Increases in Customers' Costs due to Birkenstock Imposing Tariffs
Get ready to shell out more for Birkenstock's iconic sandals and health shoes! The company is hiking prices worldwide in response to the US tariffs, taking a global approach to offset the costs.
In an interview with Reuters, CFO Ivica Kroloin revealed the company's strategy. "We're not just raising prices in one region, we're looking at this as a global measure," he said. Despite the economic uncertainties brewing globally, Birkenstock is experiencing strong demand and has upgraded its financial projections for the year.
Why the sudden price surge? It's all about those US tariffs. "We'll fully absorb the impacts of the current tariffs," Kroloin explained. As a result of the 10% tariff slapped on European Union-made goods by the US, Birkenstock is aiming to maintain its profitability through a proportionate price adjustment.
The future of the trade conflict between the US and EU is anyone's guess, according to Kroloin. However, Birkenstock seems unfazed. With minimal reliance on Asian sources for its materials, the company sees this as an opportunity to expand its market share and continues to invest.
Birkenstock's shoes are a hit with customers, regardless of the economic downturn. After a impressive quarter, the CEO, Oliver Reichert, raised the company's annual revenue growth target to 15 to 17 percent. He also increased the target for the adjusted operating profit margin (Ebitda margin) to 31.3 to 31.8 percent, translating to an adjusted Ebitda of 660 million to 670 million euros.
On the subject of the US tariffs imposed by President Donald Trump, Reichert remains optimistic. Despite the challenge, Birkenstock's limited supply and pricing strategy are expected to keep it popular with customers. In the second quarter of the 2024/25 fiscal year, revenue skyrocketed by nearly a fifth to 574 million euros, and profit soared by 47 percent to 105 million euros, the company reported.
Sources: ntv.de, jwu/rts
- Quarterly Results
- Fashion
[1] Daily Mail: Birkenstock Hikes Prices Globally to Cover US Tariffs[2] CNBC: Birkenstock Sees Strong Demand Despite Tariffs, Raises Outlook[3] CNN Business: Birkenstock's Global Price Increase to Counter US Tariffs
In the wake of US tariffs, Birkenstock is implementing a global price increase, as revealed by CFO Ivica Kroloin. This move is part of the company's strategy to maintain profitability, aiming to offset the costs associated with the tariffs. The business is also investing heavily to capitalize on the opportunity presented by the trade conflict between the US and EU.
