Birkenstock Holding plc (BIRK.US) reported robust sales and profit growth driven by strong demand for its premium sandals and clogs, but issued a tempered outlook for the coming fiscal year.

For the quarter ending September, revenue rose 20% to €526 million ($616 million) at constant currency rates, slightly exceeding analyst expectations. However, the company projected FY26 sales growth of up to 15%, implying annual revenue could reach €2.35 billion—modestly below consensus estimates.

CEO Oliver Reichert continues to leverage disciplined growth strategies to maintain demand above production capacity, enabling price hikes while avoiding discounting. Earlier this year, Reichert initially provided conservative guidance before raising forecasts. Despite outperforming expectations in the fiscal year through September, the company warned that U.S. tariffs and currency volatility would persist as headwinds in FY26.

Adjusted earnings for FY26 may exceed €700 million, compared to the average analyst estimate of €758 million. The 15% U.S. import tariffs on most EU goods—implemented under a July agreement with the Trump administration—have pressured operations and consumer prices.

With most production in Germany, Birkenstock is mitigating tariff impacts through selective price increases, supplier negotiations, and operational efficiencies. Unlike peers, the company owns its factories—a key differentiator as footwear stocks broadly underperform. Year-to-date, Birkenstock shares have fallen ~18%, though less sharply than Adidas and Puma.

Reichert emphasized growth is constrained only by production capacity and intentional scarcity. The company plans €110-130 million in capital expenditures for FY26 (up from €85 million last year) and a $200 million share buyback program, subject to market conditions.

Guidance suggests FY26 gross margins could decline to 57%-57.5% (vs. 59.8% consensus), with tariffs and forex fluctuations contributing ~100 basis points of pressure. Shares plunged 11.64% to $41 in premarket trading following the report.