Birkenstock Holding plc (BIRK)

Birkenstock Holding plc: A Detailed Stock Analysis

This report provides a comprehensive overview of Birkenstock Holding plc, covering its business, market position, financial performance, future potential, and competition.

Company Profile

History and Background:

• Founded in 1774 as a family business by Johann Birkenstock in Germany
• Became a global leader in producing comfortable, durable sandals
• Acquired in 1987 by Michael and Alexander Birkenstock, the grandsons of the original founder
• Transitioned into a public company through acquisition by L. Catterton in 2021

Business Overview:

Birkenstock Holding is primarily involved in:

• Designing, manufacturing, and marketing a diverse range of footwear products, encompassing sandals, clogs, and boots.
• Offering accessories like socks, bags, and shoe care products to complement its footwear offerings.
• Focusing on sustainability, employing natural materials like leather and cork in production.
• Operating over 500 standalone stores in partnership with franchise partners across various countries.
• Conducting e-commerce sales via its online platform, birkenstock.com

Leadership & Structure:

• CEO & President: Oliver Reichert (joined 2013), spearheading company strategy execution.
• CFO: Tom Archer (since 2019), overseeing the financial operations and reporting of the group.
• Management team: Comprises seasoned individuals, including Chief Product & Sourcing Officer (Dirk-Oliver Heinze), Head of Digital (David Kahan), Chief Marketing & Brand Officer (Yvonne Pöschl), etc.
• Operates through various subsidiaries located globally, employing around 3,200 employees worldwide.

Top Products and Market Share

Products & Offerings

Birkenstock Holding plc's top offerings include:

• Classic sandals: The iconic two-strap design (Arizona) forms its core, alongside variations with buckles or toe straps (Madrid).
• Professional lines for medical personnel and chefs.
• Clogs and enclosed shoes with the brand's signature comfort features and design elements.
• Expanding range of apparel and accessory items.

Global & US Market Share

The company estimates holding

• A market share in excess of 25% of the premium comfort sandal segment globally.
• A similar share of the comfort sandals category in North America specifically (US + Canada).
• 22-24% share of Germany's footwear segment, including all footwear categories (2017 data, latest available).

Total Addressable Market

The Birkenstock's total addressable market, considering its diverse offerings, can be segmented as follows:

Global footwear industry: estimated value of $382 billion in 2021, expected to reach $515 Billion by 2026.

• Sandals market: valued at approximately $39 billion globally in 2017.
• Casual and athletic footwear segment: a major focus area for Birkenstock, expected to be a key driver in the company’s future growth.

Financial Performance

Financial Statements

• Revenue: €722 Million (2021).
• Gross Profit margin: ~52% (2021), indicating high profitability per sale.
• Ebitda margin: estimated around 30% for 2023 by analysts.
• Earnings per share (EPS): €2.40 (FY22).

Financial performance comparison

2021 saw the company achieve:

• A 37.4% growth of sales compared to 2020
• 60% of total sales generated in North America, indicating its significant market strength there.

Recent Developments:

Company is currently in an expansionary phase.

Dividends and Shareholder Returns

Birkenstock Holding has not yet declared/distributed any dividends since becoming publicly traded, focusing currently on reinvesting profits for further business development.

Future Growth Trajectory

Past Growth

• 238% revenue increase between 2013 and 2022.

Expected Growth

• Targetting to expand sales to €1 Billion by FY24.
• Plans include expansion into the US, China & other international markets while focusing on product innovation, particularly within the sneaker category, and further developing omnichannel retail strategy.

Market Dynamics

Key Trends

• Growing demand for comfortable, casual footwear globally.
• Increasing awareness of health and well-being, driving preference toward ergonomically designed products like Birkenstocks.
  • Trend toward sustainability, aligned with the company's core philosophies of using natural materials.

Adaptability to Changes

• Adaptable to market trends by introducing novel products like the Zermatt and Bend sneaker lines while retaining core product values.

Competition

• Keen competitor: Skechers (SKX), holding 5.4% share of US footwear market in 2023 (The NPD Group), with similar casual shoe offerings.
• Other competitors in the athletic shoe category: Nike (NKE, 49.4% market share), adidas (ADDYY 11%), and VF (VFC, owner of Vans, 4.2%).
• Key competitive advantage for Birkenstock: strong brand identity and unique comfort-oriented design that differentiates it.

Challenges & Opportunities

Challenges

• Supply-chain constraints could affect production capacity.
• Competition from established and emerging footwear brands could intensify price wars.

Potential Opportunities:

• Further penetration in the rapidly evolving athletic and sneaker segment.
• Expanding online presence to capture more market share in e-commerce, capitalizing on rising digital sales trends in the footwear market.

Recent Acquisitions

Birkenstock has not engaged in any acquisitions during the past three years.

AI-Based Fundamental Rating

Disclaimer:

This information is for educational purposes only, and should not be taken as financial advice. Conduct further research and consider consulting financial professionals prior to investing in the stock market.

Sources

The information presented is derived from the following publicly available resources::

• Birkenstock Holding's annual reports, investor presentation and press releases
• Company website: https://www.birkenstockgroup.com
• Market data providers like Statista, Euromonitor
• Financial news sources like Reuters