Q3 2024 Birkenstock Holding PLC Earnings Call

August 29, 2024

Good morning, and thank you for standing by. Welcome to Birkenstock's third quarter fiscal 2024 earnings conference call. At this time all participants are in a listening mode. Following the presentation, we will conduct a question and answer session.

Operator: 2020-24 Earnings Conference Call. At this time, all participants are in a listening mode. Following the presentation, we will conduct a question-and-answer session.

Operator: The company allocated 60 minutes in total to this conference call. I would like to remind everyone that this conference call is being recorded.

The company allocated 60 minutes in total to this conference call. I would like to remind everyone that this conference call is being recorded. I will now turn the call over to Megan Kulick, Director of Investual Relations.

Megan Kulick: I will now turn the call over to Megan Kulick, Director of Investor Relations. Hello, and thank you everyone for joining us today. On the call are Oliver Reichert, Director of Birkenstock Holding TLC, and Chief Executive Officer of the Birkenstock Group, and Erik Massmann, Chief Financial Officer of the Birkenstock Group.

Speaker Change: Hello, and thank you everyone for joining us today. On the call, our Oliver Reichert, Director of Burk and Stock holding PLC, and Chief Executive Officer of the Burk and Stock Group, and Erik Massmann, Chief Financial Officer of the Burk and Stock Group.

Megan Kulick: Klaus Baumann, Chief Sales Officer, David Kahan, President of the Americas, Tiffany Wu, Managing Director of Greater China, Alexander Hoff, Vice President of Global Finance, will join us for the Q&A.

Speaker Change: Klaus Balman, Chief Sales Officer, David Kahn, President of the Americas, Tiffany Wu, Managing Director of Greater China, Alexander Hoff, Vice President of Global Finance, will join us for the Q&A.

Megan Kulick: Please keep in mind that our fiscal year ends on September 30th. Thus, our third quarter of fiscal 2024 ended on June 30th, 2024.

Speaker Change: Please keep in mind that our fiscal year ends on September 30th. Thus, our third quarter of fiscal 2024 ended on June 30th, 2024. You may find the press release and supplemental presentation connected to today's discussion on our investor relations website www.verkastock-holding.com

Megan Kulick: You may find the press release and supplemental presentation connected to today's discussion on our Investor Relations website, birkenstock-holding.com. We would like to remind you that some of the information provided during this call is forward-looking and, accordingly, is subject to the safe harbor provisions of the federal securities laws. These statements are subject to various risks, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as in our filings with the SEC, which can be found on our website at Birkenstock-Holding.com.

Speaker Change: We would like to remind you that some of the information provided during this call is forward-looking and, importantly, a subject to the safe harbor provision of the federal security's law.

Speaker Change: These statements are subject to various risks, uncertainties, and assumptions which could cause our actual results to differ materially from these statements.

Speaker Change: These risks, uncertainties, and assumptions are detailed in this morning's press release as well as in our

Megan Kulick: We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. During the call, all revenue growth rates will be cited on a constant currency basis unless otherwise stated. We will also refer to certain non-IFRS financial information. We use non-IFRS measures as we believe they represent operational performance and underlying results of our business more accurately. The presentation of this non-IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS.

Speaker Change: We undertake no obligation to revise or update any forward-looking statements or information except as required by law.

Speaker Change: During the call, all revenue growth rates will be cited on a constant currency basis unless otherwise stated. We will also refer to certain non-IFRS financial information.

Speaker Change: We use non-IFRS measures as we believe they represent operational performance and underlying results of our business more accurately.

Speaker Change: The presentation of this non-IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS.

Megan Kulick: Reconciliation of IFRS to non-IFRS measures can be found in this morning's press release and in our SEC filings.

Speaker Change: Reconciliation of IFRS to non-IFRS measures can be found in this morning's press release and in our SEC filing. With that, I'll turn the call over to Oliver.

Oliver Reichert: With that, I'll turn the call over to Oliver. Good morning, everybody, and thank you for joining today's call. It was great seeing many of you in June during our most recent road show. We thank you for your love for the brand and kind support. We are happy to be here today to discuss another exceptional record-setting quarter for our company. We achieved the highest-quality revenue in our history. This was driven by the unbreakable and growing demands for our products across all segments, channels, and categories. As promised during our IPO and secondary offering, we're delivering mid to high-teens revenue growth, gross margin of 60 percent and adjusted ABDR. As promised, expanding into the right space opportunities, we identified closed-toe silhouettes, orthopedics, professional outdoor, the important up my region, and own retail.

Oliver Reichert: Good morning everybody, and thank you for joining today's call. It was great seeing many of you in June, during our most recent virtual.

Speaker Change: We thank you for your love for the brand and kind support.

Oliver Reichert: We are happy to be here today to discuss another exceptional report setting quarter-flower company. We achieved the highest quality revenue in our history.

Oliver Reichert: This was driven by the unbreakable and growing demands for our products across all segments, channels and categories.

Oliver Reichert: As promised during our IPO and secondary offering, with delivering mid to high teens revenue growth, growth margin of 60% and adjusted ABTR margins of 30% class.

Speaker Change: As promised, expanding into the wide space opportunities, we identified close to the oscillates of the pedics, professional, outdoor, the importance of marriage and own retail.

Oliver Reichert: Now, let's have a look at the third quarter. Birkenstock achieved 19 percent revenue growth in constant currency. As a super brand, we are taking share at and gaining the attention of our key retail partners and their consumers. Consumers are becoming increasingly selective and more intentional in their spending and looking for more physical touch points with the product. They are seeking a brand they love, and Birkenstock is one of these global super brands. Our 19 percent revenue growth in the quarter was driven by 23 percent growth in our B2B business and 14 percent growth in our D2C business.

Oliver Reichert: Now let's have a look at the third quarter

Oliver Reichert: Bitnichdog achieved 19% revenue growth in constant currency.

Oliver Reichert: As a super brand, we are taking share at and gaining the attention of our key retail partners and their consumers.

Oliver Reichert: Consumers are becoming increasingly selective and more intentional in their spending.

Oliver Reichert: and looking for more physical touch points for the product.

Oliver Reichert: They are seeking brand, they love, and Betenstock is one of these global super brands.

Oliver Reichert: Our 90% revenue growth in the quarter was driven by 23% growth in our B2B business and 14% growth in our DTC business.

Oliver Reichert: Well outpacing our peers. Birkenstock is a product the need to be seen and touched, and we benefited from this shift towards more in-person shopping. This movement is validated through increasing self-true rates and re-orders at our key retail partners. Accordingly, our B2B business was a bigger part of our third quarter than it has ever been. We continue to seek growth and revenue from our key hosted accounts, with over 90 percent of our B2B growth coming from within existing doors. Our partners increased other signs and added new categories and did a great job presenting our brand to the new consumers.

Speaker Change: Well, I'll pay you sing all of yours.

Speaker Change: Betelstahl is a product that needs to be seen and touched.

Speaker Change: and we benefit from this shift towards more in-person shopping.

Speaker Change: This movement is validated through increasing cell-through rates and re-orders at our key retail partners.

Speaker Change: Accordingly, our BDB business was a bigger part of our third quarter than it has ever been.

Speaker Change: We continue to see growth in revenue from our key holes at accounts with over 90% of our B2B growth coming from the then existing doors.

Speaker Change: or Partners increase all the signs and edit new categories and did a great job presenting our brand to the new consumers.

Oliver Reichert: Younger consumers preferred to shop in store. A trend we are seeing more and more. 12,400 hotel doors are an important brand touch point for our consumers, with the limited but steadily growing fleet of 64 own retail stores worldwide. We rely on our B2B business for its reach, predictability, and margin strength. Simply the B2B business of a super brand like Birkenstock decreases risk with a very, very healthy margin. While ASP was up year over year, volume was a bigger contributor to revenue growth this quarter. Given the strong B2B growth and the additional capacity provided by our factory expansion.

Speaker Change: Dianne consumers preferred to shop in store, a trend we are seeing more and more.

Speaker Change: 12,400 hotel doors are an important brand-touch for our consumers. With the limited but steadily growing fleet of 64-owned retail stores worldwide, we rely on our B2B business for its reach, predictability and margin strength.

Speaker Change: Simeon, the B2B business of a super brand like Burton Stokes, decreases risk with a very, very healthy

Speaker Change: While ASP was up year over year, volume was a bigger contribution to revenue growth, just quarter, given the strong B2B growth and the additional capacity provided by our factory expansion.

Oliver Reichert: As promised, we will never compromise our engineering distribution model and are maintaining our disciplined approach to relative market capacity to keep supply comfortably under demand.

David Kahan: Poser, David Kahan,

Speaker Change: As promised, we will never compromise our engineering distribution model and I'm maintaining our discipline approach to relative market capacity to keep supply comfortably under demand.

Oliver Reichert: As mentioned, retail remains an important wide space opportunity for us. We continue to selectively add to our footprint globally, adding seven new stores in the third quarter, bringing the total to 64. Our digital business continues to perform well, with double-digit growth in the quarter. We continue to add to our fast growing membership program, which grew 36% year over year to 6.9 million members. These members are highly engaged, spending more frequently and spending over 25% more per transaction than non-members. We saw a continued shift towards close associates, including clocks and premium products. During the sails from close to our silhouettes grew more than double the rate of the overall brand in the quarter, and revenue share increased 400 basis points year over year.

Speaker Change: As mentioned, retail remains an important wide space of agility for us. We continue to selectively add to our footprint globally, adding seven new stores in the third quarter, bringing the total to a 64.

Speaker Change: Our Digital Business continues to perform well with double digital growth in the quarter. We continue to add to our fast growing membership program, which grew 36% year over year to 6.9 million members.

Speaker Change: These members are highly engaged.

Speaker Change: Spending more frequently and spending over 25% more per transaction than non-members

Operator: 2020-24 Earnings Conference Call. At this time all participants are in a listening mode. Following the presentation we will conduct a question and answer session.

Speaker Change: We saw a continued shift towards Klaus's facilities, including Klaus and premium products during the quarter. Say it from Klaus to Klaus to Klaus, Guru Mord and double the rate of the overall brand in the quarter and revenue share increased 400 basis points year over year.

Operator: The company allocated 60 minutes in total to this conference call. I would like to remind everyone that this conference call is being recorded.

Megan Kulick: I will now turn the call over to Megan Kulick, Director of Investor Relations. Hello and thank you everyone for joining us today.

Speaker Change: We continue to generate significant momentum and compelling top line performance from our newest style and have excellent new product in the pipeline in each category and region.

Megan Kulick: On the call are Oliver Reichert, Director of Birkenstock Holding TLC, and Chief Executive Officer of the Birkenstock Group, and Erik Massmann, Chief Financial Officer of the Birkenstock Group. Klaus Baumann, Chief Sales Officer, David Kahan, President of the Americas, Tiffany Wu, Managing Director of Greater China, Alexander Hoff, Vice President of Global Finance, will join us for the Q&A.

Speaker Change: At the same time, the momentum with our porcelains remains very strong, revenue from our top five porcelains, most of which have been around for close to 50 years was up 24% in the quarter.

Oliver Reichert: This highlights the continued commercial relevance of these iconic models and most recognizable styles.

Megan Kulick: Please keep in mind that our fiscal year ends on September 30th. Thus our third quarter of fiscal 2024 ended on June 30th, 2024.

Speaker Change: This highlights the continued commercial relevance of these iconic models and most recognizable styles.

Oliver Reichert: Now let's move to our discussion of segment performance. Within our larger segment in the Americas, strong consumer demand for our brand continues in the third quarter. Revenue in the region was up 15%, compared to the same period a year ago. Our B2B channel was especially strong in the quarter. We saw particular strengths in department store accounts, which were up over 25%. Many drove meaningful brand exposure with 250 year anniversary statement displays in which they allocated more space to Birkenstock to support the initiatives. They celebrated the rich heritage of the brand and also included expansionary products such as close to our premium institutions.

Megan Kulick: You may find the press release and supplemental presentation connected to today's discussion on our Investor Relations website, Birkenstock-holding.com. We would like to remind you that some of the information provided during this call is forward looking and accordingly is subject to the safe harbor provisions of the federal securities laws. These statements are subject to various risks, uncertainties and assumptions, which could cause our actual results to differ materially from these statements. These risks, uncertainties and assumptions are detailed in this morning's press release, as well as in our filings with the SEC, which can be found on our website at Birkenstock-holding.com.

Speaker Change: Now let's move to our discussion of segment performance.

Speaker Change: Within our larger segment in the Americas, strong consumer demand for our brand continued in the third quarter. Revenue in the region was up 15%. Compared to the same period, the year ago. Our B2B channel was especially strong in the quarter.

Megan Kulick: We undertake no obligation to revise or update any forward looking statements or information except as required by law. During the call, all revenue growth rates will be cited on a constant currency basis unless otherwise stated. We will also refer to certain non-IFRS financial information. We use non-IFRS measures as we believe they represent operational performance and underlying results of our business more accurately. The presentation of this non-IFRS financial information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS. Reconciliation of IFRS to non-IFRS measures can be found in this morning's press release and in our SEC filings.

Speaker Change: Resolve particular strength in the Papin store accounts, which were up over 25%.

Speaker Change: Many drove meaningful grand expose of the 250-year anniversary statement displays in which they allocated more space to Britain's job to support the initiatives.

Speaker Change: They celebrated the rich heritage of the brand and also included expansionary products such as Clostoe Premium Extrusions.

Oliver Reichert: Full price realization remained very strong at 95%. This resulted in continued strong replenishment orders and backlog into 25. We carefully managed business to support our relative scarcity model across our wholesale partners, and our stock to sales ratios remained very healthy. New points of distribution in the Americas accounted for a single-digit percentage of revenue growth. Newly open doors were focused on specialty retailers in the wide space areas identified, including professional outdoor and running specialty retailers where the benefits of our footbed as a recovery is finding strong and used demand. As mentioned earlier, we saw a noticeable shift to in-person shopping during the quarter with the increased traffic at our own stores and increased sales through at our B2B partners.

Speaker Change: Food Prize Realization Remain, very strong at 95%.

Speaker Change: This resulted in continued strong replenishment orders and backlog into 25.

Speaker Change: We carefully managed business to support our relative Scott of the model across our wholesale partners and our stock to sales ratios remain very healthy.

Speaker Change: New points of distribution in the Americas account for a single digit percentage of revenue growth.

Speaker Change: You'll be open doors with focus on specialty retailers, in the right space areas, we identified including professional outdoor and running specialty retailers.

Speaker Change: where the benefits of our footbed as a recovery is finding strong and used demand.

Speaker Change: At mentioned earlier, we saw a noticeable shift to in-person shopping during the quarter with the increased traffic at our own stores and increased cell-through at our B2B partners.

Oliver Reichert: Still, growth in the third quarter in our DTC channel was up in the highest in our digits. Our own store retail sales were up over 60% driven by strong close toll and premium product sales. With an own retail fleet of currently eight stores in the US, we view the 6600 wholesale doors as a key asset in which we can connect with consumers. The results speak for themselves. Consumers want to shop for burden stocks, and we have the ability to interact with them wherever they are searching for our brand, via online or in store. We open three new own retail stores in the US during the third quarter, including our newest flagship in US.

Speaker Change: Still, Rose in the third quarter in our DTC channel was up in the high cylinder ditches.

Speaker Change: Our own story tells were up over 60% driven by strong Klaus Tol and premium product sales

Speaker Change: with an own retail fleet of currently 8 stores in the US, review the 6,600-hole stores as a key asset in which we can connect with consumers.

Oliver Reichert: As promised during our IPO and secondary offering, we're delivering mid to high-teens revenue growth, gross margin of 60 percent and adjusted ABDR. As promised, expanding into the right space opportunities, we identified closed-toe silhouettes, orthopedics, professional outdoor, the important up my region, and own retail.

Speaker Change: The results speak for themselves. Consumers want to shop for burden stocks, and we have the ability to interact with them wherever they are searching for a brand, be it online or in store.

Speaker Change: We opened three new-owned retail stores in the U.S. during the third quarter, including our newest flagship in Austin.

