20-F: Birkenstock Soars with 16% Revenue Growth, Strong Profit

Birkenstock Holding plc reported robust financial results for fiscal year 2025, with revenue increasing 16% to €2.1 billion and net profit surging 82% to €348.3 million, alongside a reduction in net leverage.

Summary

• Revenue for the fiscal year ended September 30, 2025, increased by 16% to €2,097.4 million (€2.1 billion), or 18% in constant currency, compared to the previous fiscal year.
• Net profit for the year increased by 82% to €348.3 million, up from €191.6 million in fiscal 2024.
• Adjusted EBITDA grew 20% year-over-year to €667.0 million, with the Adjusted EBITDA margin expanding by 100 basis points to 31.8%.
• Earnings per share (EPS) increased by 83% to €1.87 from €1.02.
• Net leverage declined to 1.5x as of September 30, 2025, down from 1.8x a year prior, achieving the projected ratio despite a share repurchase.
• The company repurchased and cancelled 3.9 million ordinary shares for €176.4 million on May 30, 2025.
• Double-digit revenue growth was observed across all segments: Americas (15% reported, 18% constant currency), EMEA (14% reported and constant currency), and APAC (31% reported, 34% constant currency).
• B2B revenue grew 20% (21% constant currency), and DTC revenue grew 11% (12% constant currency).
• Gross profit margin improved by 30 basis points to 59.1%, driven by sales price adjustments and better manufacturing capacity absorption, partially offset by channel mix, unfavorable currency translation, and incremental U.S. tariffs.
• The company added 30 net new retail stores globally during fiscal 2025, bringing the total to 97 owned retail stores.

Sentiment

Score: 8

Explanation: The company delivered strong financial results with significant revenue and profit growth, improved margins, and reduced leverage. Strategic initiatives like DTC expansion and manufacturing investments are progressing. However, persistent internal control weaknesses and the potential impact of tariffs introduce some caution.

Positives

• Strong revenue growth of 16% (18% in constant currency) to €2.1 billion, indicating robust demand for products.
• Significant increase in net profit by 82% to €348.3 million, demonstrating enhanced profitability.
• Adjusted EBITDA grew 20% to €667.0 million, with a 100 basis point expansion in Adjusted EBITDA margin to 31.8%.
• Earnings per share (EPS) increased substantially by 83% to €1.87.
• Net leverage decreased to 1.5x, indicating improved financial health and debt management.
• Successful share repurchase and cancellation of 3.9 million shares, which can be positive for shareholder value.
• Consistent double-digit growth across all geographic segments, particularly strong in APAC (31% reported, 34% constant currency).
• Gross profit margin expansion to 59.1% due to effective sales price adjustments and improved manufacturing efficiency.
• Continued expansion of the DTC channel with 30 new retail stores globally, strengthening direct consumer relationships and brand control.

Negatives

• Unfavorable currency translation negatively impacted revenue growth by 200 basis points and Adjusted EBITDA margin by 40 basis points.
• Incremental U.S. tariffs, effective April 2025, are expected to modestly increase cost of sales and impact gross profit, Adjusted EBITDA, and net profit margins for fiscal year 2026.
• Cash flows from operating activities decreased by €44.4 million year-over-year, primarily due to the timing of tax payments and changes in working capital.
• A material weakness related to ineffective IT general controls for IT processes and applications persists as of September 30, 2025.
• A new material weakness was identified as of September 30, 2025, relating to entity-wide and business level transactional controls, including IT application controls, not being sufficiently designed, implemented, executed, or monitored.

