Birkenstock shares plunge as it warns of lower profits

BIRKENSTOCK shares slumped after the sandal maker warned over profits, disappointing investors with its first update since it joined the New York Stock Exchange in October.

Shares in the German company dropped by as much as 12pc yesterday, after Birkenstock said margins could be weaker as it pursues a global expansion.

Revenues grew by €53m (£45.4m) to €375m over the three months to Sept 30, but it fell to a pre-tax loss of €571,000, dropping from a profit of €63m over the same period the prior year. Sales for the year to Sept 30 rose to €1.5bn, but pre-tax profits dropped from €251m to €153m.

Birkenstock said it expected “a modest headwind” to margins because of planned ramp-up costs and the expense of starting up its new factory in Pasewalk, north-east Germany.

The company said it plans to invest €150m into ramping up production and opening stores. It currently has 45 stores, with almost half in Germany.

The 250-year-old company is targeting global markets such as China and India, where it has had less exposure.

Oliver Reichert, its chief executive, said the company wanted to tap “geographic, category extension and distribution white space”. It comes in the wake of a disappointing flotation for Birkenstock, whose shares dropped by almost 13pc on its New York debut in October, ending its first day of trading at $40.20 (£32.70) per share, below the $46 price it had set.

It was the worst opening for a listing of $1bn or more in New York in more than two years, according to Bloomberg. However, its shares have risen by more than 24pc since then.

Birkenstock was founded by the cobbler Johann Adam Birkenstock in Langen-bergheim, Germany, in 1774. His great-great-grandson, Konrad Birkenstock, brought the company to prominence after he developed the first contoured and flexible insoles for shoes.

In the 1960s, Karl Birkenstock developed the cork-soled shoes the company is now known for, launching them as “fitness sandals” and beginning to sell shoes in the US and other markets.

They became popular in the US as the hippie movement took off, and have frequently been mocked for being “ugly”.

However, they went on to be adopted by fans of the grunge subculture, and more recently celebrities including model Gigi Hadid have been pictured wearing them. In the 2023 Barbie movie, Margot Robbie has a pink pair. Birkenstock has also made inroads into high fashion, collaborating with brands such as Valentino and Dior.