Say Goodbye to Budget-Friendly Birkenstocks: The Shoe Giant Hikes Prices Due to U.S. Tariffs
Customers Now Responsible for Product Management at Birkenstock
Buckle up, sandal lovers, because it's about to cost you more to strut around in those iconic Birkenstocks. The footwear giant has announced a global price increase, and it's all thanks to the U.S. tariffs.
Chief Financial Officer, Ivica Kroloin, spilled the beans to Reuters, explaining that the inflation will be a worldwide move, not just a local one. "It's not a case of us merely increasing prices in one region," he said. "We're treating this as a global measure."
Why the sudden price hike, you ask? Well, this move is Birkenstock's response to the cost of US tariffs on their products, especially those crafted in Germany, which are slapped with a 10% tariff.
The trade conflict between the US and the EU is making it impossible to predict the future, but Kroloin isn't sweating it. Birkenstock has the upper hand since they don't rely on Asian sourcing for their materials. "This issue presents an opportunity for us to expand our market share. That's why we're continuing to invest," he explained.
Despite the slowdown in consumer spending, Birkenstock is doing better than expected. After rocking the first quarter of the year, the company has upped their revenue growth target from 15 to 17% for the fiscal year. Not too shabby, huh?
CEO Oliver Reichert is feeling confident about Birkenstock's resilience against this price increase. "We've had a strong start to the fiscal year 2025 and now expect to be at the upper end of our revenue growth target," he said. Even the adjusted operating profit margin (Ebitda margin) has been raised to 31.3 to 31.8%, which amounts to an adjusted Ebitda of 660 million to 670 million euros.
It seems Birkenstock is in an "enviable position" when it comes to import tariffs imposed by President Trump. With their supply limited and pricing strategy in place, the brand will still appeal to customers. And the numbers speak for themselves - in the second quarter of the 2024/25 fiscal year, revenue skyrocketed by 16% to 574 million euros, with profit jumping by 47% to 105 million euros.
Insights:- Birkenstock's price hike strategy is designed to offset U.S. tariffs on its German-made products, which are subject to a 10% tariff.- The footwear giant aims to fully offset the impact of existing tariffs through these price increases, ensuring profitability despite the tariffs.- Despite the tariffs and price increases, Birkenstock has reported strong demand for its pricier footwear, indicating brand loyalty and perceived value.- Significant growth in regions like APAC (30%) suggests that the company is experiencing strong global demand, supporting the price increase strategy.- Birkenstock's decision to raise prices globally reflects its positioning as a premium brand, helping maintain its brand image and appeal to customers willing to pay for quality products.
[1] 'ntv.de, jwu/rts[2] ntv.de, jwu/rts[3] Data derived from analysis of Birkenstock's price increase strategy and global sales performance
In response to the 10% U.S. tariffs on their German-made products, Birkenstock has implemented a global price increase as part of their employment policy, aiming to offset the tariffs, thereby ensuring profitability within their finance sector. As they continue to invest and expand their market share, this decision aligns with their commitment to maintain their premium brand image and appeal to customers willing to pay for quality products.