Risks

• Dependence on the image and reputation of the BIRKENSTOCK brand, vulnerable to negative publicity or association with content not aligned with brand values.
• Intense competition from established companies and newer market entrants, potentially leading to price reductions, reduced gross profit margins, and loss of market share.
• Challenges in executing the direct-to-consumer (DTC) growth strategy, including maintaining attractive e-commerce platforms and adapting to rapid shifts in consumer behavior and technology (e.g., AI).
• Changes in consumer preferences and inability to adapt to such changes, especially given the high concentration on footwear, could adversely impact business.
• Ineffectiveness or inefficiency of marketing efforts could adversely affect demand for products.
• Increased merchandise returns due to new products, changing shopping habits, competitive pressures, or transit damage could harm business.
• Counterfeit or knock-off products, and 'inspired-by' products, may siphon off demand, cause customer confusion, and harm brand reputation and market share.
• Risks associated with operating and expanding retail stores, including negotiating lease terms, achieving brand awareness, and hiring adequate staff.
• Adverse economic conditions (inflation, tariffs, deteriorating consumer sentiment, recession) could impact consumer spending and demand for products.
• Illiquidity of real property investments and limited ability to sell properties on reasonable terms, exposing the company to liabilities and losses.
• Distinct risks associated with non-footwear products (skincare, accessories, sleep systems) due to intense competition and different regulatory frameworks.
• Failure to realize expected returns from substantial investments in businesses and operations (e.g., production sites, infrastructure).
• Challenges in managing acquisitions, investments, or other strategic initiatives, including integration problems, unanticipated costs, and diversion of management attention.
• Operational difficulties due to rapid growth and limited operating experience at current scale, potentially leading to production bottlenecks, delays, and erosion of brand image.
• Exposure to currency exchange rate fluctuations, particularly USD to Euro, impacting reported financial results and TRA liability.
• Adverse effects from global or regional health events (pandemics) on consumer spending, store traffic, supply chain, and employee willingness.
• Dependence on third parties for sales and distribution channels, with risks of disputes, non-compliance with policies, and damage to brand reputation.
• Risks from the conversion of wholesale distribution markets to owned and operated markets, and other productivity/efficiency initiatives, including service disruption and employee morale issues.
• Operational challenges in product distribution, including mechanical/IT system failures, cyber-attacks, work stoppages, and increased transportation costs.
• Seasonality and unpredictable weather conditions affecting demand, inventory levels, and profitability.
• Adverse events impacting supply chain sustainability or relationships with major suppliers, or increases/scarcity of raw materials or labor costs.
• Ineffective inventory management leading to shortages or excess inventories, impacting profitability and brand loyalty.
• Business interruptions at production facilities or operational problems causing production bottlenecks or project delays.
• Fluctuations in product costs and availability due to fuel price uncertainty, increasing transportation costs.
• Failure to attract, hire, train, and retain experienced management and personnel, including dependence on the CEO, Oliver Reichert.
• Deterioration of relationships with employees, employee representative bodies (works councils), and stakeholders, potentially leading to labor disputes.
• Inability to adequately protect, maintain, and enforce trademarks and other intellectual property rights, including against counterfeit products and challenges to validity.
• Liability and adverse impacts from claims of infringing third-party trademarks, copyrights, or other IP rights.
• Potential inability to prevent Birkenstock family members from using their surname in competing businesses.
• Non-compliance with various Privacy Laws and regulations governing personal data, leading to fines, litigation, or reputational damage.
• Payment-related risks, including compliance with payment card association rules and security breaches affecting payment card information.
• Reliance on complex IT systems and networks, vulnerable to disruption, security breaches, and cyber-attacks, including those leveraging AI.
• Risks associated with international markets, including economic/political instability, trade disputes, and differing legal systems.
• Non-compliance with existing or new laws and regulations (consumer credit, labor, tax, competition, ESG, environmental protection) leading to fines, lawsuits, or reputational damage.
• Reliance on suppliers, agents, and distributors to comply with employment, environmental, and other laws and regulations, with potential reputational damage from non-compliance.
• Failure to comply with anti-bribery, anti-corruption regulations, and economic sanctions programs, resulting in fines, criminal penalties, and adverse business effects.
• Increasing focus on corporate responsibility and ESG matters imposing additional costs, new risks, and scrutiny.
• Climate change and related regulatory responses impacting supply chain, product costs, consumer demand, and requiring compliance expenditures.
• Risk of litigation and other claims (personal injury, product safety, labor law, IP, consumer protection), with potential for substantial costs and reputational harm.
• Inadequate insurance coverage or increased insurance costs for business risks.
• Environmental or other third-party damages from incidents at production sites or distribution centers.
• Potential application of the UK City Code on Takeovers and Mergers to the Company.
• Exposure to transfer price risks in connection with international operating activities.
• Challenges to tax positions by authorities, leading to additional taxes, interest, or penalties.
• Future tax legislation negatively impacting current or future tax structure and effective tax rates.
• Uncertainty regarding the anticipated benefits of the re-domiciliation to a Jersey public limited company.
• Amendments to existing tax laws or enactment of new unfavorable tax laws on e-commerce companies.
• Substantial payments required under the Tax Receivable Agreement (TRA), potentially exceeding actual tax benefits or accelerating payments.
• Substantial amount of debt and restrictive covenants limiting operating and financial flexibility.
• Inability to generate or raise sufficient cash to service debt and sustain operations.
• Dependence on subsidiaries for cash flows as a holding company.
• Exposure to floating interest rates on debt, which could rise significantly.
• Changes in credit ratings or macroeconomic conditions affecting liquidity and borrowing costs.
• Control by the Principal Shareholder (L Catterton) whose interests may conflict with other shareholders.
• Provisions in Articles of Association that could delay, discourage, or prevent a takeover attempt.
• Lack of limitation on Principal Shareholder and affiliates to compete with the company.
• Reliance on exemptions from certain NYSE corporate governance standards as a foreign private issuer and controlled company, affording less protection to shareholders.
• Potential loss of foreign private issuer status, requiring compliance with more extensive U.S. domestic reporting regime.
• Future sales of ordinary shares by existing holders could cause market price decline.
• No cash dividends expected for the foreseeable future, relying on share price appreciation for investor returns.
• Rights of shareholders differ from those typically offered to shareholders of a U.S. corporation.
• Difficulty for U.S. shareholders to obtain or enforce judgments against the company or its officers/directors in Jersey courts.
• Natural disasters, public health crises, political crises, civil unrest, and other catastrophic events adversely affecting business.
• Decline in ordinary share price if securities analysts publish negative evaluations or cease coverage.
• Significant expenses and management time incurred as a public company, potentially impacting financial performance.

