Q2 2026 Birkenstock Holding PLC Earnings Call

May 13, 2026

Operator 1: Welcome to Birkenstock's Q2 2026 Earnings Conference Call. I would now like to turn the call over to Megan Kulick, Director, Investor Relations.

Speaker #1: Good morning, and thank you for standing by. Welcome to Birkenstock's second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Welcome to Birkenstock's Q2 2026 Earnings Conference Call. I would now like to turn the call over to Megan Kulick, Director, Investor Relations.

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. The company has allocated $45 minutes to this conference call and will take as many questions as time allows.

Speaker #1: I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to Megan Kulick, Director Investor Relations.

Speaker #2: Hello, and thank you, everyone, for joining us today. On the call are Oliver PLC, and Chief Executive Officer of the Birkenstock Group, and Ivica Krolo, Chief Financial Officer of the Birkenstock Group.

Megan Kulick: Hello, and thank you everyone for joining us today. On the call are Oliver Reichert, Director of Birkenstock Holding PLC, and Chief Executive Officer of the Birkenstock Group, and Ivica Krolo, Chief Financial Officer of the Birkenstock Group. Mehdi Nico Bouyakhf, President EMEA, and Alexander Hoff, VP of Global Finance, will join us for Q&A. Today, we are reporting the financial results for our fiscal Q2 ended 31 March 2026. You may find the press release and the supplemental presentation connected to today's discussion on our investor relations website at birkenstock-holding.com. Results have been filed on Form 6-K with the SEC. 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.

Speaker #2: Nico, President of EMEA, and Alexander Hoff, VP of Global Finance, will join us for Q&A. Today we are reporting the financial results for our fiscal second quarter ended March 31, 2026.

Speaker #2: You may find the press release and the supplemental presentation connected to today's discussion on our investor relations website at birkenstock-holding.com. Results have been filed on Form 6K with the SEC.

Speaker #2: 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.

Speaker #2: These statements are subject to various risk, uncertainties, and assumptions, which could cause our actual results to differ materially from these statements. These risk, 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.

Megan Kulick: 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. We undertake no obligations to revise or update any forward-looking statements or information except as required by law. We will reference certain non-IFRS financial information. We use non-IFRS measures as we believe they represent the operational performance and underlying results of our business more accurately. The presentation of this non-IFRS information is not intended to be considered by itself or as a substitute for the financial information prepared and presented in accordance with IFRS. Reconciliations of non-IFRS measures to IFRS measures can be found in this morning's press release and in our SEC filings.

Speaker #2: We undertake no obligations to revise or update any forward-looking statements or information except as required by law. We will reference certain non-IFRS financial information.

Speaker #2: We use non-IFRS measures as we believe they represent the operational performance and underlying results of our business more accurately. The presentation of this non-IFRS 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 #2: Reconciliations of non-IFRS measures to IFRS measures can be found in this morning's press release and in our SEC filings. Now I will turn the call over to Oliver.

Megan Kulick: Now I will turn the call over to Oliver.

Speaker #3: Good morning, everybody. Since our Q1 results, a lot has happened. We faced multiple conflicts in the Middle East, disrupting global supply chains and driving higher energy costs.

Oliver Reichert: Good morning, everybody. Since our Q1 results, a lot has happened. We face multiple conflicts in the Middle East, disrupting global supply chains and driving higher energy costs. These cost pressures are fueling inflation, clearly causing pressure on consumer wallets. The annual inflation rate in US jumped to 3.3% in March 2026, marking the highest level since May 2024 and sharp increase from 2.4% in both February and January. Eurozone inflation reached 3% in April, the highest level since September 2023, driven by 11% increase in energy costs. Eurozone inflation is broadly expected to remain elevated throughout the remainder of 2026. The US Supreme Court ruling striking down IEEPA tariffs has actually increased our tariff exposure, at least temporarily. We estimate our refund claims will be about EUR 30 million, but timing is still uncertain.

Speaker #3: These cost pressures are fueling inflation, clearly causing pressure on consumer wallets. The annual inflation rate in the US jumped to 3.3% in March 26, marking the highest level since May 24 and sharp increase from 2.4%.

Speaker #3: In both February and January. Eurozone inflation reached 3% in April, the highest level since September 23. Driven by 11% increase in energy costs. Eurozone inflation is broadly expected to remain elevated throughout the remainder of 2026.