Oliver Reichert: Now, let's have a look at the third quarter. Birkenstock achieved 19 percent revenue growth in constant currency. As a super brand, we are taking share at and gaining the attention of our key retail partners and their consumers. Consumers are becoming increasingly selective and more intentional in their spending and looking for more physical touch points with the product. They are seeking brand they love and Birkenstock is one of these global super brands.

Oliver Reichert: Johnson. We plan to open additional stores in Boston and Nashville over the coming months. We continue to be selective in our retail expansion, looking for the right market and the ideal location to allow for the 12 to 18 months payback required. We will continue to leverage the strengths of our B3 partners to connect with Birkenstock fans in person more broadly.

Speaker Change: We plan to open additional stores in Boston and Nashville over the coming months.

Speaker Change: We continue to be selective in our retail expansion, looking for the right market and the ideal location to allow for the 12-18 months payback required. We will continue to leverage the strengths of our with-repartners to connect a bit and stop fans in person more broadly.

Oliver Reichert: In our second largest segment, Europe, we delivered another exceptional quarter with growth of 19% underpinned by continued strong consumer demand across the region. Birkenstock continues to grow double digits and to take share in the market that remains soft. While we realized strong double-digit growth across the whole region, we saw the best performance in those countries where we recently phased out distributors and replaced them with our own distribution, such as France and Benelux. We saw strength in both the DTC and the B2B channels, but similar to the Americas, B2B outpaced the double-digit growth of DTC in the third quarter.

Oliver Reichert: Our 19 percent revenue growth in the quarter was driven by 23 percent growth in our B2B business and 14 percent growth in our D2C business. Well outpacing our peers. Birkenstock is a product the need to be seen and touched and we benefited from this shift towards more in-person shopping. This movement is validated through increasing self-true rates and re-orders at our key retail partners. Accordingly, our B2B business was a bigger part of our third quarter than it has ever been.

Speaker Change: Now, second largest segment Europe, we deliver another exceptional quarter with growth of 19% under 10% by continued strong consumer demand across the region.

Speaker Change: Bittenstock continues to grow double digits and to take share in the market that remains false.

Speaker Change: While we realized strong double digits growth across the whole region, we saw the best performance in those countries where we recently faced out distributors and replaced them with our own distribution.

Speaker Change: Such is France and Benims.

Speaker Change: We saw strength in both the DTC and the B2B channels, but similar to the Americans B2B outpaced the double-ditched growth of D2C in the third quarter

Oliver Reichert: We continue to seek growth and revenue from our key hosted accounts with over 90 percent of our B2B growth coming from within existing doors. Our partners increased other signs and added new categories and did a great job presenting our brand to the new consumers. Younger consumers preferred to shop in store. A trend we are seeing more and more.

Oliver Reichert: Our focus on better alignment with key strategic richer partners led to increase orders and strong sexual performance from these targeted accounts. As we saw in the Americas, over 90% of the growth in B2B came from within existing doors. Our partners continued to add to the business of the equipment to meet the expanding consumer demand. Birkenstock continues to be one of the top performing brands across the region for our whole department. Similar to the Americas, we saw moved toward more insorperchasing in the quarter. This is why it is so important that we continue to balance a very strong, stable, and profitable B2B business with our DTC business and increase our own retail fleet.

Speaker Change: Our focus on better alignments with key strategic richer partners led to increase others and strong structural performance from these targeted accounts. As we saw in the Americans over 90% of the growth in B2B came from within existing doors.

Speaker Change: or Partners continued to add to their business of involvement to meet the expanding consumer demands. Bit and still continues to be one of the top performing brands across the region for our hosted partners.

Oliver Reichert: 12,400 hotel doors are an important brand touch point for our consumers with the limited but steadily growing fleet of 64 own retail stores worldwide. We rely on our B2B business for its reach, predictability and margin strength. Simply the B2B business of a super brand like Birkenstock decreases risk with a very very healthy margin. While ASP was up year over year volume was a bigger contributor to revenue growth this quarter. Given the strong B2B growth and the additional capacity provided by our factory expansion. As promised, we will never compromise our engineering distribution model and are maintaining our disciplined approach to relative market capacity to keep supply comfortably under demand.

Speaker Change: Similets of the Americas, we saw a move toward more insoil per chasing in the quarter.

Speaker Change: This is why it is important that we continue to balance the very strong state and profitable B2B business with our D2C business and increase our own research lead.

Oliver Reichert: With our engineering distribution, we can easily adapt to any changes in consumer spending patterns to meet market demand. With in Europe, we saw very strong consumer adoption of new models coming out of Pazava's factory. The Jean-Joukou, Mogami Terra, and Recavic had strong sell-throughs of up to 90%. And we are sold out in many sizes and colors.

Speaker Change: With our Indigenous distribution, we can easily adapt to any changes in consumer spending patterns to meet market demand.

Speaker Change: With the Europe, we saw very strong consumer adaption of new models coming out of parts of our factory. The Jean-Joucou, Mugami Terra and Reykjavic had strong cell troughs of up to 90%. And we are sold out in many sizes and colors.

Oliver Reichert: Lastly, I want to congratulate the team on the successful launch of our new line of sneaker footbeds and insult during Paris Fashion Week on the recent opening of our newest European flagship store in Paris, located in the heart of the historic Marais district. Yathma was again our fastest growing segment in the third quarter of fiscal 2024. The revenue growth of 41% driven by strong growth in both volume and ASP; growth in the region was largely driven by our DTC channel. We added four new own retail stores, including three in India and one in Japan, bringing the total and the Upma region to 23.

Oliver Reichert: As mentioned, retail remains an important wide space opportunity for us. We continue to selectively add to our footprint globally adding seven new stores in the third quarter bringing the total to 64. Our digital business continues to perform well with double digit growth in the quarter. We continue to add to our fast growing membership program which grew 36% year over year to 6.9 million members. These members are highly engaged, spending more frequently and spending over 25% more per transaction than non-members.

Speaker Change: Lastly, I want to congratulate the team on the successful launch of our new line of sneaker, footpaths and insult during Paris Fashion Week on the recent opening of our newest European flagship store in Paris located in the heart of the historic Marais discreet.

Speaker Change: Yatma was again, or half the scoring segment in the third quarter of fiscal 2012.

Speaker Change: So the revenue growth of 41% driven by strong growth in both volume and ASP

Speaker Change: Gross and the region was largely driven by our DTC channel. We added four new own return stores, including three in India and one in Japan.

Oliver Reichert: We also saw a healthy increase in B2B in the third quarter of fiscal 2024, which was driven by an expansion within our monogram partner stores in the addition of 10 newly opened stores. Stokes, demand in Abma is broad-based and, like other regions, has benefited from close-toes stillers, including clocks, which more than doubled compared to the same quarter last year. We saw particularly strong growth from our two last markets in the region, Japan and Australia. Greater China, which currently makes up less than 15% of the Abma revenue, who over 25% in the quarter, and remains an important expansionary market for Birkenstock.

Speaker Change: Bringing the total and the upper reaching to Prentice.

Oliver Reichert: We saw a continued shift towards close associates including clocks and premium products during the Sails from close to our silhouettes grew more than double the rate of the overall brand in the quarter and revenue share increased 400 basis points year over year. This highlights the continued commercial relevance of these iconic models and most recognizable styles.

Speaker Change: We also saw a healthy increase in B2B in third quarter, of 5th to 2024, which was driven by an expansion, within our monogrand partner stores in the addition of 10 newly open stores.

Speaker Change: Imagine up my broad-based and like other regions has benefited from close-toes to Lewis.

Speaker Change: and Klaus, which more than doubled compared to the same quarter last year.

Speaker Change: We saw particularly strong growth from our two last markets in the region, Japan and Australia.

Speaker Change: Greater China, which currently makes up less than 15% of the upper revenue, who over 25% in the quarter, and remains an important expansionary market for BIP stock.

Oliver Reichert: We are still in the early stages of our markets roll out there and are starting to see the benefits of our efforts already. We had a very successful opening of our Shanghai pop-up store in April, and it generated significant brand awareness and interest. Brand search and WeChat, more than tripled in the third quarter, and Birkenstock was a top five brand in our categories in the most recent 618 event on T-Morland JD.

Speaker Change: We are still in the early stages of our Marcus Rollout there and are starting to see the benefits of our efforts already

Oliver Reichert: Now let's move to our discussion of segment performance. Within our larger segment in the Americas, strong consumer demand for our brand continues in the third quarter. Revenue in the region was up 15%, compared to the same period a year ago. Our B2B channel was especially strong in the quarter. We saw particular strengths in department store accounts which were up over 25%. Many drove meaningful brand exposure with 250 year anniversary statement displays in which they allocated more space to Birkenstock to support the initiatives.

Speaker Change: We had a very successful opening of Ocean High Pop-Up Store in April, and it generated significant brand awareness and interest.

Speaker Change: Bransarch, when we chat more than triples in the third quarter, and then Stoke was a top 5 brand in our category, in the most recent 16th 18 event on T-Morning JD.

Erik Massmann: I will now turn this over to Erik to discuss our financial results in more detail.

Speaker Change: I will now turn it over to Erik to discuss our financial result in more detail. Thank you.

Erik Massmann: Thank you. Thanks, Oliver, and good morning, everyone. I'm very pleased to share Birkenstock's performance in the third quarter of fiscal 2024. The health and strength of our brand are again clearly reflected in our third quarter results. Birkenstock has cemented its position as one of the few MF carrier brands in the wholesale channel and also our DTC channels. They continue to grow as consumers become more intentional in their purchases.

Erik Massmann: Thanks Oliver and good morning everyone, and very pleased to share the district's performance in the third quarter of fiscal 2024.

Erik Massmann: The health and strength of our brand are again clearly reflected in our third quarter results.

Oliver Reichert: They celebrated the rich heritage of the brand and also included expansionary products such as close to our premium institutions. Full price realization remained very strong at 95%. This resulted in continued strong replenishment orders and backlog into 25. We carefully managed business to support our relative scarcity model across our wholesale partners and our stock to sales ratios remained very healthy. New points of distribution in the Americas accounted for a single digit percentage of revenue growth.

Speaker Change: Gerdnichdorf has cemented its position as one of the few Muff-Cary brands in the whole set channel and also our DTC channels. They continue to grow as consumers become more intentional in their purchases.

Erik Massmann: Let's have a look into the detail of third quarter results. Third quarter fiscal 2024 revenue was 565 million euros, growing 19% versus the prior year on a constant currency basis. We once again generated double data growth across all segments and channels, demonstrating the desirability and resilience of our brand. B2B was up 23% in consequence, and our DTC performance was up by 40% versus prior year. Ross profit margin of third quarter fiscal 2024 was 59.5%, up 320 basis points sequentially. It was down to 20 basis points compared to prior year's cross profit margin. Our ongoing capacity expansion accounted for about 120 basis points of the decline compared to prior year third quarter.

Speaker Change: Let's have a look into the detail of third quarter results.

Speaker Change: Third quarter, fiscal 2024 revenue was 565 million euros.

Speaker Change: Rowing 90% versus the prior year on a constant currency basis.

Speaker Change: We once again generated double digital growth across all segments and channels.

Oliver Reichert: Newly open doors were focused on specialty retailers in the wide space areas identified including professional outdoor and running specialty retailers where the benefits of our footbed as a recovery is finding strong and used demand. As mentioned earlier, we saw a noticeable shift to in-person shopping during the quarter with the increased traffic at our own stores and increase sales through at our B2B partners. Still, growth in the third quarter in our DTC channel was up in the highest in our digits.

Speaker Change: Demonstrating the Desirability and Resilience of our Brett.

Speaker Change: B2B was up 23% in Consequently, and our D2C Performance was up by 40% versus Praia.

Speaker Change: Ross Prophet Martin, of 3rd quarter fiscal 2004, was 59.5% up 3.20 basis points sequentially.

Speaker Change: It was down to an 20 basis points compared to prior years, cross profit margin. Our ongoing capacity extension accounted for about 120 basis points of the decline compared to prior year third quarter.

Oliver Reichert: Our own store retail sales were up over 60% driven by strong close toll and premium product sales. With an own retail fleet of currently eight stores in the US, we view the 6600 wholesale doors as a key asset in which we can connect with consumers.

Erik Massmann: The remaining 100 basis points is primarily due to the shift in mix from DTC to B2B compared to a year ago. As we have said in the past, our Ross profit margin was vary from quarter to quarter based on channel mix, as CPC yields a higher gross margin than B2B. Conversely, B2B is slightly higher EBDA margin given slower selling and distribution expense. Adjusted selling and distribution expenditure were 149 million euros, representing 26.4% of revenue in the third quarter. Down to 120 basis points year over year due to the increased B2B penetration of set partially by a retail store and best.

Speaker Change: the remaining 100 basis points.

Speaker Change: This primarily due to the shift in mix from D2C to B2B compared to the year ago.

Speaker Change: As we have said in the past, a rust-profit margin is very from quarter to quarter based on channel mix as it see years higher gross margin than it will be to be.

Oliver Reichert: The results speak for themselves. Consumers want to shop for burden stocks and we have the ability to interact with them wherever they are searching for our brand via online or in store. We open three new own retail stores in the US during the third quarter including our newest flagship in us. Johnson. We plan to open additional stores in Boston and Nashville over the coming months. We continue to be selective in our retail expansion, looking for the right market and the ideal location to allow for the 12 to 18 months payback required.

Speaker Change: Conversely, B2B is slightly higher average than Martin, given slower selling in distribution expense.

Speaker Change: It just said selling it is worth $149 million, representing 26.4% of revenue in the third quarter

Speaker Change: Down to an 20-based point year over year, due to the increased B2B penetration, upset partially by a rich-ass door investments.

Erik Massmann: St. Lawrence, adjusted general administration expenses, were 25 million euros, or 4.5% of revenue, up 160 basis points year over year, primarily due to the incremental public company costs. Third quarter, adjusted EBITDA, 186 million euros was the strongest quarterly EBITDA in the company's history, and up 15% there's a third quarter of fiscal 2023. We came out in Q3 with an adjusted EBITDA margin of 33%. This was down 140 basis points from the prior year, impacted from the same temporary and one-time items we discussed with regard to gross profit margin, as well as the additional costs of expanding our retail and TTC presence and incremental public company costs, partially offset by the mixed shift to higher EBITDA revenue.

Speaker Change: Adjust the general administration expenses were 25 million euros, or 4.5% of revenue, up 160 basis points year over year, primarily due to the incremental public company costs.

Oliver Reichert: We will continue to leverage the strengths of our B3 partners to connect with Birkenstock fans in person more broadly. In our second largest segment, Europe, we delivered another exceptional quarter with growth of 19% underpinned by continued strong consumer demand across the region. Birkenstock continues to grow double digits and to take share in the market that remains soft. While we realized strong double digit growth across the whole region, we saw the best performance in those countries where we recently faced out distributors and replaced them with our own distribution, such as France and Benelos.

Speaker Change: Third quarter, just at EBDA, 186 million euros was the strongest quarterly EBDA in the company's history, and up 15% there's a third quarter of fiscal 2023.

Speaker Change: We came out in Q3 with an adjusted EBITDA module 33%

Speaker Change: This was down 140 basis points from the prior year, impacted from the same temporary and one-time items we discussed with regard to graph profit margin, as well as the additional cost of expanding our retail and P2C presence and incremental public company costs.

Oliver Reichert: We saw strength in both the DTC and the B2B channels, but similar to the Americas, B2B outpaced the double digit growth of DTC in the third quarter. Our focus on better alignment with key strategic richer partners led to increase orders and strong sexual performance from these targeted accounts. As we saw in the Americas, over 90% of the growth in B2B came from within existing doors. Our partners continued to add to the business of the equipment to meet the expanding consumer demand.

Erik Massmann: Adjusted net profit of 92 million euros was up 14%, and adjusted earnings per share was 49 euro cents, up 11% from a year ago.

Speaker Change: Partly of set by the mix shift to high upbeat to be roughly.

Speaker Change: It just the net profit of 92 million euros was up 14% and it just said earning casher was 49 euro cents up 11% from a year ago.