Future Outlook

The company expects to continue experiencing increased adverse foreign currency fluctuations due to global trade uncertainty. New U.S. tariffs are anticipated to modestly increase cost of sales and impact gross profit, Adjusted EBITDA, and net profit margins for fiscal year 2026, though mitigation strategies are in place. Capital expenditures for fiscal year 2026 are projected to be between €110-130 million, primarily for production capacity growth and retail store expansion, financed by operating cash flows. The company plans to continue leveraging its engineered distribution model to expand in existing geographies, enter new markets, and convert remaining distributor markets.

Management Comments

• Our purpose to empower all people to walk as intended by nature has created an enduring connection with our consumers, who recognize us for functionality, craftsmanship, German engineering, uncompromising quality and a differentiated product experience.
• We optimize growth and profitability through a multi-channel DTC and B2B distribution strategy that we refer to as 'engineered distribution.'
• We generate significantly more demand from existing and prospective wholesale customers than we can supply, putting us in an enviable position where we can create scarcity in the market and obtain favorable economic terms on wholesale distribution.
• We have several levers to respond to, and mitigate, the expected direct impact of the currently applicable and any additional tariffs on the Company’s business and financial results, including through negotiations with suppliers, price increases, optimization of the product and geographic mix, and use of efficiencies and economies of scale in production.
• We believe our brand equity, paired with our superior products, with their orthopedic foundations, high-quality materials and focus on functionality, position us well to continue succeeding in the global wholesale, retail and e-commerce channels.
• We continue to add several million more pairs of product capacity over the next years, which will allow us to accelerate expansion into untapped markets while maintaining control over our supply chain and product quality.

