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Birkenstock shares slump as shoe company warns on profit outlook during first earnings since IPO

Birkenstock, the renowned German shoe brand, experienced a significant dip in its stock value on Thursday as it cautioned investors about potential impacts on profit margins in the upcoming year.

Birkenstock shares slump as shoe company warns on profit outlook during first earnings since IPO

The company, which made its debut on the public market in October at an initial share price of $41, saw a 7% decline in its shares following its first earnings report post-initial public offering.

During the report, Birkenstock revealed a quarterly loss of approximately 28.3 million euros (equivalent to about $30.8 million), coupled with an adjusted EBITDA margin exceeding 30% for the prior fiscal year. Executives expressed concern about the outlook for 2024, anticipating a "modest headwind" on profit margins as the company allocates more resources to scale up its operations. Despite this cautious projection, Birkenstock foresees a robust 17% to 18% growth in revenue.

In a strategic move, the shoe company outlined plans to make substantial investments in 2024, particularly focusing on expanding its business operations. With intentions to inject nearly 150 million euros into retail store expansion and production capacity, Birkenstock aims to position itself for sustained growth in the market.

CEO Oliver Reichert expressed confidence in the company's ability to navigate challenges, emphasizing that the past year marked Birkenstock's most successful period. Reichert outlined the company's vision for 2024, highlighting its commitment to significant geographic and production expansion. Despite acknowledging the potential challenges posed by the broader macroeconomic landscape, Birkenstock appears undeterred in its pursuit of growth.

The decision to go public in October marked a historic moment for Birkenstock, coming almost 250 years after its founding by German cobbler Johann Adam Birkenstock. During the initial public offering, CEO Reichert articulated the company's choice to go public, citing family-related issues as a driving factor. Reichert expressed a commitment to returning the brand to the people, even if going public was the second-best option after staying family-owned.

In conclusion, Birkenstock's recent financial report, coupled with its strategic outlook for 2024, reflects a dynamic period for the company as it grapples with challenges while maintaining an optimistic vision for growth and expansion in the global market.