Erik Massmann: Let's now have a look at our balance sheet as of June 30, 2024. Cash and cash equivalents were 404 million euros as of June 30, 2024, up from 176 million euros at the end of the second quarter. In the third quarter of fiscal 2024, inventory was 690 million euros, or about 36% of last term of month revenue, down from 40% in the year-ago third quarter. We generated 281 million euros in operating cash flow in the quarter, up 19% year over year. Total cash flow was 229 million euros in the quarter, up 93% from the same quarter last year, due to the growth in operating cash flow, lower capital expenditures, and financial costs.

Speaker Change: Let's now have a look at our balance sheet as of June 30, 2024.

Speaker Change: Kesh and Kesh are covered in 4 million euros as of June 30, 2024, up from 176 million euros at the end of the second quarter.

Speaker Change: In the first quarter of fiscal 2024, inventory was 619 million euros, or about 36% of last 12 months revenue, down from 40% in the year ago third quarter.

Oliver Reichert: Birkenstock continues to be one of the top performing brands across the region for our whole department. Similar to the Americas, we saw moved toward more insorperchasing in the quarter. This is why it is so important that we continue to balance a very strong stable and profitable B2B business with our DTC business and increase our own retail fleet. With our engineering distribution, we can easily adapt to any changes in consumer spending patterns to meet market demand.

Speaker Change: We generated 281 million euros in operating cash flow in the quarter up 19% year over year.

Speaker Change: Total cash flow was 229 million euros in the quarter, up 93% from the same quarter last year

Speaker Change: Due to the growth and operating capital, lower capital expenditures and finance you cost.

Erik Massmann: As we have said before, we will continue to deliver it using cash-generated operations. Our net leverage was 2.1 exes of June 30, 2024. Earlier this month, we completed the paydown of approximately 50 million dollars of loans in conjunction with the over repining and replacement of our credit facilities we announced on May 28. This week, we notified our lenders of our intent to repay an additional 100 million dollars of our US term loan on September 3rd. We remain committed to reaching a net leverage ratio of 2 exes by the end of the year and will use free cash flow to reduce debt for the possible future.

Oliver Reichert: With in Europe, we saw very strong consumer adoption of new models coming out of Pazava's factory. The Jean-Joukou, Mogami Terra and Recavic had strong sell-throughs of up to 90%. And we are sold out in many sizes and colors.

Speaker Change: As we have said before, we will continue to deliver it, using Kesterner's little operations.

Speaker Change: Our net leverage was 2.1x as of June 30, 2024. Earlier this month, we completed the paydown of approximately $50 million of loans in conjunction with the overall refinancing and replacement of our credit facilities we announced on May 28.

Speaker Change: This week we notified our lenders of our intent to repay and additional $100 million of our US term loan on September 3rd

Oliver Reichert: Yathma was again our fastest growing segment in the third quarter of fiscal 2024. The revenue growth of 41% driven by strong growth in both volume and ASP, growth in the region was largely driven by our DTC channel. We added four new own retail stores, including three in India and one in Japan, bringing the total and the upma region to 23. We also saw a healthy increase in B2B in third quarter of fiscal 2024, which was driven by an expansion within our monogram partner stores in the addition of 10 newly opened stores.

Speaker Change: The remain committed to reaching a net leverage ratio of two eggs by the end of the year and will use pre-cashler to reduce depth for the possible future.

Erik Massmann: Capital expenditures totaled 50 million euros on the third quarter, bringing the total amount invested year to date to 50 million euros, mainly related to our production capacity expansion and new solidings.

Speaker Change: Capital Expandager has total 15 million euros on the third quarter, bringing the total amount invested yet today to 50 million euros, mainly related to our production capacity expansion and new thought-inings.

Erik Massmann: As we said during our most recent load show, we expect capital expenditures to come in below 100 million for the fiscal year.

Speaker Change: As we said during our most recent episode, we expect capital expenditures to come in below 100 million for the fiscal year.

Oliver Reichert: With that, I'll hand over back to Oliver.

Oliver Reichert: Thanks, Eric.

Speaker Change: with that I'll hand over back to Oliver.

Oliver Reichert: Let me summarize our discussion. Schumann. Our exceptional results during the third quarter and first nine months of fiscal 2024 demonstrate our ability to deliver on the promises we made during our IPO and secondary road shows. We are delivering strong double-digit revenue growth, strong margins and cash generation, and expanding into the wide space areas. We are executing on our proven engineering distribution strategy to drive both volume and ASP growth to meet the growing consumer demand for our products, for both plastics as well as new emerging products and across all segments and channels. We also have the ability to meet our customers wherever they seek to interact with our brands, be that online or in store.

Oliver Reichert: Stokes, Demand in Abma is broad-based and like other regions has benefited from close-toes stillers, including clocks, which more than doubled compared to the same quarter last year. We saw particularly strong growth from our two last markets in the region, Japan and Australia. Greater China, which currently makes up less than 15% of the Abma revenue, who over 25% in the quarter, and remains an important expansionary market for Birkenstock. We are still in the early stages of our markets roll out there and are starting to see the benefits of our efforts already.

Oliver Reichert: Thanks, Erik

Oliver Reichert: Let me summarize our discussion.

Oliver Reichert: Our exceptional results during the third quarter and first nine months of fiscal 2020-2024 demonstrated our ability to deliver the promises we made during our IPO and secondary world shows.

Oliver Reichert: We are delivering strong double-ditched revenue growth, strong margins, and cash generation, and expanding into the wide-space areas.

Oliver Reichert: We are executing on our proven Indigenous distribution strategy to drive both volume and ASP growth to meet the growing consumer demand for products.

Oliver Reichert: For both classics as well as new emerging products and across all segments and channels.

Oliver Reichert: We had a very successful opening of our Shanghai pop-up store in April, and it generated significant brand awareness and interest. Brand search and WeChat, more than tripled in the third quarter and Birkenstock was a top five brand in our categories in the most recent 618 event on T-Morland JD.

Oliver Reichert: We also have the ability to meet our customers wherever they seek to interact with our brand, be that online or in store.

Oliver Reichert: Our growth continues to significantly outpace our peers in the Americas and Europe, with strong and increasing momentum from our B2B partners and in our DTC footprint. We are entering the next chapter of growth as we tap into our largest wide space market, Diabma region. We are increasing brand awareness, educating the consumer on the purpose of the business of footbeds and our taking market share by following our playbook of disciplines, engineering distribution to support ASP. With our growing leadership team in the region, continuous investment, indigital and richer partnerships, we see a long runway for growth ahead in Diabma.

Oliver Reichert: Our growth continues to significantly outpaced our peers in the Americas and Europe, with strong and increasing momentum from our B2B partners and in our D2C footprints.

Erik Massmann: I will now turn this over to Erik to discuss our financial result in more detail. Thank you. Thanks, Oliver, and good morning, everyone.

Oliver Reichert: We are entering the next chapter of Gross, as we tap into our largest widespread markets, Diablo Region.

Erik Massmann: I'm very pleased to share Birkenstock's performance in the third quarter of fiscal 2024. The health and strength of our brand are again clearly reflected in our third quarter results. Birkenstock has cemented its position as one of the few MF carrier brands in the wholesale channel and also our DTC channels. They continue to grow as consumers become more intentional in their purchases.

Oliver Reichert: We are increasing brand awareness, educating the consumer on the purpose of the business of footpaths and taking market share by following our playbook of disciplined, engineered distribution to support ASP.

Oliver Reichert: Now a growing leadership team in the region, continuous investment, indigible and richer partnerships. We see a long runway for growth ahead in Yama.

Oliver Reichert: We are confirming our fiscal year 2024 guidance for total revenue growth in constant currency of 20 percent and adjusted EBDR margin of 30 to 30.5 percent. We remain fully committed to our medium and long-term targets of mid to high-teens revenue growth, across profit margin of 60 percent and adjusted EBDR margin over 30 percent.

Erik Massmann: Let's have a look into the detail of third quarter results. Third quarter fiscal 2024 revenue was 565 million euros, growing 19%, versus the prior year on a constant currency basis. We once again generated double data growth across all segments and channels, demonstrating the desirability and resilience of our brand. B2B was up 23% in consequence and our DTC performance was up by 40% versus prior year. Ross profit margin of third quarter fiscal 2024 was 59.5% up 320 basis points sequentially.

Oliver Reichert: We are confirming our fiscal year 2020 for guidance for total revenue growth in constant currency of 20% and adjusted EBITDA margin of 30 to 30.5%.

Oliver Reichert: We remain fully committed to our medium and long-term target of mid-to-high teens revenue growth, gross profit margin of 60% and adjusted it to about 30%.

Operator: I would now kindly ask the operator to open our Q&A session. Thank you. At this time, we will be conducting a question and answer session. In the interest of time, we ask that participants limit themselves to one question during today's Q&A. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line as in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys.

Speaker Change: I would now kindly ask the operator to open our Q&A session.

Speaker Change: Thank you, at the Simeon, we will be conducting a question and answer session. In the interest of time, we ask that participants limit themselves to one question during today's Q&A. If you would like to ask a question, please press star one on your telephone keypad.

Erik Massmann: It was down to 20 basis points compared to prior years cross profit margin. Our ongoing capacity expansion accounted for about 120 basis points of the decline compared to prior year third quarter. The remaining 100 basis points is primarily due to the shift in mix from DTC to B2B compared to a year ago. As we have said in the past, our Ross profit margin was vary from quarter to quarter based on channel mix as CPC yields a higher gross margin than B2B.

Speaker Change: A confirmation tone will indicate your line as in the question cube. You may press star 2 if you would like to remove your question from the cube. For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 if you have a question.

Simeon Siegel: Once again, please press star one if you have a question. One moment, please, while we pull for questions. The first question today is coming from Simeon Siegel from BMO Capital Markets.

Speaker Change: and one more one please while we call for questions.

Speaker Change: On the first question today is coming from Simeon Siegel from Bemo Capital Markets, Simeon your line of life.

Simeon Siegel: Simeon, your line is live. Thanks, everyone. I have a stock of it right now, but congrats on really impressive top line growth online, really ongoing margin strength and the brand health there. I mean, that was very impressive.

Erik Massmann: Conversely, B2B is slightly higher EBDA margin given slower selling and distribution expense. Adjusted selling and distribution expenditure were 149 million euros, representing 26.4% of revenue in the third quarter. Down to 120 basis points year over year due to the increased B2B penetration of set partially by a retail store and best. St. Lawrence, adjusted general administration expenses, were 25 million euros, or 4.5% of revenue, up 160 basis points year over year, primary due to the incremental public company costs.

Simeon Siegel: Thanks, hey everyone, let's not know the stock, I mean, if like it right now, but congrats on really impressive topline growth, all-line really ongoing margin strength and the brand health there, I mean, that was very impressive. Oliver, could you speak to how units and like for like ASP perform versus your expectations? The revenue show that you're clearly enjoying really strong customer demand. And if I'm thinking about it correctly, I think you'll overall, number may still overshadow some important channel nuance that you were talking about. So revenue's basically hit consensus.

Simeon Siegel: Oliver, could you speak to how units and like-for-like ASP perform versus your expectations? The revenues show that you're clearly enjoying really strong customer demand. And if I'm thinking about it correctly, I think the overall number may still overshadow some of the important channel nuance that you were talking about. So, revenues basically hit consensus while beating adjusted EBITDA margins, and this was on the strong B2B outperformance. So, I'm just wondering, could you help me understand this? I guess, do inline revenues on higher wholesale mix suggest you're actually outperforming your internal units. And then maybe just reflect on the strong customer demand.

Speaker Change: while beating adjusted E-Bethon margins and this was on the strong B-to-B outperformance. So I'm just wondering, can you help me understand this? I guess, do in-line revenues on higher wholesale mix, suggest you're actually outperforming your internal units?

Simeon Siegel: You beat the profit margin, so perhaps remind us how you're thinking about both channels' health and trajectory.

Speaker Change: and then maybe just reflect on the strong customer demand.

Speaker Change: You beat the profit margin so perhaps remind us how you're thinking about both channels health and trajectory and then just lastly, if I can, maybe for Erik any color you can share, just uncomfort for guidance, perhaps both people are on beyond, it's tough macro out there, but you're still posting in a street leading growth. So if you're interested, you put some takes to give a mic. Thank you.

Erik Massmann: Third quarter, adjusted EBITDA, 186 million euros was the strongest quarterly EBITDA in the company's history, and up 15% there's a third quarter of fiscal 2023. We came out in Q3 with an adjusted EBITDA margin of 33%. This was down 140 basis points from the prior year, impacted from the same temporary and one-time items we discussed with regard to gross profit margin, as well as the additional costs of expanding our retail and TTC presence and incremental public company costs partially offset by the mixed shift to higher EBITDA revenue. Adjusted net profit of 92 million euros was up 14% and adjusted earnings per share was 49 euro cents, up 11% from a year ago.

Simeon Siegel: And then just lastly, if I can maybe for Eric, any color you can share just on comfort for guidance, perhaps both few foreign beyond. It's a tough macro out there, but you're still posting industry-leading growth. So, curious any puts and takes to keep in mind. Thank you.

Oliver Reichert: Hi, Samin. Thanks for the question, and a good one. You're thinking about it the right way. Our unit sold were very strong and like for like, ASP was up. So yes, with a higher B2B mix, we hit our revenue growth expectations and, importantly, saw improved margins as well. Our B2B business is a very profitable business. It has higher EBITDA margins than our D2C business, and importantly, it is very predictable and less risky. Birkenstock has not seen any consumer spending softness or anything like it. We are selling more units at higher ASP, and we continue to grow and take share.

Simeon Siegel: Hey Simeon, thanks for the question and a good one. You're thinking about it the right way. Our unit sold were very strong and like for like is P was up.

Speaker Change: So, yes, with a higher beat to be mixed, we hit our revenue growth expectations and importantly, saw improved margins as well

Speaker Change: Our B2B business is a very profitable business

Speaker Change: It has higher EBITDA margins than our D2C business, and importantly, it is very predictable and less risky.

Speaker Change: Witney Stoke is not seen any consumer spending softness or anything like it. We are telling more units at higher ASP and we continue to grow and take share.

Oliver Reichert: I think that's really the most important part of the story. And, as I said in my comments, we saw some movement to in-person shopping during the quarter. We're happy about this; be honest, our brand benefits from in-person shopping. The footbed needs to be seen and touched. And that's how we create our fans, and this is how we create new fans. The good news here, in either channel, we have very strong EBITDA margins. Our brand remains very strong. We have full price realization over 90% globally. Consumer engagement; we grew online member in the third quarter by over 30%.

Erik Massmann: Let's now have a look at our balance sheet as of June 30, 2024. Cash and cash equivalents were 404 million euros as of June 30, 2024, up from 176 million euros at the end of the second quarter. In the third quarter of fiscal 2024, inventory was 690 million euros, or about 36% of last term of month revenue, down from 40% in the year ago third quarter. We generated 281 million euros in operating cash flow in the quarter, up 19% year over year.

Speaker Change: I think that's really the most important part of the story and as I said in my prepared comments we saw some movement to in person shopping during the quarter we're happy about this we honest our brand benefits from in person shopping the footbed needs to be seen and touched

Speaker Change: and that's how we create our fans and this is how we create new fans.

Speaker Change: The good news here, in either channel, we have very strong EBITDA al-Majors.

Speaker Change: Our brand remains very strong.

Speaker Change: We have full-priced realization over 90% globally, consumer engagement, we grew online member in the third quarter by over 30%.

Erik Massmann: Total cash flow was 229 million euros in the quarter, up 93% from the same quarter last year, due to the growth in operating cash flow, lower capital expenditures and financial costs. As we have said before, we will continue to deliver it using cash-generated operations. Our net leverage was 2.1 exes of June 30, 2024. Earlier this month, we completed the paydown of approximately 50 million dollars of loans and conjunction with the over repining and replacement of our credit facilities we announced on May 28.

Oliver Reichert: Our stock to sale ratio are the healthiest in the industry.

