Shares of German sandal maker Birkenstock (BIRK) plummeted 5.63% in pre-market trading on Thursday, despite reporting better-than-expected third-quarter profits. The significant drop comes as investors grapple with the company's slight revenue miss and ongoing concerns about tariffs.

Birkenstock reported Q3 adjusted earnings per share of 0.62 euros, surpassing analysts' estimates of 0.60 euros. However, the company's quarterly revenue of 635 million euros ($741.49 million) fell short of the expected 636.74 million euros. Despite the revenue miss, Birkenstock showcased improved profitability, with its gross margin rising 100 basis points to 60.5%, driven by strong demand for its footwear at full prices.

The company reaffirmed its fiscal 2025 revenue growth guidance, expecting it to be at the high end of its 15% to 17% forecast range in constant currency. Birkenstock also addressed concerns about the impact of the current 15% US/EU tariff agreement, stating that it is well-positioned to manage the situation through a combination of pricing adjustments, cost discipline, and inventory management. However, investors seem to be focusing on the potential challenges posed by these tariffs and the slight revenue miss, leading to the sharp pre-market decline.