Birkenstock tumbles on first earnings results since IPO

Birkenstock (BIRK) shares tumbled Thursday after the company warned margins could be pressured as it invests in a new facility. The stock initially plunged 14% at the market open before trading was briefly halted.

Birkenstock forecasts 18% revenue growth for 2024 and expects adjusted Ebitda of $566 million to $577 million.

Yahoo Finance’s Seana Smith and Brad Smith discuss the company’s earnings results as consumers adjust spending plans.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim.

Video Transcript

SEANA SMITH: Well, Birkenstock shares have resumed trading after being briefly halted shortly following the opening bell. The stock initially plunging 14% on muted guidance that disappointed the Street's expectations. It's now off just about 7.5%, staying above that $46 a share level. Now, this iconic shoe and sandal brand forecasting revenue to grow up to 18% this year as consumers continuing to spend.

But Brad, you and I have been talking about the performance of this stock since going public just last October. There was so much riding, not just for Birkenstock, but really on whether or not this is going to reignite some of the excitement within the IPO market. That certainly has not played out. And there was a lot of questions just about the stock's performance since their initial public offering, whether or not the gains that we've seen since October make sense.

And I think a lot of the reaction that we're seeing play out in the market today is. Actually, this earnings report, it wasn't bad. The growth numbers weren't terrible. It was a bit more muted than maybe what a lot of analysts have been expecting. But I think we're giving back some of the gains that we've seen since the open. And remember, that this is a stock that started trading at $41 a share back in October today. Sitting just $5 higher at $46.

BRAD SMITH: Yeah. You never like to see clogs get clobbered like this in the open and equity markets here. But ultimately at the end of the day, I think something that came out that was interesting from two calls this morning by analysts. One of them was from Citi. And it was really more about some of the questions that they wanted to ask during the ability to connect with some of the Birkenstock's executives.

Number one, they want to hear how sales trended by region and channel and any additional margin color that could be provided there. Plus, what drove specific misses that they're seeing as a result of macro pressure perhaps in China as well? And then additionally, just what the supply chain looks like as they're also monitoring any impacts from the Red Sea.

And then just lastly, I'll just mention this quickly from Jefferies and what they had to note around this and their quick take. They said, healthy 4Q performance, the fiscal year outlook could prove conservative. And so that perhaps gives them a little bit of room for cautious optimism as it may be right now.

SEANA SMITH: Yeah. And the initial take, though, I think, from a lot of these analysts that have been closely following the stock, at least from Citi, they're saying that stepping back when you take a look at the fourth quarter numbers, the growth that we saw from Birkenstock, the gross margins, they did come in much better than anticipated.

Telsey advisors was also saying that this is a very strong first quarter here as a public company. But again, looking ahead to 2024, given those macro headwinds, exactly what the pressure is going to look like on Birkenstock is one of the big challenges here for the company.