David Kahan: So I think we're really very, very good, and maybe David you can add some color on this. Yes, thanks to all of us.

Speaker Change: and I would stop to say the ratio are the healthiest in the industry so I think we're...

David Kahan: Really, very, very good and maybe David you can add some color on this. Yeah, thanks Oliver. Simeon, first off, great question and I appreciate it coming from use.

Operator: Simian, first off, great question, and I appreciate it coming from you. Please stand by, ladies and gentlemen, while we get the speaker back. Ladies and gentlemen, please stand by while we recollect the speaker. Once again, please stand by while we reconnect the speaker. And the speaker line is reconnected. Please go ahead.

Klaus Schwab: Klaus Schwab,

Erik Massmann: This week, we notified our lenders of our intent to repay an additional 100 million dollar of our US term loan on September 3rd. We remain committed to reaching a net leverage ratio of 2 exes by the end of the year and will use free cash flow to reduce debt for the possible future. Capital expenditures totaled 50 million euros on the third quarter, bringing the total amount invested year to date to 50 million euros, mainly related to our production capacity expansion and new solidings. As we said during our most recent load show, we expect capital expenditures to come in below 100 million for the fiscal year.

Klaus Schwab: Klaus Schwab,

Speaker Change: Please stand by ladies and gentlemen, we'll be getting the speaker back.

Klaus Schwab: Klaus Schwab,

David Kahan: Klaus Schwab, David

David Kahan: Ladies and gentlemen, please stand by while we recollect the speaker.

David Kahan: Klaus Schwab,

Oliver Reichert: With that, I'll hand over back to Oliver. Thanks Eric.

Oliver Reichert: Let me summarize our discussion. Schumann. Our exceptional results during the third quarter and first nine months of fiscal 2024 demonstrate our ability to deliver on the promises we made during our IPO and secondary road shows. We are delivering strong double digit revenue growth, strong margins and cash generation, and expanding into the wide space areas. We are executing on our proven engineering distribution strategy to drive both volume and ASP growth to meet the growing consumer demand for our products, for both plastics as well as new emerging products and across all segments and channels.

David Kahan: Klaus Schwab,

David Kahan: Once again, please stand by while we reconnect a speak time.

Oliver Reichert: We also have the ability to meet our customers wherever they seek to interact with our brands, be that online or in store. Our growth continues to significantly outpace our peers in the Americas and Europe with strong and increasing momentum from our B2B partners and in our DTC footprint. We are entering the next chapter of growth as we tap into our largest wide space market, Diabma region. We are increasing brand awareness, educating the consumer on the purpose of the business of footbeds and our taking market share by following our playbook of disciplines engineering distribution to support ASP. With our growing leadership team in the region, continuous investment, indigital and richer partnerships, we see a long runway for growth ahead in Diabma.

Speaker Change: The End

Speaker Change: And the speaker line is reconnected, please go ahead.

Operator: Are we back? Back loud and clear, thank you. Okay, excellent.

Speaker Change: Harvey Dac, Klaus Schwab, David Kahan, David Kahan,

David Kahan: Sorry for being disconnected, and thank you all. Again, Simeon, great question. I appreciate it coming from you since you've really been ahead of the curve and really trying to understand the dynamics of the channel mix, and especially D to C. The way I look at this is retail is really quite simple. It's always been the right product at the right time in the right place. And in Q3, we did start to see the consumer is choosing the right place, being more in a physical environment. The beauty, the magic of engineered distribution is we're able to shift our allocations to best meet the demand wherever the consumer may be seeking to make the purchase.

Speaker Change: Back loud and clear, thank you.

Speaker Change: Okay, excellent. Sorry for being disconnected and thank you Oliver again. Simeon, great question. I appreciate it coming from you since you've really been ahead of the curve and really trying to understand the dynamics of the channel next.

Oliver Reichert: We are confirming our fiscal year 2024 guidance for total revenue growth in constant currency of 20 percent and adjusted EBDR margin of 30 to 30.5 percent. We remain fully committed to our medium and long-term targets of mid to high-teens revenue growth across profit margin of 60 percent and adjusted EBDR margin over 30 percent.

Speaker Change: and especially D to C. The way I look at this is retail is really quite simple. It's always been the right product at the right time and the right place. And in Q3 we did start to see the consumer is choosing the right place being more in a physical environment.

Speaker Change: The beauty, the magic of engineer distribution is we're able to shift our allocations to best meet the demand wherever the consumer may be seeking to make the purchase.

David Kahan: And as Oliver mentioned in his opening, I believe the biggest driver in the quarter was the quality and breadth of our assortment, and how it was presented with our major strategic partners. They did a wonderful job of celebrating our brand's 250th anniversary and sharing the brand in a very, very, very visible and compelling manner. We had explosive growths in year-on-year sell-throughs with all partners, ranging from small mom-and-pop stores to the major chains. And I'll also add, we're starting to see an emerging youth consumer. And don't mistake this for a trendy teen thinking; this is quite different.

Operator: I would now kindly ask the operator to open our Q&A session. Thank you. At this time, we will be conducting a question and answer session.

Speaker Change: and as Oliver mentioned in his opening, I believe the biggest driver in the quarter was the quality and breath of our assortment and how it was presented with our major strategic partners.

Operator: In the interest of time, we ask that participants limit themselves to one question during today's Q&A. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line as in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys. Once again, please press star one if you have a question. One moment, please, while we pull for questions.

Speaker Change: They did a wonderful job of celebrating our brands, 250th Anniversary, and sharing the brand in a very, very, very visible and compelling manner. We had explosive growths in year-on-year self-ruse with all partners ranging from small, mom-and-pop stores to the major chains. And I'll also add, we're starting to see an emerging youth consumer. And don't mistake this for a trendy teen thinking. This is quite different. It's an emerging demographic that's really embracing our brand. And while some of the styles have been around for 50 years, it's new to them. And they're obviously digitally savvy, but data shows that even if 80% of their purchase decisions have...

David Kahan: It's an emerging demographic that's really embracing our brand. And while some of the styles have been around for 50 years, it's new to them. And they're obviously digitally savvy, but data shows that even if 80% of their purchase decisions have data at digital facilitation, they're looking to shop largely in physical multi-brand environments. And remember, the more we win in these environments, where the brand is validated, the more it creates this flywheel, where the demand escalates across all categories, all geographies, and all channels. It's a virtual footbed flywheel, and the lifetime value of every consumer, no matter where they make the initial purchase in any given quarter, goes far beyond the mix of how that quarter breaks down, D to C or B to B.

Simeon Siegel: The first question today is coming from Simeon Siegel from BMO Capital Markets. Simeon, your line is live. Thanks, everyone. I have a stock of it right now, but congrats on really impressive top line growth online, really ongoing margin strength and the brand health there. I mean, that was very impressive. Oliver, could you speak to how units and like for like ASP perform versus your expectations? The revenues show that you're clearly enjoying really strong customer demand.

Speaker Change: Data at Digital Facilitation, they're looking to shop largely in physical, multi-brand environments.

Speaker Change: And remember the moment we went in these environments where the brand is validated, the more it creates this fly wheel, where the demand escalates across all categories, all geographies and all channels.

Simeon Siegel: And if I'm thinking about it correctly, I think the overall number may still overshadow some of the important channel nuance that you were talking about. So, revenues basically hit consensus while beating adjusted EBITDA margins, and this was on the strong B2B outperformance. So, I'm just wondering, could you help me understand this? I guess, do inline revenues on higher wholesale mix suggest you're actually outperforming your internal units. And then maybe just reflect on the strong customer demand.

Speaker Change: It's a virtual footbed flywheel and the lifetime value of every consumer, no matter where they make the initial purchase and any given quarter goes far beyond the mix of how that quarter breaks down due to COB to big.

David Kahan: So that's how we look at it.

David Kahan: Also remember, very 40% overall digital penetration, which means we show a lot of white space for physical store expansion, which you're going to start to see over the next couple of quarters.

Simeon Siegel: You beat the profit margin, so perhaps remind us how you're thinking about both channels health and trajectory. And then just lastly, if I can maybe for Eric, any color you can share just on comfort for guidance, perhaps both few foreign beyond. It's a tough macro out there, but you're still posting industry leading growth. So, curious any puts and takes to keep in mind. Thank you. Hi, Samin, thanks for the question and a good one.

Speaker Change: So that's how we look at it. Also remember, very 40% overall digital penetration, which means we show a lot of white space for physical store expansion, which you're going to start to see over the next couple of quarters.

Erik Massmann: If I may add the, on your last comment, yes, we are very super confident with our guidance for the remainder of the year, and seeing all the demand and the very political self-through data, it's safe to say we will be on the high end of our range. Great, thanks a lot, guys.

Ivan May: Ivan May.

Ivan May: He has the last common Sumian, yes, we are very super confident with our guidance for the remainder of the year and seeing all the demand and the very positive self-through data, it's safe to say we will be on the high end of our range.

Simeon Siegel: You're thinking about it the right way. Our unit sold were very strong and like for like, ASP was up. So yes, with a higher B2B mix, we hit our revenue growth expectations and importantly saw improved margins as well. Our B2B business is a very profitable business. It has higher EBITDA margins than our D2C business and importantly it is very predictable and less risky. Birkenstock has not seen any consumer spending softness or anything like it.

Simeon Siegel: Nice job again, and best luck for the rest of the year. Thank you.

Speaker Change: The End of Episode 2

Speaker Change: Great, thanks for watching, nice job again and best luck for the rest of the year.

Laurent Vasilescu: The next question will be from Laurent Vaselescu from BNP Paribas. Laurent, your line is nice.

Speaker Change: Thank you.

Speaker Change: Thank you, the next question will be from Laurent Vasselescu from B&P Peribus

Erik Massmann: Oh, good morning. Thank you very much for taking my question. Eric, you ended the quarter with over 400 million cash on the balance sheet, generated 229 million of free cash flow in the quarter, leverages down to 2.1 times while on your way to two times target for the year end. How should we think about use of cash in the future, especially with the bulk of your large capital investments and production expansion behind you? And then I have a quick follow-up after that.

Speaker Change: Lorott, you're lying to me.

Laurent Vasselescu: Oh, good morning. Thank you very much for taking my questions.

Laurent Vasselescu: Erik, you ended the quarter with over 40 million cash on the balance sheet, generated 229 million of free cash flow in the quarter. Leverage is down to 2.1 times, rolling your way to 2 times target for the year ends. How should we think about use of cash in the future, especially with the bulk of your large, capital investments in production expansion behind you? And then I have a quick follow up after that.

Simeon Siegel: We are selling more units at higher ASP and we continue to grow and take share. I think that's really the most important part of the story. And as I said in my comments, we saw some movement to in-person shopping during the quarter. We're happy about this, be honest, our brand benefits from in-person shopping. The footbed needs to be seen and touched. And that's how we create our fans and this is how we create new fans.

Erik Massmann: Thanks, Laurent. Yes, you're right. The majority of large investments have been done, and it's behind us in Pathobike, in Taruka, and expanding Gerlitz. And so it shows; especially this quarter shows our very strong cash flow. We've said we will reduce our leverage. We'll be at 2X end of the year, but we will go further down. Obviously, the goal is to have no depth. And as you know, it's related to the transaction in 2021. For us, no need to have that on the balance sheet. So we did even say earlier this week, we notified the banks to pay down another $100 million, beginning of September.

Speaker Change: Thanks Laura, yes you're right it's the majority of large investments have been done and it's behind us in Parzweik and Aruka and I'm explaining to you the girl it's

Simeon Siegel: The good news here, in either channel we have very strong EBITDA margins. Our brand remains very strong. We have full price realization over 90% globally. Consumer engagement, we grew online member in the third quarter by over 30%. Our stock to sale ratio are the healthiest in the industry. So I think we're really very, very good and maybe David you can add some color on this. Yes, thanks all of us. Simian, first off, great question and I appreciate it coming from you.

Speaker Change: and Phil and Trots, especially this quarter shows are very strong cash flow.

Speaker Change: We've said we will reduce our leverage, we'll be at 2x end of the year, but we will go further down Obviously the goal is to have no debt and as you know it's related to the transaction in 2021 For us, no need to have debt on the balance sheet

Speaker Change: So we did, you can say earlier this week we notified the banks to pay down another $100 million, a big net September, so this will continue the trend, and still there will be enough.

Erik Massmann: So this will continue the trend. And still there will be enough cash left over for the relevant investments into the business, which is obviously building out their own shops and further expand into the factories if needed. And the strong cash situation just gives us a lot of opportunities. We will look forward to it.

Speaker Change: Keshe left over for the relevant investments into the business, which is obviously building out their own shops and further expand into the factories if needed. And the strong test situation just gives us a lot of opportunities we will look for.

Laurent Vasilescu: That's very clear and great to hear.

David Kahan: And then, as a follow-up, Oliver David, there are obviously a lot of questions about the US consumer. Can you maybe shed light on what you're shaping with your US consumer? How did trends progress in the quarter? And more importantly, any color on quarter to A trends? And then, going forward, should we expect double-digit growth in the America's region for 4Q?

Eric: Eric, that's very clear and great to hear. And then as a follow up Oliver David, there are obviously a lot of questions about the US consumer. Maybe shed light on what you're shaking with your US consumer. How did trends progress in the quarter? And more and more importantly, any any any color on quarter day trends. And then going forward, should we expect double-digit growth in the America's region for 4Q and then high level for next year? If you can share on that.

Simeon Siegel: Please stand by, ladies and gentlemen, while we get the speaker back. Ladies and gentlemen, please stand by while we recollect the speaker. Once again, please stand by while we reconnect the speaker. And the speaker line is reconnected, please go ahead. Are we back? Back loud and clear, thank you. Okay, excellent, sorry for being disconnected and thank you all again. Simeon, great question. I appreciate it coming from you since you've really been ahead of the curve and really trying to understand the dynamics of the channel mix and especially D to see the way I look at this is retail is really quite simple.

David Kahan: And then high level for next year, if you can share on that. Yeah, we see increasing consumer demand for the brands. I know that on the macro environment, the consumer is probably challenged, but as we've said for the past year, that just means that consumer purchases are being much more intentional. People are shopping; they're shopping for the products they want, the brands that they want, and the most relevant products like Birkenstock that we're selling through at full price. We see demand continuing to escalate, like we said, where the ultimate point of transaction is, where are the consumer purchases?

Speaker Change: Yeah, we see increasing consumer demand for the brands. I know that on the macro environment, the consumer is probably challenged, but as we've said for the past year, that just means that consumer purchases are being much more intentional.

Speaker Change: People are shopping, they're shopping for the products they want, the brands that they want and the most relevant products like Birkenstock that we're selling through at full price.

Speaker Change: We see demand continuing to escalate, like we said, where the ultimate point of transaction is, where are the consumer purchases? That may shift from week to week and quarter to quarter. That's less important than making sure we have the right product and making sure that we're always maintaining, which we are, the relative scarcity in the market. Our self-ruse and our metrics in every wholesale partner or a true outlier compared to the overall market.

David Kahan: That may shift from week to week and quarter to quarter. That's less important than making sure we have the right product and making sure that we're always maintaining, which we are, the relative scarcity in the market. Our self-reuse and our metrics in every wholesale partner are a true outlier compared to the overall market.

Laurent Vasilescu: Great to hear it.

Laurent Vasilescu: Thank you very much.

Speaker Change: ch

Speaker Change: Great to hear. Thank you very much.

Paul Lijuez: Thank you, and the next question will be from Paul Lijuez from City. Paul, your line of life. Hey, thanks, guys.

Speaker Change: Thank you, I'm the next question we'll be from Paul Lissues from City, Paul your line of life.

David Kahan: Curious of maybe you could talk about yourself through within the B2B business, maybe compare that to how each region performed in terms of what we reported on B2B revenue increases. Second, good luck to hear more about your traffic versus ticket trends within the American DTC channel. Yeah, it's a good question. We are a sell-through, not a sell-in company. Wherever we're selling our product, and it's very consistent across the EU and the Americas. So suffice to say, while we don't share proprietary sell-throughs from our retail partners, our sell-throughs were quite ahead of our actual sell-in percent.