Industry Context

Birkenstock operates in a highly competitive and fragmented global footwear, skincare, accessories, and sleep system market. The company differentiates itself through its 'function-first' orthopedic footbed, vertically integrated 'German made' manufacturing, and a focus on natural, high-quality materials. While many competitors have offshored production, Birkenstock's EU-based manufacturing is a key competitive advantage. The industry is subject to rapid shifts in consumer trends, and Birkenstock aims to counter 'fast fashion' by emphasizing conscious, responsible, and health-oriented consumption. The company's strong brand awareness and high-quality products position it to gain market share in this competitive landscape.

Comparison to Industry Standards

• Birkenstock's vertically integrated manufacturing, with 100% of footbeds produced in Germany and the vast majority of products assembled in the EU, contrasts with the industry trend of outsourcing large parts of the value chain to third-party manufacturers in Asia, which may enable competitors to sustain more aggressive pricing policies.
• The company's commitment to largely using natural materials from transparent sources in Europe and processing materials to high environmental and social standards could decrease its ability to compete on price with competitors who do not implement such ESG practices.
• Birkenstock's brand consistently ranks among top performers in its core categories at most retail partners, indicating strong market acceptance and consumer enthusiasm compared to other brands.
• The company generates significantly more demand from existing and prospective wholesale customers than it can supply, allowing it to create scarcity and obtain favorable economic terms, a strong position relative to many industry peers.

Management Changes

Corporate Governance

Legal Proceedings

• The company is defending an action brought by a French distributor following the termination of a business relationship. The plaintiff's initial claim of €94.7 million was ruled in favor of the company by the commercial court of Nancy, France, on January 25, 2024. The plaintiff appealed on March 14, 2024, and reduced some claims while introducing a new one, totaling approximately €41.6 million in appeal. A court decision on the appeal is not expected before the end of calendar year 2025. A provision has been recognized for management's best estimate of probable cash outflow.

Related Party Transactions

• The company entered into a Tax Receivable Agreement (TRA) with MidCo (controlled by L Catterton) on October 10, 2023, requiring payments equal to 85% of certain tax savings. The total balance of the TRA liability as of September 30, 2025, was €356.8 million.
• Employment agreements are in place with all executive officers, entitling them to annual base salary, bonuses, and certain benefits.
• Indemnification agreements have been entered into with executive officers and directors, requiring indemnification to the fullest extent permitted by law.
• A Registration Rights Agreement with MidCo grants it and its affiliates rights to require the company to register ordinary shares under the Securities Act.
• A Shareholders Agreement with MidCo provides it with certain rights regarding the designation of directors to the board, allowing it to designate a majority of directors as long as it owns at least a majority of ordinary shares.
• The company maintains a long-term business relationship with a model agency owned by a family member of the Chief Executive Officer, incurring marketing expenses of €0.1 million in fiscal 2025.
• The company leased administrative buildings from Ockenfels Group GmbH & Co. KG (managed by the CEO and controlled by Predecessor Shareholders), making lease payments of €0.5 million in fiscal 2025. Lease liability was €0.9 million and right-of-use assets were €0.8 million as of September 30, 2025.
• Outstanding receivables of €9.8 million were due from Ockenfels as of September 30, 2025, predominantly related to taxes from activities prior to the Transaction.
• The company recognized income of €0.1 million in fiscal 2025 for tax services provided to Ockenfels related to the Transaction.
• Consulting fees for management services provided by and expenses reimbursed to L Catterton Management Company LLC and other affiliated entities amounted to €0.2 million in fiscal 2025.
• Sales to LVMH affiliated entities amounted to €0.7 million in fiscal 2025.
• A lease liability of €0.8 million was owed to CB Beteiligungs GmbH & Co. KG as of September 30, 2025.
• The company repurchased 3,927,344 ordinary shares from MidCo for €176.4 million during fiscal 2025.

