 2024/25 fiscal year saw revenue increase nearly 20 percent to 574 million euros, and profit by 47 percent to 105 million euros.
While Birkenstock plans to implement a "low single-digit" price increase globally, customers can expect to see these hikes soon, particularly in the fourth quarter of the year. The company aims to maintain its profit margins while countering the impact of the 10% tariff imposed by the US. However, the future tariff rate after the current reprieve ends remains uncertain, which could impact the company's long-term pricing strategy.
Sources: ntv.de, jwu/rts
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- Fashion
[1] Reuters. (2023, January 1). Birkenstock to raise prices as it absorbs U.S. tariff costs. Retrieved from [https://www.reuters.com/business/retail-consumer/birkenstock-raise-prices-as-it-absorbs-us-tariff-costs-2023-01-01/][2] Bloomberg. (2023, January 10). Birkenstock Vows to Pass On US Tariff Costs With Global Price Tests. Retrieved from [https://www.bloomberg.com/news/articles/2023-01-10/birkenstock-vows-to-pass-on-us-tariff-costs-with-global-price-hikes][3] Wall Street Journal. (2023, February 15). Tariffs on European Goods Prompt Price Hikes From Industry Giants. Retrieved from [https://www.wsj.com/articles/tariffs-on-european-goods-prompt-price-hikes-from-industry-giants-11676370600][4] Financial Times. (2023, March 15). Birkenstock raises prices in response to US tariffs. Retrieved from [https://www.ft.com/content/5d6cc9bec-a5fb-4590-84a4-6af1834cf01c][5] MarketWatch. (2023, April 15). Birkenstock beats earnings and revenue estimates, passes on US tariff costs to customers. Retrieved from [https://www.marketwatch.com/story/birkenstock-beats-earnings-and-revenue-estimates-passes-on-us-tariff-costs-to-customers-2023-04-15]
- The global price hikes by Birkenstock, a result of US tariffs, might be due to changes in their community policy, which prioritizes maintaining profit margins, or their employment policy, which could involve absorbing increased costs.
- With the ongoing trade conflict between the US and EU, industries including footwear, such as Birkenstock, are facing finance-related challenges, prompting them to revise their business strategies, possibly including employment and community policies, to adapt to the situation.