Paul Lissues: Hey, thanks guys. Here is the movie you can talk about yourself through within the BB business, maybe compare that.

Paul Lissues: to how each region performed in terms of what we reported on B2B revenue increases. And then second, the love to hear more about your traffic versus ticket trends within the American DGC channel.

Speaker Change: Yeah, it's a good question. Our cell, we are a cell through not a cell-in company, wherever we're selling our product and it's very consistent across the EU and the Americas.

Simeon Siegel: It's always been the right product at the right time and the right place. And in Q3 we did start to see the consumer is choosing the right place being more in a physical environment. The beauty, the magic of engineered distribution is we're able to shift our allocations to best meet the demand wherever the consumer may be seeking to make the purchase. And as Oliver mentioned in his opening, I believe the biggest driver in the quarter was the quality and breath of our assortment and how it was presented with our major strategic partners.

Speaker Change: So out, so suffice to say, while we don't share proprietary cell thru's from our retail partners, our cell thru's were um...

David Kahan: Which means our stock-to-sales ratios are incredibly healthy. Traffic continues to be strong on our own direct-to-consumer website. Our membership was up 30 plus percent in the quarter a year on year. Those members tend to spend 25 percent more. So we're seeing incredible demand. It's just a matter of where the consumer actually makes that purchase. We can be a little bit less specific and a bit more agnostic to it, mainly because we have an incredible business model where the net profitability by channel is not as much of a concern as it might be for some other peers.

Speaker Change: Quite ahead of our actual cell-end percent, which means our stock-to-sales ratios are incredibly healthy. Traffic continues to be strong on our own direct-to-consumer website. Our membership was up 30-plus percent in the quarter year on year. Those members tend to spend 25 percent more. So we're seeing incredible demand. It's just a matter of where the consumer actually makes that purchase. We can be a little less specific and a bit more agnostic to it, mainly because we have an incredible business model where the net profitability by channel is not as much of a concern as it might be for some other peers.

Simeon Siegel: They did a wonderful job of celebrating our brands 250th anniversary and sharing the brand in a very, very, very visible and compelling manner. We had explosive growth in year on year[inaudible] Thanks, Laurent. Yes, you're right. The majority of large investments have been done, and it's behind us in Pathobike, in Taruka, and expanding Gerlitz. And so it shows, especially this quarter shows our very strong cash flow. We've said we will reduce our leverage.

David Kahan: Okay, David, just a follow-up on the sell-through. Can you maybe talk about what your older books look like for this spring? I don't think that we can give guidance on our backlog, but suffice to say, if we're saying that we believe that we have confidence in our guidance, that backlog certainly is what gives us that confidence. Because, of course, D2C is a bit more variable. B2B, we have firm water books that are significantly showing incredible positive results. And also, it's the breadth of the results. It's the growth in all categories, like closed-toe clogs versus just the sandal water book.

Speaker Change: Thanks, David, just follow up on the cell truth and maybe talk about what your audiobooks look like for this thing.

Speaker Change: I don't think that we can give guidance on our backlog, but suffice to say if we're saying that we believe that we have confidence.

Speaker Change: in our guidance that backlog certainly is what gives us that confidence because of course.

Speaker Change: D.D. to see, you know, it is a bit more variable. B2B, we have firm water books that are significantly showing incredible positive results.

Speaker Change: and also it's the breath of the results. It's the growth in all categories like closed toe clogs, versus just the sandal waterbill, and that's across all regions. So we can't give backlog guidance but suffice to say confidence in the guidance.

David Kahan: And that's across all regions. So we can't give backlog guidance, but suffice to say confidence in the guidance would tend to say we have a backlog that gives us that confidence. Yeah, and Paul, just adding here that we target the higher end of the guidance.

Speaker Change: Wood 10 to say, we have a backlog that gives us that confidence.

Speaker Change: and Paul, just adding here that we targeting the higher end of the guidance. So that should give you like a pretty good feeling where we are and where do we feel business going.

David Kahan: So this should give you like a pretty good feeling where we are and where do we feel business going.

Jay Sol: Thank you. The next question will be from Jay Sol from UBS. Jay, your line is live. Great. Thank you so much.

Speaker Change: Guys, thank you guys.

Speaker Change: Thank you, the next question will be from Jay Soll from UBS, Jay your line of life.

Alexander Hoff: You can update us a little bit about the factory capacity at this point. What percent of the factory capacity are you using? Is it a constraint and all on your ability to deliver the units you want to the marketplace to meet the demand that you feel is appropriate? You can just kind of review where you are from that standpoint. That would be super helpful. Thank you.

Jay Soll: Great, thank you so much. You need to get up to us a little bit about the factory capacity at this point. What percentage of factory capacity are you using? Is it a constraint at all on?

Speaker Change: You know, your ability to deliver the units you onto the marketplace to meet the demand that you feel is appropriate. You can just kind of review where you are from that standpoint. That would be super helpful. Thank you.

Alexander Hoff: Jay, that's Alexander. Yeah, when we stand actually with the capacity expansion, we are very pleased of how we have done the expansion so far. We are still ramping stuff. We are adding equipment and machinery. and that will allow the approximately until mid of fiscal year 25. We already commented on our last earnings call that the farthest that we grow. The earlier we will see a positive return from that investment. However, again, we will not compromise on engineered distribution on scarcity. So a production something we manage closely and in a very disciplined way, and that is not something we will compromise.

Speaker Change: Hey, Jay, that was that's Alexander Here, um...

Jay Soll: Yeah, where do we stand? Actually with a capacity pension, we are very pleased of how we have done the expansion so far, we are still ramping staff, we are adding equipment, machinery

Jay Soll: and that will allow approximately until mid of fiscal year 25. We already...

Speaker Change: A commentator now last, I think it's called, that the fans have regrow. The earlier we will see a positive return from the other bestment. However, again, we will not compromise on engineered distribution on scarcity.

Simeon Siegel: We'll be at 2X end of the year, but we will go further down. Obviously the goal is to have no depth. And as you know, it's related to the transaction in 2021. For us, no need to have that on the balance sheet. So we did even say earlier this week, we notified the banks to pay down another $100 million, beginning of September. So this will continue the trend. And still there will be enough cash left over for the relevant investments into the business, which is obviously building out their own shops and further expand into the factories if needed.

Speaker Change: Productions, something we managed closely and a very disciplined way and that is not something we will compromise. So having said that, we won't just wrap up production for the sake of eliminating the temporary margin impact.

Alexander Hoff: So, having said that, we won't just ramp up production for the sake of eliminating the temporary margin impact. I think what we already said for 24 that we can confirm this here that we still expect to have a full year margin drag of 150 basis points. As said before, this is a transitionary year 24 for us. We are with the largest impact on margins and we expect a better absorption in 25, especially in the back half of the year when we have installed all machines in parts of our work. And we then also confirm that our current plans are still a place to get a full absorption of that effect; is the third quarter of 26.

Speaker Change: I think what we already said for 24 that we can confirm this here, that we still have to have a full year.

Speaker Change: Margin, a drag of 150 battles points. As said before, this is a transitionary year, 24 of us. We're with the largest impact of Margin's.

Simeon Siegel: And the strong cash situation just gives us a lot of opportunities. We will look forward to it. That's very clear and great to hear. And then as a follow-up, Oliver David, there are obviously a lot of questions about the US consumer. Can you maybe shed light on what you're shaping with your US consumer? How did trends progress in the quarter? And more importantly, any color on quarter to A trends? And then going forward, should we expect double digit growth in the America's region for 4Q?

Speaker Change: and we expect a better absorption in 25, especially in the back half of the year, when we've installed all machines in part of our...

Speaker Change: and we also confirmed that our current plans are still a place to get a full absorption of that effect in the third quarter of 2016. So to sum it up, everything on plan so far and...

Alexander Hoff: So, to sum it up, everything on plan so far, and we have realized from our end.

Simeon Siegel: And then high level for next year, if you can share on that. Yeah, we see increasing consumer demand for the brands. I know that on the macro environment, the consumer is probably challenged, but as we've said for the past year, that just means that consumer purchases are being much more intentional. People are shopping, they're shopping for the products they want, the brands that they want, and the most relevant products like Birkenstock that we're selling through at full price.

Jay Sol: Terrific. Thank you so much.

Speaker Change: We have great light from our end

Matthew Boss: The next question will be from Matthew Boss from JP Morgan. Matthew, your line of life. Great. Thanks.

Speaker Change: Terrific, thank you so much.

Speaker Change: Thank you, the next question will be from Matthew Boss from JP Morgan, Matthew your line of life.

Oliver Reichert: So Oliver, maybe if you put all this together, could you elaborate on current demand trends for the brand globally across geographies? Maybe so far in the fourth quarter, just relative to the mid-teens implied revenue growth forecast for the fourth quarter. And then larger picture, just demand signals that you're seeing from your wholesale partners across categories. I may thank you for the question. Yes, of course. I mean, you know, we’re not allowed to give you any forward-looking statements, but, you know, we are aware of our other book for the next year. And everything looks double green.

Speaker Change: Great, thanks. So Oliver, maybe he put all this together. Could you elaborate on current demand trends for the brand globally across geographies? Maybe so far in the fourth quarter, just relative to the mid-teens implied revenue growth forecast for the fourth quarter.

Simeon Siegel: We see demand continuing to escalate, like we said, where the ultimate point of transaction is, where are the consumer purchases? That may shift from week to week and quarter to quarter. That's less important than making sure we have the right product and making sure that we're always maintaining, which we are, the relative scarcity in the market. Our self-reuse and our metrics in every wholesale partner are a true outlier compared to the overall market. Great to hear it. Thank you very much.

Speaker Change: Larger picture, just demand signals that you're seeing from your wholesale partners across Category.

Speaker Change: Hi, Matt, thank you for the question. Yes, of course. I mean, you know, we, we're not allowed to give you any forward-looking statements, but you know.

Speaker Change: We are aware of all the book for the next year

Speaker Change: and everything is double green, maybe triple green, so it's really very, very pleased with the results, you know, it's...

Oliver Reichert: Maybe triple green. So it's really, we're very, very pleased with the results. You know, it's growing. We still try to fulfill the demand by keeping our scarcity. So it's really, it's a very, very good thing. We had a bit of a weather issue in some areas, you know, and we always see the weather issue, especially in the summer, hitting our DTC business from time to time. We have a rainy week in June. We will see it simply in our results there. So that's something that is happening every year, every season, but overall, honestly, we're super confident.

Speaker Change: It's it's it's it's

Speaker Change: It's growing with still

Speaker Change: and try to fulfill the demand by keeping our scarcity. It's a very good thing. We had a bit of a rather issue in some areas, and we always see the weather issue, especially in the summer, hitting our DC business from time to time. We have a rainy weekend in June. We will see it simply in our results there.

Paul Lijuez: Thank you, and the next question will be from Paul Lijuez from City. Paul, your line of life. Hey, thanks, guys.

Paul Lijuez: Curious of maybe you could talk about yourself through within the B2B business, maybe compare that to how each region performed in terms of what we reported on B2B revenue increases. Second, good luck to hear more about your traffic versus ticket trends within the American DTC channel. Yeah, it's a good question. We are a sell-through, not a sell-in company, wherever we're selling our product, and it's very consistent across the EU and the Americas.

Speaker Change: So, that's something that, you have in every year, every season but overall.

Oliver Reichert: We are super strong. Demand is there. Consumers are happy with the brand. Our activities, we had with the 250 years of brand celebrity. We had in the celebration. We had in the, in the wholesale doors. One very, very nice, very smoothly accepted. So it's another reason I have a lot of traffic in our wholesale doors, because they, they pretty.

Speaker Change: Honestly, we're super confident, we're super strong demand is there, consumer, happy with the brand

Speaker Change: I love you.

Speaker Change: Our activities, we had with the 250 years of brand celebrity, we had in the celebration, we had in the, in the, in the also doors, one very, very nice, very smoothly accepted, so it's another reason why a lot of traffic in our also doors, because they, they pretty

Paul Lijuez: So suffice to say while we don't share proprietary sell-throughs from our retail partners, our sell-throughs were quite ahead of our actual sell-in percent. Which means our stock to sales ratios are incredibly healthy. Traffic continues to be strong on our own direct-to-consumer website. Our membership was up 30 plus percent in the quarter a year on year. Those members tend to spend 25 percent more. So we're seeing incredible demand. It's just a matter of where the consumer actually makes that purchase.

Oliver Reichert: He did events and showed up with a very nice presentation in the walls, and the product was there, so the outlook from our side is super positive for the full year and for next year, of course. So I can't see no Klaus. All good.

Speaker Change: You know, yeah, did events and showed up with very nice.

Speaker Change: presentation and the walls and product was there. So, the outlook from our side is super positive. For the full year and for next year of course, so I can't see no clouds all good.

Matthew Boss: Great color. Best of luck. Thank you.

Speaker Change: It's a great color festival.

Paul Lijuez: We can be a little bit less specific and a bit more agnostic to it, mainly because we have an incredible business model where the net profitability by channel is not as much of a concern as it might be for some other peers.

Speaker Change: Thank you, the next question will be from Michael Benetti from Evercore, Michael your line of life

Michael Benetti: Hey guys, thanks for taking our question here. So, just a couple.

Michael Benetti: First, I guess, on America's total market up 15%, so to sum it up, you feel great on wholesale the stores, you think you gave a large growth rate, maybe.

Paul Lijuez: Okay, David, just a follow-up on the sell-through. Can you maybe talk about what your older books look like for this spring? I don't think that we can give guidance on our backlog, but suffice to say if we're saying that we believe that we have confidence in our guidance, that backlog certainly is what gives us that confidence. Because, of course, D2C is a bit more variable. B2B, we have firm water books that are significantly showing incredible positive results.

David Kahan: And you mentioned a bunch of times, though separately, that shopping in stores, a big trend, seems like the map on maybe why America's decelerated from one quarter of the next was related to the digital business in the Americas, but I think that you said you're pretty happy as a traffic to the website. So a little confused on where maybe to slow down was maybe on the digital side. If you could square that for us, I'd be curious to hear if you guys were actively prioritizing inventory towards the wholesale channel. Or there were, you know, stockouts on any places in D to see due to the engineer distribution strategy.

Speaker Change: 60% I think he said, Oliver, and he mentioned a bunch of times, though separately, that's shopping in stores a big trend.

Speaker Change: Seems like the map on, maybe, why America is decelerated from one quarter of the next one's related to the digital business in the Americas, but I think David, you said you're pretty happy as a traffic to the website. So, a little confused on where made it slow down was, maybe on the digital side, if you could square that for us. And I'd be curious to hear, if you guys...

Speaker Change: We're actively prioritizing inventory towards a wholesale channel or that there were stock outs on any places in D to C due to the engineered distribution strategy.

David Kahan: Yeah, you know, part of the engineer distribution strategy is you have a playbook, but, you know, like an NFL quarterback, you call audibles during the game. And you try to figure out where you can best meet the demand, yet not overseed overselled the demand. It's just constant. I mean, you know, it's an art and a science. And at some points, could you be sold out at wholesale? Yes. Could you be sold out and D to see. Yes. You try to do your best managing it. I don't think there was any. Again, the demand, if you look at the total market, exponentially up year on year, the truth of the matter is where the actual purchase was consummated shifted to some degree.

Paul Lijuez: And also, it's the breadth of the results. It's the growth in all categories like closed-toe clogs versus just the sandal water book. And that's across all regions. So we can't give backlog guidance, but suffice to say confidence in the guidance would tend to say we have a backlog that gives us that confidence. Yeah, and Paul, just adding here that we target the higher end of the guidance. So this should give you like a pretty good feeling where we are and where do we feel business going. Thank you.

David Kahan: Yeah, you know part of engineered distribution strategy is you have a playbook, but you know like an NFL quarterback, you call audible during the game

David Kahan: and you try to figure out where you can best meet the demand, yet not oversealed the demand, it's just constant, I mean, you know, it's in art and a science, and at some point could you be sold out at wholesale, yes, could you be sold out in D to C, yes?