Speaker #3: The US Supreme Court ruling striking down IEEPA tariffs has actually increased our tariff exposure. At least temporarily. We estimate our refund claims will be about 30 million, but timing is still uncertain.

Speaker #3: In this challenging environment, we performed strongly and we once again demonstrated the resilience of our business model. In the second quarter, we grew revenues over 14%.

Oliver Reichert: In this challenging environment, we performed strongly, and we once again demonstrated the resilience of our business model. In Q2, we grew revenues over 14% within our target range of 13% to 15% growth in constant currency. Our adjusted EBITDA margin remains strong at over 32% despite the impact of FX and tariffs. Even in this uncertain environment, demand for Birkenstock remains strong, and we delivered as promised in our white space growth opportunities. Close out penetration was up 300 basis points, driven by strong growth in clogs. APAC grew at over 2 times the pace of the other regions, and share of business was up over 100 basis points year over year.

Oliver Reichert: In this challenging environment, we performed strongly, and we once again demonstrated the resilience of our business model. In Q2, we grew revenues over 14% within our target range of 13% to 15% growth in constant currency. Our adjusted EBITDA margin remains strong at over 32% despite the impact of FX and tariffs. Even in this uncertain environment, demand for Birkenstock remains strong, and we delivered as promised in our white space growth opportunities. Close out penetration was up 300 basis points, driven by strong growth in clogs. APAC grew at over 2x the pace of the other regions, and share of business was up over 100 basis points year over year.

Speaker #3: Within our target range of 13 to 15% growth in constant currency. Our adjusted EBITDA margin remained strong at over 32%. Despite the impact of FX and tariffs.

Speaker #3: Even in this uncertain environment, demand for Birkenstock remains strong and we delivered as promised in our white space growth opportunities. Close-to-penetration was up 300 basis points driven by strong growth in GLOCs.

Speaker #3: APAC grew at over two times the pace of the other regions and share of business was up over 100 basis points year over year.

Speaker #3: We opened five new owned retail doors bringing the total globally to 111. We are well on track to meet our target of 140 doors by the end of fiscal 26.

Oliver Reichert: We opened five new owned retail doors, bringing the total globally to 111. We are well on track to meet our target of 140 doors by the end of fiscal 2026. Importantly, within our D2C business, our own retail grew over 60% in constant currency. Same-store sales were up double digits, accelerating from Q1. We also continue to invest in our online business to drive better conversion and higher growth. Our Americas business remains strong, up 14% in constant currency. It was driven by very strong B2B growth and sell-through at partner doors, which was up over 30% at key partners. Youth retailers and sporting specialty continued to lead the B2B growth. The in-person shopping trend continues.

Speaker #3: Importantly, within our D2C business, our own retail grew over 60% in constant currency. Same-store sales were up double digits, accelerating from the first quarter.

Speaker #3: We also continue to invest in our online business to drive better conversion and higher growth. Our Americas business remains strong up 14% in constant currency.

Speaker #3: It was driven by very strong B2B growth and sell-through at partner doors. Which was up over 30% at key partners. Youth retailers and sporting specialty continue to lead the B2B growth.

Speaker #3: The in-person shopping trend continues. Within the Americas D2C business, we saw strong same-store growth and we added two new stores in the Americas, bringing the total to 17.

Oliver Reichert: Within the Americas D2C business, we saw strong same-store growth, and we added 2 new stores in the Americas, bringing the total to 17. Growth in the EMEA was 11% in constant currency, a strong result when considering the negative impacts of the wars in the Middle East. We estimate the direct and indirect impacts of the war reduced EMEA revenue by about EUR 6 million and growth by about 300 basis points. About half of this was a direct impact due to our inability to complete shipments into the Middle East. The other half was due to muted consumer sentiment in Europe, largely attributed double-digit increase of energy costs and higher inflation. While it is difficult to foresee how long the impacts will last, we have taken measures to mitigate some of the direct impact.

Speaker #3: Growth in EMEA was 11% in constant currency, a strong result when considering the negative impacts of the wars in the Middle East. We estimate the direct and indirect impacts of the war reduced EMEA revenue by about 6 million euros and growth by about 300 basis points.