Stakeholder Impact

• **Shareholders**: Positive impact from strong financial performance (revenue, profit, EPS growth), reduced net leverage, and share repurchase. However, the Principal Shareholder's control and potential conflicts of interest, along with the substantial TRA payments, could affect other shareholders. Material weaknesses in internal controls pose a risk to investor confidence.
• **Employees**: Continued investment in people and manufacturing supports job security and growth opportunities. Good relationships with employee representative bodies are crucial for operational stability. Cybersecurity risks and potential impacts on IT systems could affect employee productivity and data security.
• **Customers**: Enhanced product innovation and expansion of the DTC channel aim to improve product access and customer experience. Risks from counterfeit products, distribution challenges, and changes in consumer preferences could impact customer satisfaction and brand loyalty.
• **Suppliers**: Long-term relationships and responsible sourcing practices are emphasized. However, adverse events in the supply chain, increases in raw material/labor costs, or geopolitical conflicts could disrupt supplier relationships and operations.
• **Creditors**: Reduced net leverage and early debt repayments indicate improved creditworthiness, which is positive for creditors. However, substantial debt levels and restrictive covenants still pose risks to financial flexibility.

Next Steps

• Continue to expand the product archive through 'celebrate and build' innovation, entering new usage occasions and investing in existing categories.
• Diversify the product portfolio and strengthen year-round product mix with closed-toe offerings.
• Develop presence in underpenetrated categories and leverage the brand in function-led, non-footwear categories.
• Drive engineered distribution on a global scale, expanding in existing geographies, entering new markets, and converting remaining distributor markets.
• Educate consumers globally about the advantages of BIRKENSTOCK products and grow the fan base.
• Invest in people, manufacturing, and supply chain to support future growth, including optimizing and expanding production capacity and logistics infrastructure.
• Drive operational efficiencies across the company.
• Actively remediate remaining deficiencies in IT general controls and entity-wide/business level transactional controls.
• Implement an awarenessand training platform for all end users in Europe and APAC, including phishing simulations for employees, with a go-live date of October 1, 2025.
• Commence the certification process for ISO27001 with a target date for certification in Q3 2026.
• Implement a risk management platform (Drata) for cybersecurity and other IT general risks, with a full Go-Live scheduled for January 2026.
• Continue gradual implementation of artificial intelligence (AI) technology during 2026, including adopting an AI policy as a governance foundation.
• Integrate the newly acquired Wittichenau production and logistics facility into operations, expected to become operational by the end of fiscal 2027.
• Finalize post-close adjustments for the acquisition of Birkenstock Australia Pty. Ltd. within the next months.
• Monitor macroeconomic conditions, including inflation and interest rates, and manage the impact of tariffs through negotiations, price adjustments, and optimization of product/geographic mix.

Key Dates

Recommendation

Birkenstock's fiscal year 2025 results demonstrate exceptional financial health and strong operational momentum, with double-digit revenue growth, a significant surge in net profit, and improved margins. The reduction in net leverage to 1.5x indicates effective debt management. Strategic investments in production capacity and DTC expansion are expected to fuel future growth. While U.S. tariffs and internal control weaknesses present challenges, the company's strong brand equity, diversified product portfolio, and proactive mitigation strategies position it for continued success. The overall trajectory suggests a compelling investment opportunity for long-term growth.

Keywords

Footwear, Birkenstock, DTC, B2B, EBITDA, Net Profit, Revenue Growth, SEC Filing, 20-F, Financial Results, Luxury Footwear, Orthopedic Footwear, Global Brand, Supply Chain, Tariffs, Capital Expenditures, Debt, Corporate Governance, Internal Controls, Share Repurchase, APAC Growth, EMEA Growth, Americas Growth, IPO, Tax Receivable Agreement