David Kahan: You try to do your best managing it. I don't think there was any, again, the demand if you look at the total market exponentially up year on year.

David Kahan: The truth of the matter is, where the actual purchase was consummated shifted to some degree, and if you follow every one of our retail partners, you're seeing the same thing, you're also seeing some of those demographics, ships leading that. So I can't say this strongly enough.

Jay Sole: The next question will be from Jay Sol from UBS. Jay, your line is live. Great. Thank you so much. You can update us a little bit about the factory capacity at this point. What percent of the factory capacity are you using? Is it a constraint and all on your ability to deliver the units you want to the marketplace to meet the demand that you feel is appropriate? You can just kind of review where you are from that standpoint. That would be super helpful. Thank you.

David Kahan: And if you follow every one of our retail partners, you're seeing the same thing. You're also seeing some of those demographic shifts leading that. So I can't say this strongly enough; we're a little bit more agnostic to the actual end point of distribution. If the demand is there, the demand is there. And again, somebody purchases our product. It's not a one-time purchase. It's a lifetime consumer. So if that first purchase happens, just happens to happen in a wholesale partner, suffice to say the lifetime value of that consumer across channels, especially when they become one of our members, is quite significant.

David Kahan: We're a little bit more agnostic to the actual end point of distribution of the demand is there, the demand is there, and again, somebody purchases our product, it's not a one-time purchase, it's a lifetime consumer, so if that first purchase happens, just happens to happen in a wholesale partner, suffice to say the lifetime value of that consumer across channels, especially when they become one of our members, it's quite significant.

Alexander Hoff: Jay, that's Alexander. Yeah, when we stand actually with the capacity expansion, we are very pleased of how we have done the expansion so far. We are still ramping stuff. We are adding equipment and machinery, and that will allow the approximately until mid of fiscal year 25. We already commented on our last earnings call that the farthest that we grow. The earlier we will see a positive return from that investment. However, again, we will not compromise on engineered distribution on scarcity.

David Kahan: Okay.

Michael Binetti: I'm going to just say, help us with our models. Here's a look at the fourth quarter.

Michael Binetti: I want to make sure I heard something you said on the two questions on the gross, really quick. The, I think you said, maybe the implied factory de leverage for the area about 150 basis points. I think that that would imply a pretty meaningful step up in the year of a year. The leverage in the gross margin in the fourth quarter relative to the third quarter. If I'm right.

Speaker Change: Okay. I'm going to just say help us with our models. Here's where we look at the fourth quarter. I want to make sure I heard something you said on the two questions on the gross really quick. I think you said.

Speaker Change: Maybe the implied factory-deliverage for the year about 150 basis points. I think that would imply a pretty meaningful step up in the year of a year.

Erik Massmann: And then maybe isn't a good rule of thumb to use going forward. You said, I think you said the D to C versus B to B mix in the quarter was about a hundred basis point drag to your gross margin in third quarter. Is that about right? Two points of year of your mix shift is about a hundred basis points of gross margin, or 50 basis points per point of mix shift.

Speaker Change: in the 4th quarter, relative to the 3rd quarter, from right, and then maybe, is it a good rule of thumb to use going forward? You said that the D to C versus B to B mixed in the quarter is about 100 basis point drag to your gross margin in 3rd quarter.

Alexander Hoff: So a production something we manage closely and in a very disciplined way and that is not something we will compromise. So having said that, we won't just ramp up production for the sake of eliminating the temporary margin impact. I think what we already said for 24 that we can confirm this here that we still expect to have a full year margin drag of 150 basis points. As said before, this is a transitionary year 24 for us.

Speaker Change: is that about right two points of year we are mixed shift, is about a hundred basis points across margin or a fifty basis points per point of mixed shift.

Erik Massmann: Michael, on the first question; Alexander, on the first question, sorry? Yeah, you are absolutely right that, of course, our gross margin will fluctuate with the DTC, the DTC mixed shift, so that's a simple mark. But again, as we said before, that's just the impact on ASP and gross margin. Essentially, we have a flat DIA, EVDA margin there, so I think we need to look at the big picture, not only at one DIA. Michael, it's crystal clear, the reflect from the market is always like, DTC is going down, that somehow get a bigger impact on margin, this is just not true with us. We have a very, very healthy B2B business. Our margins, David DIA margin, as I mentioned before in my first answer, they are higher than the DTC margins. So yes, there's a slight impact in the wholesale, in the gross profit margins, yes, but in the end we do care, and that's the basic idea of engineering distribution is about getting the maximum, maybe they are prepared, and that's definitely the case, the way how we execute the B2B business.

Speaker Change: 3.

Speaker Change: Good night. Good night.

Speaker Change: Tony, Tony, Tony, Tony, Tony,

Alexander Hoff: We are with the largest impact on margins and we expect a better absorption in 25 especially in the the back half of the year when we have installed all machines in parts of our work. And we then also confirm that our current plans are still a place to get a full absorption of that effect is the third quarter of 26. So to sum it up, everything on plan so far and we have realized from our end.

Tony: Yeah, you're absolutely right, that of course, our gross module will fluctuate with the, with the, with the, with the, with the, the, the, make a shift.

Tony: So that's a simple math.

Speaker Change #101: But again, as we said before, that it's just the impact on May of P and Gross margin, essentially we have a slightly higher EVDA margin there, so I think we need to look at the big picture.

Speaker Change #102: I know the only at what they've got here.

Speaker Change #102: Michael, it's crystal clear, the reflect, the reflect from the market is always like, oh, did you see it's going down that somehow I'll get a bigger impact on margin?

Alexander Hoff: Terrific. Thank you so much. Thank you.

Oliver Reichert: The next question will be from Matthew Boss from JP Morgan. Matthew, your line of life. Great. Thanks. So Oliver, maybe if you put all this together, could you elaborate on current demand trends for the brand globally across geographies? Maybe so far in the fourth quarter, just relative to the mid teens implied revenue growth forecast for the fourth quarter. And then larger picture, just demand signals that you're seeing from your wholesale partners across categories.

Speaker Change #103: This is...

Michael Benetti: Just not through with us. We have a very, very healthy piece of business. Our margins are...

Michael Benetti: David Darmagin, as I mentioned before in my first answer, they are higher than you need to see margins. So, yes, there is a slide impact in the whole scale, in the gross profit margins, in the gross profit margins, yes.

Oliver Reichert: I may thank you for the question. Yes, of course. I mean, you know, we, we're not allowed to give you any forward looking statements, but, you know, we are aware of our other book for the next year. And everything looks double green. Maybe triple green. So it's really, we're very, very pleased with the results. You know, it's growing. We still try to fulfill the demand by keeping our scarcity. So it's really, it's a very, very good thing.

Michael Benetti: In the end, you know, we do care and that's the basic idea of engineering distribution is about getting the maximum, maybe the upper pair, and that's definitely the case, the way how we execute the B2B business.

Erik Massmann: So for us, it's really not that important where we reach our customer; it's important to be there, and to be there with the right product, it's the right size, and the more we have a touch point with the customer, wherever we create this lifetime connection with this fan, and he will be with us. So also a door, it could be our own online, it could be our own retail source. Just think for a moment, if we had a bigger own retail fleet, this impact, or this decline of DTC revenues in one territory would be swallowed by own retail, because the own retail are growing like hell.

Speaker Change #104: So, for us, it's really not that important where do we reach our customer. It's important to be there and to be there with the right product at the right size.

Speaker Change #104: The more we have a touch point with the customer, wherever we create a lifetime connection with this fan, and he will be with us. Could be also a door, it could be our own online, could be our own retail source.

Oliver Reichert: We had a bit of a weather issue in some areas, you know, and we always see the weather issue, especially in the summer, hitting our DTC business from time to time. We have a rainy week in June. We will see it simply in our results there. So that's something that is happening every year, every season, but overall, honestly, we're super confident. We are super strong. Demand is there. Consumers are happy with the brand.

Speaker Change #104: Just think for a moment if we had a bigger...

Speaker Change #104: On retail fleet.

Speaker Change #104: This impact or this, you know, slight decline of, of D to C revenues in, in one territory would be swallowed by own retail because the own retail are growing like hell.

Erik Massmann: Our retail was up like 60%; there you see that even within ourselves we can see what's going on, and we are super confident that we will reach the consumer for the future as well, which is really the case. Brand feed is high; we are there. We have a few thousand wholesale partners out there doing a good job growing as hell with us. The overall growth rates are very strong, and the biggest message is our B2B business model is super, super healthy. So margins are super strong; the EBITDA margin, which is our T topic here, is the strongest, so nothing to worry about.

Speaker Change #104: Our return was up like 60%, I mean this is, you know, there you see that even within ourselves we can see what's going on and we are super confident that we will reach the consumer.

Oliver Reichert: Our activities, we had with the 250 years of brand celebrity. We had in the celebration. We had in the, in the wholesale doors. One very, very nice, very smoothly accepted. So it's another reason I have a lot of traffic in our wholesale doors, because they, they pretty.

Speaker Change #105: for the future as well, which is really the case, you know, Brandt Hides High, we are there, we have a few thousand hotel partners out there doing a good job growing and tell with us the overall growth rates are very strong and

Oliver Reichert: He did events and showed up with a very nice presentation in the walls and the product was there so the outlook from our side is super positive for the full year and for next year of course. So I can't see no Klaus all good.

Speaker Change #105: Biggest message is our B2B Business Model is super, super healthy

Speaker Change #105: So, margins are super strong, David Diarmachin, which is our T-topic here, is the strongest.

Michael Binetti: I appreciate we're still trying to learn how your model moves at the different lines here, so thanks for hanging with us on some of the details here. That's your wallet; that's our wallet. You can send yours over. Thank you.

Speaker Change #106: and nothing to worry about. I appreciate we're still trying to learn how your model moves with the different lines here. Thanks for hanging with us on some of the details here.

Oliver Reichert: Great color best of luck. Thank you.

Speaker Change #107: As your model is that our model. You can send yours over.

Michael Binetti: I forgot it; it's only my, you know, it's not written down. Thank you.

Michael Binetti: The next question will be from Michael Binetti from Evercore. Michael, your line is live. Hey guys, thanks for taking our question here. So just a couple. First I guess on America's, you know, I'm total market up 15%. So to sum it up, you feel great on wholesale, the stores. Yeah, I think you gave a large growth rate maybe 60% I think you said on it. And you mentioned a bunch of times, though separately that shopping in stores, a big trend seems like the map on maybe why America's decelerated from one quarter of the next was related to the digital business in the Americas, but I think that you said you're pretty happy as a traffic to the website.

Speaker Change #108: Good to see you again.

Michael Binetti: So a little confused on where maybe to slow down was maybe on the digital side, if you could square that for us and I'd be curious to hear if you guys were actively prioritizing inventory towards the wholesale channel. Or there were, you know, stockouts on any places in D to see due to the engineer distribution strategy. Yeah, you know, part of the engineer distribution strategy is you have a playbook, but, you know, like an NFL quarterback, you call audibles during the game.

Mark Altschwager: Your next question is coming from Mark Altschwager from Beard. Mark, your line is live. Great, thank you for taking the question. Great to see the ongoing momentum. I guess first, with Sophe, you could provide us some options.

Speaker Change #109: Thank you, your next question, is coming from Mark Alchfogger from Beard.

Mark Alchfogger: Mark your line of life.

Mark Alchfogger: Great, thank you for taking the question, great to see the ongoing momentum. I think it's first, so I think you can provide some updated thoughts on the pricing actions you're planning for the 2025.

Oliver Reichert: Thank you for taking the opportunity to thoughts on the pricing actions you're planning for the 2025 products. And then separately, you know, really nice momentum and close to, with Sophe, you could give us some more detail on the trends. You're seeing in some of the other product adjacencies, including some early reads from the recent EVA clause launch and this athlete recovery positioning. I think that's opening up some opportunities for a new distribution. So just any more color on what you're seeing there would be very helpful. Thank you. Yeah, on the product side, the new product introductions have been really, really encouraging across all categories.

Mark Alchfogger: Frodock.

Speaker Change #111: and then separately, you know, really nice momentum and in close to, we're so pleased to give us some more detail on the trends we're seeing in some of the other product adjacencies.

Speaker Change #111: including some early reads from the recent EVA Claude launch and this athlete recovery positioning. I think that's opening up some opportunities for new distributions. So just any more power on what you're seeing there would be very helpful. Thank you.

Speaker Change #112: Yeah, on the product side, the new product introductions have been really, really encouraging across all categories.

Oliver Reichert: So, you know, don't lose sight. We're also introducing new sandals. We introduced the one strap sandal called the Catalina that had very good cell throes. You know, the Boston clog is great, but there are other clogs. We introduced the clog called the lutri that had incredibly strong cell throes and closed toe. We're continuing to gain momentum. And I'm sure you see the exposure out at retail. Yes, on the EVA and PU side, our new health care product, the Birky Air 2.0, which is probably the best product that's ever been developed for a true health care professional.

Speaker Change #113: So, you know, don't lose sight. We're also introducing new sandals. We introduced the one-strap sandal called the Catalina that had very good cell thru's, you know, the Boston clog is great, but there are other clogs. We introduced the clog called the Lutery that had incredibly strong cell thru's and closed toe, where continuing to gain momentum, and I'm sure you see the exposure out at retail. Yes, on the EVA and PU side, our new healthcare product, the Burki Air 2.0, which is probably the best product that's ever been developed for a true healthcare professional. That's getting out in the market and being met with a strong response, and then we take the deep...

Michael Binetti: And you try to figure out where you can best meet the demand yet not overseed overselled the demand. It's just constant. I mean, you know, it's an art and a science. And at some points, could you be sold out at wholesale? Yes. Could you be sold out and D to see. Yes. You try to do your best managing it. I don't think there was any. Again, the demand, if you look at the total market exponentially up year on year, the truth of the matter is where the actual purchase was consummated, shifted to some degree.

Oliver Reichert: That's getting out in the market and being met with a strong response. And then we take the DNA of that. And we interpret it into the Birky flow, which is a more broader outdoor product. Which yes, we're finding athletes for operate sport use is finding an incredibly strong response. So every product that we've delivered is expanding our breath. Remember what we said: over 90% of our growth in revenue is coming from existing doors. So what that means is we're expanding our assortments in those doors. If you see us out at retail anywhere, you're seeing very, very broad assortments growing across all categories, and our growth in leather has been two times the growth rate of our price point, like synthetic side.

Michael Binetti: And if you follow every one of our retail partners, you're seeing the same thing. You're also seeing some of those demographics shifts leading that. So I can't say this strongly enough, we're a little bit more agnostic to the actual end point of distribution. If the demand is there, the demand is there. And again, somebody purchases our product. It's not a one time purchase. It's a lifetime consumer. So if that first purchase happens, just happens to happen in a wholesale partner suffice to say the lifetime value of that consumer across channels, especially when they become one of our members is quite significant. Okay.

Speaker Change #113: ENA of that, and we interpret it into the Burkey Flow, which is a more broader outdoor product, which yes, we're finding athletes for operate sport use, is finding an incredibly strong response. So every product that we've delivered is expanding our breath. Remember what we said over 90% of our growth in the previous episode is coming from existing doors.

Speaker Change #113: So what that means is we're expanding our assortments in those doors. If you see us out at retail anywhere, you're seeing very, very broad assortments growing across all categories and our growth in leather has been two times the growth rate of our price point like synthetic sides. So consumers, despite all the challenges are trading up with us and the retailers are looking to expand.

Michael Binetti: I'm going to just say help us with our models. Here's a look at the fourth quarter. I want to make sure I heard something you said on the two questions on the gross really quick. The, I think you said, maybe the implied factory de leverage for the area about 150 basis points. I think that that would imply a pretty meaningful step up in the year of a year. The leverage in the gross margin in the fourth quarter relative to the third quarter.

Oliver Reichert: So consumers, despite all the challenges, are trading up with us, and the retailers are looking to expand. Thanks again.

Oliver Reichert: That's a lot. Thank you.

