Birkenstock Holding PLC (NYSE:BIRK) shares fell more than 13% on Wednesday after the German sandalmaker reported second-quarter profit that missed analyst estimates, as US tariffs and foreign exchange headwinds weighed on margins despite solid top-line growth.
The company posted fiscal second-quarter revenue of 618 million euros, up 8% on a reported basis and 14% in constant currency, broadly in line with expectations.
But net profit dropped 22% to 82 million euros, and operating profit fell 11% to 155.5 million euros, falling short of the 168.1 million euros analysts had forecast.
Gross margins compressed to 53.9% from 57.7% a year earlier, hurt by unfavorable currency moves, higher US tariffs, and costs tied to the acquisition of Birkenstock Australia.
Adjusted EBITDA came in at 198 million euros, representing a margin of 32.1%.
Despite the earnings miss, Birkenstock reaffirmed its full-year 2026 targets, projecting constant-currency revenue growth of 13% to 15%, an adjusted gross margin of 57% to 57.5%, and an adjusted EBITDA margin of 30% to 30.5%.
The company also announced a new $200 million share repurchase program for 2026, following a similar buyback the prior year. Cash reserves exceeded 200 million euros.
Demand for core products remained resilient globally. Constant-currency growth was in the double digits across all regions and channels, with the Asia-Pacific region expanding 30%. The company also reported a record sales month for its flagship Arizona sandal in April.
Headwinds were not limited to currency and tariffs. Ongoing conflict in the Middle East weighed on EMEA revenue by approximately 6 million euros, representing a roughly 300 basis point drag, while muted consumer sentiment in Europe, amid elevated energy costs and inflation, added to the uncertain outlook.