Speaker #3: About half of this was a direct impact due to our inability to complete shipments into the Middle East. The other half was due to muted consumer sentiment in Europe largely attributed double-digit increase of energy costs and higher inflation.

Speaker #3: While it is difficult to foresee how long the impacts will last, we have taken measures to mitigate some of the direct impact. We have secured alternative delivery routes and we can also steer products originally intended for the Middle East to other regions.

Oliver Reichert: We have secured alternative delivery routes, and we can also steer products originally intended for the Middle East to other regions, especially APAC, where demand remains very strong. This is the beauty of our engineered distribution model and puts our resilience. APAC was up 30% in constant currency. As planned, growing more than twice as fast as our other segments. Within our top markets in the region, our strongest growth was in India, China, and Japan. APAC showed the highest D2C penetration and highest ASP in the quarter compared to the other segments. Our production is ramping up as planned to reach our target of 10% annual growth in pairs sold. Despite the impact of different conflicts, inflation, and tariff uncertainty, we are confident in our growth potential.

Speaker #3: Especially APAC. Where demand remains very strong. This is the beauty of our engineered distribution model and put our resilience. APAC was up 30% in constant currency.

Speaker #3: As planned, growing more than twice as fast as our other segments. Within our top markets in the region, our strongest growth was in India, China, and Japan.

Speaker #3: APAC showed the highest close-to-penetration and highest ASP in the quarter compared to the other segments. Our production is ramping up as planned to reach our target of 10% annual growth in pairs sold.

Speaker #3: Despite the impact of different conflicts, inflation, and tariff uncertainty, we are confident in our growth potential. We are reiterating our targets 13 to 15% for fiscal 2026 and the longer-term targets we shared with you in January.

Oliver Reichert: We are reiterating our targets 13% to 15% for fiscal 2026 and the longer-term targets we shared with you in January. Why are we so confident? We are a purpose-driven brand and see strong global demand for the footbed that shows resilience in uncertain times. As an affordable luxury brand with a huge pricing bandwidth, we attract a diverse range of consumers across geography, gender, age, and income. We manage our distribution with discipline to maintain scarcity, properly segment the market, and manage channel growth. The ultimate truth for brand health and momentum is sell-through at full price, which remains very strong at over 90%. Now I will pass the call over to Ivica to go through the quarter results in more detail.

Speaker #3: Why are we so confident? We are a purpose-driven brand and see strong global demand for the footbed that shows resilience and uncertain times. As an affordable luxury brand with a huge pricing bandwidth, we attract a diverse range of consumers across geography, gender, age, and income.

Speaker #3: We manage our distribution with discipline to maintain scarcity properly segment the market and manage channel growth. The ultimate truth for brand health and momentum is sell-through at full price.

Speaker #3: Which remains very strong at over 90%. Now we'll pass the call over to Ivica to go through the quarterly results in more detail.

Speaker #4: Thanks, Oliver. I'm happy to share with you the details of Birkenstock's performance for the second quarter of fiscal 2026. Which met our expectations despite the headwinds Oliver already mentioned.

Ivica Krolo: Thanks, Oliver. I'm happy to share with you the details of Birkenstock's performance for Q2 of fiscal 2026, which met our expectations despite the headwinds Oliver already mentioned. We generated Q2 revenues of EUR 680 million, growth of 8% on a reported basis. Growth in constant currency was 14%. The strong depreciation of the US dollar, Canadian dollar, and Asian currencies compared to Q2 of 2025 cost a 640 basis point headwind to revenue growth in the quarter. For reference, in Q2 of 2026, the average euro to US dollar rate was 1.17, up from 1.05 in Q2 of fiscal 2025. We saw strong growth across all segments in the quarter. The Americas segment was up 14% in constant currencies, reflecting continuing strength in our most developed market.

Speaker #4: We generated second quarter revenues of 618 million growth of 8% on a reported basis. Growth in constant currency was 14%. The strong depreciation of the US dollar Canadian dollar and Asian currencies compared to the second quarter of 2025 caused a 640 basis point headwind to revenue growth in the quarter.

Speaker #4: For reference, in the second quarter of 2026, the average euro to US dollar rate was 117, up from 105 in Q2 of fiscal 2025.

Speaker #4: We saw strong growth across all segments in the quarter. The Americas segment was up 14% in constant currencies reflecting continuing strength in our most developed market.