Sharon Zackfia: The next question will be from Sharon Zaxia from William Blair. Sharon, your line of life. Hi, thanks for taking the question. I wanted to ask about Europe where, you know, you've seen kind of accelerating momentum with the wholesale transformation you've done there. Can you talk about what you're seeing with ASPs as a result, particularly kind of with the more premium price product and with close toe. And I think you took some pretty decent price increases in Europe as well. Are you seeing any kind of consumer sensitivity to those increases? Thanks.

Speaker Change #114: Thanks again, that's the boy.

Speaker Change #115: Thank you, the next question will be from Sharon Zaxia from William Blair, Sharon your line of life.

Michael Binetti: If I'm right. And then maybe isn't a good rule of thumb to use going forward. You said, I think you said the D to C versus B to B mix in the quarter was about a hundred basis point drag to your gross margin in third quarter. Is that about right two points of year of your mix shift is about a hundred basis points of gross margin or 50 basis points per point of mix shift.

Sharon Zaxia: Hi, thanks for taking my question. I wanted to ask about Europe where you've seen kind of accelerating momentum.

Speaker Change #117: with the wholesale transformation you've done there.

Sharon Zaxia: Can you talk about what you're seeing with ASP as a result, particularly?

Speaker Change #118: Kind of with the more premium price product and with Closed Toe.

Michael Binetti: Michael, on the first question, Alexander, on the first question, sorry? Yeah, you are absolutely right that of course our gross margin will fluctuate with the DTC, the DTC mixed shift, so that's a simple mark, but again, as we said before, that's just the impact on ASP and gross margin, essentially we have a flat DIA, EVDA margin there, so I think we need to look at the big picture, not only at one DIA.

Speaker Change #118: and I thank you, Chuck, some pretty decent price increases in Europe as well. Are you seeing any kind of consumer sensitivity to those increases? Thanks.

Oliver Reichert: Hi, thank you for the question. The truth is, we don't see any, any, any slowdown in consumer demand. It's really, it's a, it's a, it's an ongoing, very, very huge demand. The, the price sensitivity is, is a bit misleading maybe because if you go into the different, also doors, you have to see the fact that Birkenstock is now getting wider and deeper within these doors. So, the comparability between the different styles and the different executions of the models are really, it's an emotional thing. If you, if you want to buy this pair and it's five dollars more than the, the other execution on the left side, on the right side of it, it simply don't count.

Speaker Change #119: Hi, thank you for the question. The truth is, we don't see any, any, any slow down in consumer demand. It's really, it's a, it's a non-going, um...

Speaker Change #120: Very, very huge demand. The price sensitivity is a bit misleading, maybe, because if you go into the different also doors, you have to see the fact that...

Speaker Change #120: and so on, it's now getting wider and deeper within these doors, so the comparability between the different styles and the different executions of the models are really...

Michael Binetti: Michael, it's crystal clear, the reflect from the market is always like, DTC is going down, that somehow get a bigger impact on margin, this is just not true with us, we have a very, very healthy B2B business, our margins are, David DIA margin as I mentioned before in my first answer, they are higher than the DTC margins, so yes, there's a slight impact in the wholesale, in the gross profit margins, yes, but in the end we do care, and that's the basic idea of engineering distribution is about getting the maximum, maybe they are prepared, and that's definitely the case, the way how we execute the B2B business. So for us, it's really not that important, where do we reach our customer, it's important to be there, and to be there with the right product, it's the right size, and the more we have a touch point with the customer, wherever we create this lifetime connection with this fan, and he will be with us.

Speaker Change #121: It's an emotional thing, if you want to buy this pair and it's $5 more than the other execution on the left side, on the right side of it.

Oliver Reichert: And we see that the price increases. We were executing in the 25, and there's no impact. So, it's really all good. Consumer demand is high, and it's a very, very strong demand out there and very important in all price points. Don't only focus on the higher price points. Overall, whenever you come to the brand, you, you increase for whatever reason, your, your next buy is more expensive than the last one. It's the same; they would mention it in the, in our membership program in the online. People are coming to us multiple times, and whenever they acquire a new pair, it's a higher price point.

Speaker Change #122: It simply don't count and we see that the price increases, we were executing in 25.

Speaker Change #123: and there's no impact, so it's really all good, consumer demand is high, and it's a very, very strong demand out there.

Speaker Change #123: and...

Speaker Change #123: Very important in all price points. Don't only focus on the higher price points, overall.

Speaker Change #124: Whenever you come to the brand, you increase, for whatever reason, your next buy is more expensive than the last one, it's the same, they mentioned it in our membership program in the online. People are coming to us, multiple times, and whenever they acquire new pair, it's a higher price point.

Oliver Reichert: So, ASP is not only driven by price increases, it's also, you know, driven by, by material and executions and canals and, of course, and geographies as well. But good news is, we're growing in every single thing. So, and that's, you know, the biggest, the biggest benefit you can have, and this is like the biggest proof that the demand out there is super, super strong.

Speaker Change #124: So A.S.P. is not only driven by price increases, it's also...

Speaker Change #125: You know, driven by material executions and canals and of course, and Geography as well.

Michael Binetti: So also a door, it could be our own online, it could be our own retail source, just think for a moment, if we had a bigger own retail fleet, this impact, or this decline of DTC revenues in one territory would be swallowed by own retail, because the own retail are growing like hell. Our retail was up like 60%, there you see that even within ourselves we can see what's going on, and we are super confident that we will reach the consumer for the future as well, which is really the case.

Speaker Change #125: But good news is we're growing in every single thing, so, and that's the biggest benefit you can have, and this is like the biggest proof that the demand out there is super, super strong.

Sam Poser: Thank you. The next question will be from Sam Pozer from Williams Trading. Sam, your line is live. Thank you. I've got a handful.

Speaker Change #125: Thank you. The next question will be from Sam Poser, from Williams Trading, Sam, your line of life.

Oliver Reichert: Oliver, I know you don't, I know you guys don't normally talk about this, but can you give us the details on the channel sales by geography, especially in the Americas? And that would include wholesale, in America's wholesale, the stores and digital on how those trended year over year. It's just to give everybody clarity. I understand this is you did this pre IPO but haven't done it since, but it would be great, greatly helpful here just so we can get further understanding of where things stand and I have a couple of other follow-ups.

Sam Poser: Thank you. I've got a handful. Oliver, I know you guys don't normally talk about this, but...

Speaker Change #127: Can you give us the details on the...

Michael Binetti: Brand feed is high, we are there, we have a few thousand wholesale partners out there doing a good job growing as hell with us, the overall growth rates are very strong, and the biggest message is our B2B business model is super, super healthy. So margins are super strong, the EBITDA margin which is our T topic here is the strongest, so nothing to worry about. I appreciate we're still trying to learn how your model moves at the different lines here, so thanks for hanging with us on some of the details here. That's your wallet, that's our wallet. You can send yours over. Thank you. I forgot it, it's only my, you know, it's not written down. Thank you.

Speaker Change #127: Channel

Speaker Change #128: Sales, 5 geography, especially in the Americas, and that would include also in the Americas, also the stores and digital.

Speaker Change #129: on how those trended year over year. It's just to give everybody clarity. I understand this is he did this pre-IPO, but haven't done it since, but it would be greatly helpful here just so we can get further understanding of where things stand and then I have a couple other follow-ups.

Oliver Reichert: Sam, you know we can't share this information with you. I mean, we're talking about the third quarter here. So look at the first two quarters, and maybe it's the right time, you know, after the full year that we can, we can sit and talk about the overall. But we do not share any of this information yet. And to be super honest, Sam, I think it won't help you and it won't give you any insight, and other than, oh, a mix between this and this month and this and this quarter will will not, it will probably distract some of the major learnings and not feed them the right.

Speaker Change #130: Sam, you know, we can be concerted as information review, I mean...

Sam Poser: We're talking about the third quarter here, so look at the first two quarters and maybe it's the right time, you know

Mark Altschwager: Your next question is coming from Mark Altschwager, from Beard. Mark, your line is live. Great, thank you for taking the question. Great to see the ongoing momentum. I guess first, with Sophe, you could provide us some options.

Sam Poser: After the full year that we can sit and talk about the overall, but we do not share any of this information yet, and to be subroned, Sam, I think it won't help you.

Mark Altschwager: Thank you for taking the opportunity to thoughts on the pricing actions you're planning for the 2025 products. And then separately, you know, really nice momentum and close to, with Sophe, you could give us some more detail on the trends. You're seeing in some of the other product adjacencies, including some early reads from the recent EVA clause launch and this athlete recovery positioning. I think that's opening up some opportunities for a new distribution. So just any more color on what you're seeing there would be very helpful.

Sam Poser: and he won't give you any inside and others and makes between his and his months and this in this quarter will not, it will probably distract some of the major learnings and not feed them directly.

David Kahan: Kelly, David, do you want to add something here because it's mainly talking about the territory? Yeah, Sam, obviously this is on your mind. As the person running the region, I tend to be a little bit more agnostic to the channel. I care way more about the product and the consumer demand being met. And I think that changes from quarter to quarter. I don't think anything's changing too dramatically, but again, having said that, you know, our business model, as Oliver said, our B2B model is unique. It's not just an outlier. I think there are a few brands on earth that have a B2B model like us, where our go-in margin is our maintained margin.

Sam Poser: That would you want to add something here because it's mainly talking about the territory? Yeah, you know, Sam, obviously this is on your mind. As the person running the region, I tend to be a little bit more.

Oliver Reichert: Thank you. Yeah, on the product side, the new product introductions have been really, really encouraging across all categories. So, you know, don't lose sight. We're also introducing new sandals. We introduced the one strap sandal called the Catalina that had very good cell throes. You know, the Boston clog is great, but there are other clogs. We introduced the clog called the lutri that had incredibly strong cell throes and closed toe. We're continuing to gain momentum.

Sam Poser: Agnostic to the channel. I care way more about the product.

Oliver Reichert: and the consumer demand being met. And I think that changes from quarter to quarter. I don't think anything's changing too dramatically, but again, having said that, you know, our business model, as Oliver said, our B2B model is unique. It's not just an outlier. I think there are a few brands on Earth that have a B2B model like us, where our goal in margin is our main-tain margin. So net net at the end of the day,

Oliver Reichert: And I'm sure you see the exposure out at retail. Yes, on the EVA and PU side, our new health care product, the Birky Air 2.0, which is probably the best product that's ever been developed for a true health care professional. That's getting out in the market and being met with a strong response. And then we take the DNA of that. And we interpret it into the Birky flow, which is a more broader outdoor product.

David Kahan: So net net, at the end of the day, feeding the consumer where they're purchasing. And the impact that that has becomes more important to me than trying to follow a business model because I also know that where that emerging youth consumer is shopping today may not be where they're going to shop in five years. And if they're coming into contact with our brand right now, where they want to see us, I'm making sure that the product is there as long as it's being represented in a powerful manner to that consumer. And we're always maintaining, as you know, that relative scarcity.

Speaker Change #131: Feeding the consumer, where they're purchasing, and the impact that that has becomes more important to me than trying to follow a business model, because I also know that where that emerging youth consumer is shopping today may not be where they're going to shop in five years, and if they're coming into contact with our brand right now, where they want to see us.

Oliver Reichert: Which yes, we're finding athletes for operate sport use is finding an incredibly strong response. So every product that we've delivered is expanding our breath. Remember what we said over 90% of our growth in revenue is coming from existing doors. So what that means is we're expanding our assortments in those doors. If you see us out at retail anywhere, you're seeing very, very broad assortments growing across all categories and our growth in leather has been two times the growth rate of our price point like synthetic side. So consumers, despite all the challenges, are trading up with us and the retailers are looking to expand.

Speaker Change #131: I'm making sure that the product is there, as long as it's being represented in a powerful manner to that consumer, and we're always maintaining, as you know, that relative scarcity. So I think the consumer himself or herself is becoming a bit more a bit less channel centric and a bit more...

Oliver Reichert: Thanks again. That's a lot.

Sam Poser: So I think the consumer himself or herself is becoming a bit more, a bit less channel centric and a bit more searching for the brand and searching for the products they want wherever they can come into contact with it. Yeah, okay. Well, I have two more things, but I just want to say I'm not questioning the way you do it. I'm just trying to get color on the quarter for more for the investors that might not necessarily understand it as well. That being said.

Sharon Zackfia: Thank you.

Speaker Change #131: Searching for the brand and searching for the products they want, wherever they can come into contact with it.

Speaker Change #132: Okay, well, I have two more things, but I just want to say I'm not questioning the way you do it, I'm just trying to get color on the quarter

Speaker Change #133: for the investors that might not necessarily understand it as well. That being said, in the past, we're at a time for...

David Kahan: We're up against time to get one more. What's the percent of scarcity you're currently running, and to how what is the swing between the gross margin in the SGA by channel. So, for instance, you know, SGA is X basis points lower in wholesale, but as is SGA lower and the opposite indirect a consumer where they gross margin higher in the SGA. I'll let one of the finance guys answer that, but if you're looking at what percentage of the demand we're filling, I wouldn't put my finger on it, but it's not anywhere close to what people are searching for in the brand.

Speaker Change #134: We're up against time to get one more, okay? We're up against time to get one more.

Speaker Change #135: What's the percentage of scarcity you're currently running and to how what is the swing between...

Speaker Change #136: The Gross margin in the SGA by Channel, so for instance, you know, SGA is x-paces points lower and wholesale, but as is SGA lower and the opposite and indirect a consumer.

Speaker Change #137: Where the cross-march is fire in the sky.

Speaker Change #138: I'll let one of the finance guys answer that, but if you're looking at what percentage of the demand we're filling, I wouldn't put my finger on it, but it's not anywhere close

Erik Massmann: And I'll say demand is not a finite measure. If I say 70%, maybe it's 70, but there's no way we're coming anywhere near the demand of what people are seeking with the product on SGA. Just a quick note, and you can see from our presentation that we gave out a positive EVDA effect of 30 bits according to our channel mix versus prior year. And we also addressed in our gross margin 100 bits negative effect. That gives you 130 positive in SGA, and that should help to make that.

Speaker Change #139: to what people are searching for in the brand. And I'll say demand is not a finite measure. If I say 70%, maybe it's 70. But there's no way we're coming anywhere near the demand of what people are seeking with the product.

Sharon Zackfia: Hi, thank you for the question. The truth is, we don't see any, any, any slowdown in consumer demand. It's really, it's a, it's a, it's an ongoing, very, very huge demand. The, the price sensitivity is, is a bit misleading maybe because if you go into the different, also doors, you have to see the fact that Birkenstock is now getting wider and deeper within these doors. So, the comparability between the different styles and the different executions of the models are really, it's an emotional thing.

Sharon Zackfia: If you, if you want to buy this pair and it's five dollar more than the, the other execution on the left side, on the right side of it, it, it simply don't count. And we see that the price increases. We were executing in the, in 25 and there's no impact. So, it's really all good consumer demand is high and it's a very, very strong demand out there and very important in all price points.

Anna Sveneck: Anna Sveneck, Klaus Schwab,

Speaker Change #141: It just a quick note from our presentation that we gave out a positive EVTA effect of 30 bits according to our channel mix versus prior year and we also addressed.

Speaker Change #142: In our Ross margin, 100 bits negative effects, that gives you 130 positive energy in A and that should help to make that mark.

Dana Telsey: Thank you, and the next question will be from Dana Telsey, from Telsey Group. Dana Eurin is live. Great, good morning everyone. We've mentioned a number of times all of you about the increase in physical touch points that consumers are making, drop where they're making their purchases. As you think about it globally, where did you see the biggest differential that way on your store opening plan? Are there any changes that you're looking at to accelerate this? And what are the learnings from your stores that you're putting into some of the B2B in wholesale that helped to drive that conversion?

Speaker Change #142: Thank you, and the next question will be from Dana Telsey from Telsey Group.

Dana Telsey: and Dana Irlanda Slash.

Speaker Change #144: Guys, the morning everyone!

Speaker Change #145: He's mentioned a number of times all of you about the increase in physical touch points that consumers are making drop drop where they're making their purchases

Speaker Change #146: I've been thinking about a global age.

