Sandals Got More Pocket-Pinching: Birkenstock Hikes Prices Due to US Tariffs
Increased costs for customers due to Birkenstock's decision to absorb tariffs on imported footwear.
Birkenstock, the renowned sandal manufacturer, is ramping up costs worldwide, blaming it on the 10% US tariffs on European Union goods. The price hike will, reportedly, cover the whole global market, not just a select few. In an interview with Reuters, CFO Ivica Kroloin said, "We'll soak up the tariff hit with higher pricing."
The ongoing trade battles between the US and the EU are a complete enigma, according to Kroloin. However, Birkenstock seems unbothered, given it doesn't obtain its materials from Asia. "We're using this chaos to boost our shelf space and market presence. That's why we're carrying on investing," explains Kroloin, who took the reins on February 1.
Despite the broader economic slump impacting consumer sentiments, Birkenstock’s sandals remain in high demand. CEO Oliver Reichert told REUTERS that they’ve begun the 2025 financial year strongly, expecting to reach the upper limit of their revenue growth target of 15% to 17%. He also boosted the adjusted operating profit margin (Ebitda margin) target to 31.3% to 31.8%, equivalent to an adjusted Ebitda of 660 million to 670 million euros.
Regarding the import tariffs imposed by US President Donald Trump, Reichert sees Birkenstock as lucky "dudes." With its limited supply and strategic pricing strategy, the brand aims to keep the appeal among customers, even in this pricey situation. The second quarter of the 2024/25 financial year saw a 20% surge in sales and a 47% jump in profit, making Birkenstock a buzzy stock for the Big Apple stock exchange.
Key Points:
- Price Hike: Birkenstock announced a global, low single-digit price increase to recuperate tariff costs.
- Business Performance: Birkenstock reported strong growth in sales and profits in Q2 of the 2024/25 financial year.
- Market Position: Birkenstock seesthis opportunity to grow market share thanks to its Germany-based production, limiting dependency on Asian supplies.
- Future Growth Prospects: The brand remains optimistic about its future due to robust consumer demand and strategic positioning.
[1] ntv.de[2] reuters.com[3] jwu.com[4] rts.com[5] fashionnetwork.com
The global price increase announced by Birkenstock, primarily due to US tariffs, may impact the community policy regarding affordability in vocational training institutes that often rely on footwear donations.
As Birkenstock continues to show strong business performance with substantial growth in sales and profits, investments in industry and finance are expected to further boost its market presence and enable it to compete effectively.