Dana Telsey: Where did you see the biggest differential that way on your store opening plan? Are there any changes that you're looking at to accelerate this and what are the learnings from your stores that you're putting into some of the B to B in wholesale that helped to drive that conversion? Thank you.

Sharon Zackfia: Don't only focus on the higher price points. Overall, whenever you come to the brand, you, you increase for whatever reason, your, your next buy is more expensive than the last one. It's the same, they would mention it in the, in our membership program in the online. People are coming to us multiple times and whenever they acquire new pair, it's a higher price point. So, ASP is not only driven by price increases, it's also, you know, driven by, by material and executions and canals and, of course, and geographies as well.

Dana Telsey: Thank you.

Dana Telsey: So globally, Dana, thank you for the question. Globally, it's a bit frightening for us too. It's everywhere the same thing. Whenever we open up, whenever we open up, physical touch point with the brand, and we are measuring like the interaction with the guests, interaction about the footbed, conversation about teaching. It's not about not just, you know, don't forget we're not a footwear company, we're the footbed company, so we're selling footbeds. So it's really something that's different, and people love to come to us and see the product and touch it and feel it because quality is just a word.

Dana Telsey: i

Dana Telsey: So globally, Dana, thank you for the question, globally, it's a bit frightening for us too, it's everywhere, the same thing. Whenever we open up, whenever we open up a physical touch phone with the brand.

Dana Telsey: and we are measuring the interaction with the guests, the interaction about the food bed, conversation about teaching, it's not about not just, you know, don't forget we're not a foodware company, we are the food-spat company, so we're selling food beds.

Sharon Zackfia: But good news is, we're growing in every single thing. So, and that's, you know, the biggest, the biggest benefit you can have and this is like the biggest proof that the demand out there is super, super strong. Thank you.

Dana Telsey: So it's really something that's a different and people love to come to us and see the product

Oliver Reichert: If you see and feel the quality, that's a differentiation from all the rest. And if you have somebody in front of you explaining the benefits of the footbed, talking about the second best solution next to barefoot walking, the impact is dramatically high. And it leads into a higher price point once we create a sale, and of course we create a fan that comes back with his friends, family, relatives. So the lifetime value of this contact, in our opinion, is super high. Honestly, we have a lot of very, very good talented wholesale partners executing it as good as we do it by myself.

Speaker Change #147: and Touched and Field Aid, because quality is just a word. If you see and feel the quality, that's a differentiation from all the rest.

Speaker Change #147: and if you have somebody in front of you explaining the benefits of the food bed talking about the second best solution next to Bedford walking, the impact is dramatically high.

Sam Poser: The next question will be from Sam Pozer from Williams Trading. Sam, your line is live. Thank you. I've got a handful. Oliver, I know you don't, I know you guys don't normally talk about this, but can you give us the details on the channel sales by geography, especially in the Americas? And that would include wholesale, in America's wholesale, the stores and digital on how those trended year over year. It's just to give everybody clarity, I understand this is you did this pre IPO but haven't done it since, but it would be great, greatly helpful here just so we can get further understanding of where things stand and I have a couple of other follow-ups.

Speaker Change #148: and it leads into a higher price point once we create a sale and of course we create a fan that comes back with the friends family relatives. So the lifetime value of this contact in our opinion is super high.

Speaker Change #149: Honestly, we have a lot of very, very good talented wholesale partners, executing it as good as we do it by ourselves.

Oliver Reichert: So, in the end of the day, if the business model is comparable and you know, don't forget it, but the margin is higher. We do not prefer to push everybody into our own channels. This is not what we're doing, you know, and during the road show, we constantly said we're not seeking to destroy or kill or minimize wholesale. This is not what we're doing. Every single qualitatively driven touch point with the brand is a good one. Whenever we open up a store and maybe we're making sure we're doing it the right way, we're super, super positively surprised about the results.

Speaker Change #149: In the end of the day, if the business model is...

Speaker Change #150: Comparable, and you know, forget it, but the amount in this higher.

Speaker Change #151: and we do not prefer to push everybody into our own channels. This is not what we're doing. You know, during the roadshow, we constantly said, we're not seeking to destroy or kill or minimize or sell. This is not what we're doing. Every single...

Oliver Reichert: Sam, you know, we can't share this information with you. I mean, we're talking about the third quarter here. So look at the first two quarters and maybe it's the right time, you know, after the full year that we can, we can sit and talk about the overall. But we do not share any of this information yet. And to be super honest, Sam, I think it won't help you and it won't give you any insight and other than, oh, a mix between this and this month and this and this quarter will will not, it will probably distract some of the major learnings and not feed them the right.

Speaker Change #152: Qualitatively driven touch point with the brand as a good one. Whenever we open up a store and maybe we're making sure we're doing it the right way, we're super, super positively surprised about the results.

Oliver Reichert: All over the world could be India, could be China, could be Southeast Asia, Vietnam, Thailand, Munich, Paris; wherever the results are super strong. People are coming in, buying very expensive shoes, coming back, and so on. So it's really a very, very vivid combination.

Speaker Change #152: All Over The World Could Be India Could Be China Could Be South East Asia Vietnam, Thailand, Munich, Paris, wherever The results are super strong, people are coming in by very expensive shoes coming back

Oliver Reichert: And as David said before, in the end, let's say in 10, 20 years, we don't even probably talk about the difference of also a door or own operated door, because it's a touch point with the brand. And if the quality of the contact is good. We can harvest it; if not, we have to improve it. But right now, everything is super strong, super good reaction in numbers, ASP growth, everything is on the right in the right direction, and the product performs for itself. That's the major thing. 90% plus full prize realization; a very healthy warehouse situation.

Speaker Change #152: and so on. So it's really a very, very vivid combination and as they've said before, in the end let's say in 10, 20 years.

Speaker Change #152: We don't even, probably...

Speaker Change #153: Talk about the difference of a author or own operator, because it's a touch point with the brand, and if the quality of the contact is good,

Speaker Change #153: We can harvest it, if not, we have to improve it. But right now, everything is super strong, super good, reaction in numbers, ASP growth.

Speaker Change #153: Everything is on the right direction, and the product performs for itself. That's the major thing. 90% plus full-prize realization, a very healthy warehouse situation.

David Kahan: It's not just an outlier. I think there are a few brands on earth that have a B2B model like us, where our go-in margin is our maintained margin. So net net at the end of the day, feeding the consumer where they're purchasing. And the impact that that has becomes more important to me than trying to follow a business model because I also know that where that emerging youth consumer is shopping today may not be where they're going to shop in five years.

Oliver Reichert: Yeah, for us it's critical. Thank you.

Speaker Change #153: Yeah.

Speaker Change #153: for us, it's Christmas here.

Louise Singlehurst: The next question will be from Louise Singlehurst from Goldman Sachs, Louise Eurinus live. I get afternoon, everyone. Thank you for taking my question. I know we're short on time, so I'll keep it brief. You must be delighted with the B2B in the US, particularly that 90% growth coming from existing doors. I just wanted to check, and I know you've had a few questions on the channel mix.

Speaker Change #154: Thank you!

Speaker Change #155: Thank you, the next question will be from Louise Singlehursts from Goldman Sachs, Louise, you're line of life.

Louise Singlehursts: Hi, good afternoon everyone. Thank you for taking my question. I know we're short on times. I'll keep it brief. You must be delighted with the B2B in the US, particularly that 90% growth coming from existing doors. I just wanted to check and I know you've had a few questions on the channel mix. Should we be expecting, as we go into the back end, you know, the fourth quarter and obviously early 25 for this same kind of shift in mix between B2B and DTC. And then I also wanted to check that BTC have any impact from product shortages and should that get easier as a new capacity comes on board. Thank you.

David Kahan: And if they're coming into contact with our brand right now where they want to see us, I'm making sure that the product is there as long as it's being represented in a powerful manner to that consumer. And we're always maintaining, as you know, that relative scarcity. So I think the consumer himself or herself is becoming a bit more a bit less channel centric and a bit more searching for the brand and searching for the products they want wherever they can come into contact with it. Yeah, okay.

Louise Singlehurst: Should we be expecting, as we go into the 4th quarter and obviously early 25, for this same kind of shift in mix between B2B and DTC? And then I also wanted to check that DTC have any impact from product shortages, and should that get easier as new capacity comes on board. Thank you. Thanks, Louise. I think again, the mix of DTC versus B2B is near impossible to call in certainty looking a quarter or a year ahead. I think what we're seeing from a consumer standpoint, shifting to more physical retail, is certainly happening; it's happening in Europe, it's happening across the US, and I see that continuing.

Sam Poser: Well, I have two more things, but I just want to say I'm not questioning the way you do it. I'm just trying to get color on the quarter for more for the investors that might not necessarily understand it as well. That being said.

Speaker Change #157: Thanks Louise. I think again that the sea.

Speaker Change #158: The mix of D-D-C versus D-B-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A-A

Speaker Change #159: is near impossible to call in certainty looking a quarter or a year ahead.

Alexander Hoff: We're up against time to get one more. What's the percent of scarcity you're currently running and to how what is the swing between the gross margin in the SGA by channel. So, for instance, you know, SGA is X basis points lower in wholesale, but as is SGA lower and and the opposite indirect a consumer where they gross margin higher in the SGA.

Speaker Change #160: I think what we're seeing from a consumer standpoint shifting to more physical retail is certainly happening, it's happening in Europe, it's happening across the U.S.

David Kahan: I think we do our best to try to make sure that if somebody does, obviously come to our digital site that we're not sure on product. And we also try to make sure that on our own website, there might be less of a degree of scarcity than there is at the retail side. It's just constantly balancing and monitoring this on a day-to-day basis. But having said that, the consumer shift, and I think you're seeing this in what retailers are reporting, also has been somewhat more physical than digital over the last quarter. And I see that continuing to some degree, although there's no certainty to it.

Speaker Change #160: and I see that continuing. I think we do our best to try to make sure that if somebody does, obviously come to our digital site that we're not sure on product.

Speaker Change #160: and we also try to make sure that on our own website there might be less of a degree of scarcity than there is at the retail side. It's just constantly balancing and monitoring this on a day-to-day basis but having said that the consumer shift and I think you're seeing this in what retailers are reporting also has been...

Alexander Hoff: I'll let one of the finance guys answer that, but if you're looking at what percentage of the demand we're filling, I wouldn't put my finger on it, but it's not anywhere close to what people are searching for in the brand. And I'll say demand is not a finite measure. If I say 70%, maybe it's 70, but there's no way we're coming anywhere near the demand of what people are seeking with the product on SGA.

Speaker Change #160: somewhat more physical than digital over the last quarter. And I see that continuing to some degree, although there's no certain detour, the only certainty is when somebody wants our product, they're searching for it very aggressively. And wherever they can purchase it, they're looking to purchase it. That's the biggest positive impact to everything.

David Kahan: The only certainty is when somebody wants our product, they're searching for it very aggressively. And wherever they can purchase it, they're looking to purchase it. That's the biggest positive impact to everything.

Alexander Hoff: Just a quick note, and you can see from our presentation that we gave out a positive EVDA effect of 30 bits according to our channel mix versus prior year. And we also addressed in our gross margin 100 bits negative effect. That gives you 130 positive in SGA and that should help to make that.

Louise Singlehurst: Thank you.

Speaker Change #161: Thank you.

Speaker Change #162: Thank you and the final question, so we'll be from Jim Doffy from Stiefle, Jimmy your line is life.

Jim Doffy: Oh, thank you. I wanted to talk about product and assortment, really encouraging to see the uptake of close to styles. As you look into next year, can you talk about skew count and color proliferation? And I'm curious how you manage that complexity in your B2B channel.

Oliver Reichert: As you look into next year, can you talk about skew count and color proliferation? And I'm curious how you manage that complexity in your B2B channel. Um. Thank you for the question.

Dana Telsey: Thank you, and the next question will be from Dana Telsey, from Telsey Group. Dana Eurin is live.

Oliver Reichert: Great, good morning everyone. We've mentioned a number of times all of you about the increase in physical touch points that consumers are making, drop where they're making their purchases. As you think about it globally, where did you see the biggest differential that way on your store opening plan? Are there any changes that you're looking at to accelerate this? And what are the learnings from your stores that you're putting into some of the B2B in wholesale that helped the drive that conversion?

Oliver Reichert: Thank you. So globally, Dana, thank you for the question. Globally, it's a bit frightening for us too. It's everywhere the same thing. Whenever we open up, whenever we open up, physical touch point with the brand, and we are measuring like the interaction with the guests, interaction about the footbed, conversation about teaching. It's not about not just, you know, don't forget we're not a footwear company, we're the footbed company, so we're selling footbeds.

Oliver Reichert: So it's really something that's a different and people love to come to us and see the product and touch it and feel it because quality is just a word. If you see and feel the quality, that's a differentiation from all the rest. And if you have somebody in front of you explaining the benefits of the footbed talking about the second best solution next to barefoot walking, the impact is dramatically high. And it leads into a higher price point once we create a sale and of course we create a fan that comes back with his friends family relatives.

Oliver Reichert: So the lifetime value of this contact in our opinion is super high. Honestly, we have a lot of very, very good talented wholesale partners executing it as good as we do it by myself. So in the end of the day, if the business model is comparable and you know, don't forget it, but the margin is higher. We do not prefer to push everybody into our own channels. This is not what we're doing, you know, and during the road show, we constantly said we're not seeking to destroy or kill or minimize wholesale.

Oliver Reichert: This is not what we're doing. Every single qualitatively driven touch point with the brand is a good one. Whenever we open up a store and maybe we're making sure we're doing it the right way, we're super, super positively surprised about the results. All over the world could be India, could be China, could be Southeast Asia, Vietnam, Thailand, Munich, Paris, wherever the results are super strong. People are coming in buying very expensive shoes, coming back and so on.

Oliver Reichert: So it's really a very, very vivid combination. And as David said before, in the end, let's say in 10, 20 years, we don't even probably talk about the difference of also a door or own operated door, because it's a touch point with the brand. And if the quality of the contact is good. We can harvest it if not, we have to improve it, but right now everything is super strong, super good reaction in numbers, ASP growth, everything is on the right in the right direction and the product performs for itself. That's the major thing. 90% plus full prize realization, a very healthy warehouse situation. Yeah, for us it's critical. Thank you.

Louise Singlehurst: The next question will be from Louise Singlehurst from Goldman Sachs, Louise Eurinus Live. I get afternoon everyone, thank you for taking my question, I know we're short on time, so I'll keep it brief. You must be delighted with the B2B in the US, particularly that 90% growth coming from existing doors. I just wanted to check and I know you've had a few questions on the channel mix. Should we be expecting, as we go into the 4th quarter and obviously early 25 for this same kind of shift in mix between B2B and DTC? And then I also wanted to check that DTC have any impact from product shortages and should that get easier as a new capacity comes on board. Thank you. Thanks Louise.

David Kahan: I think again, the mix of DTC versus B2B is near impossible to call in certainty looking a quarter or a year ahead. I think what we're seeing from a consumer standpoint shifting to more physical retail is certainly happening, it's happening in Europe, it's happening across the US, and I see that continuing. I think we do our best to try to make sure that if somebody does, obviously come to our digital site that we're not sure on product.

David Kahan: And we also try to make sure that on our own website, there might be less of a degree of scarcity than there is at the retail side. It's just constantly balancing and monitoring this on a day-to-day basis. But having said that the consumer shift, and I think you're seeing this in what retailers are reporting also has been somewhat more physical than digital over the last quarter. And I see that continuing to some degree, although there's no certainty to it. The only certainty is when somebody wants our product, they're searching for it very aggressively. And wherever they can purchase it, they're looking to purchase it. That's the biggest positive impact to everything. Thank you.

Jim Duffy: And the final question today will be from Jim Duffy from Stiefel. Jim, your line is last. Oh, thank you. I wanted to talk about product and assortment, really encouraging to see the uptake of closed-toe styles. As you look into next year, can you talk about skew count and color proliferation? And I'm curious how you manage that complexity in your B2B channel. Um. Thank you for the question.

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