Speaker #4: EMEA was up 11% and APAC up 30% in constant currency. As Oliver mentioned, we estimate the impact of the war in the Middle East was about 300 basis points to EMEA growth or about 100 basis points to consolidated growth.

Ivica Krolo: EMEA was up 11% and APAC up 30% in constant currency. As Oliver mentioned, we estimate the impact of the war in the Middle East was about 300 basis points to EMEA growth or about 100 basis points to consolidated growth. By channel for the year, B2B was up 15% in constant currency on the back of continued strong demand at our key partners, and D2C is sustaining double-digit growth up 12% in constant currency. We are still seeing stronger growth in our B2B channel compared to D2C as consumers, especially our newest younger consumers, prefer to shop in-store. At the same time, our digital business remains a positive contributor to growth, and we are taking measures to drive stronger digital growth in the future. Our own retail business was very strong, up over 60% year over year in constant currency.

Speaker #4: By channel for the year, B2B was up 15% in constant currency on the back of continued strong demand at our key partners and D2C is sustaining double-digit growth up 12% in constant currency.

Speaker #4: We are still seeing stronger growth in our B2B channel compared to D2C as consumers, especially our newest younger consumers, prefer to shop in store.

Speaker #4: At the same time, our digital business remains a positive contributor to growth and we are taking measures to drive stronger digital growth in the future.

Speaker #4: Our own retail business was very strong up over 60% year over year in constant currency. We added five new doors. Same-store sales growth accelerated from Q1 and was up double digits.

Ivica Krolo: We added five new doors. Same-store sales growth accelerated from Q1 and was up double digits. Gross profit margin for Q2 was 53.9%, down 380 basis points year-over-year. Adjusted gross profit margin, including the reversal of distributor markup associated with the acquisition of our Australian distribution partner, was 54.6%, down 310 basis points. Adjusted gross profit margin, excluding 230 basis points of pressure from FX and 90 basis points of pressure from incremental US tariffs, was up 10 basis points year-over-year. Selling and distribution expenses were EUR 138 million in Q2, representing 22.4% of revenue. This was up 40 basis points from the prior year. General and administration expenses were EUR 33 million, or 5.3% of revenue, down 30 basis points year-over-year.

Speaker #4: Gross profit margin for the second quarter was 53.9% down 380 basis points year over year. Adjusted gross profit margin including the reversal of distributor markup associated with the acquisition of our Australian distribution partner was 54.6% down 310 basis points.

Speaker #4: Adjusted gross profit margin excluding 230 basis points of pressure from FX and 90 basis points of pressure from incremental US tariffs was up 10 basis points year over year.

Speaker #4: Selling and distribution expenses were 138 million in the second quarter. Representing 22.4% of revenue. This was up 40 basis points from the prior year.

Speaker #4: General and administration expenses were 33 million or 5.3% of revenue down 30 basis points year over year. Adjusted EBITDA in the second quarter of 198 million was down 1% year over year primarily due to tariffs and currency translation impacts.

Ivica Krolo: Adjusted EBITDA in Q2 of EUR 198 million was down 1% year-over-year, primarily due to tariffs and currency translation impacts. The flow-through of FX effects reduced adjusted EBITDA by EUR 27 million. Excluding this FX impact, EBITDA was up 13%. Adjusted EBITDA margin of 32.1% was down 270 basis points year-over-year. Excluding the FX and tariff impact, adjusted EBITDA margin would have been up 60 basis points to 35.4%. Adjusted net profit of EUR 93 million in Q2 was down 10% year-over-year. Adjusted EPS for Q2 was EUR 0.50, down 9% from EUR 0.55 a year ago.

Speaker #4: The flow-through of FX effects reduced adjusted EBITDA by 27 million. Excluding this FX impact, EBITDA was up 13%. Adjusted EBITDA margin of 32.1% was down 270 basis points year over year.

Speaker #4: Excluding the FX and tariff impact, adjusted EBITDA margin would have been up 60 basis points to 35.4%. Adjusted net profit of 93 million in the second quarter was down 10% year over year.

Speaker #4: Adjusted EPS for Q2 was 50 euro cents down 9% from 55 euro cents a year ago. Adjusted net profit and adjusted EPS were negatively impacted by FX translation of 17 million or 9 euro cents respectively and by a 15 million euro one-time non-cash expense or 8 euro cents per share from the change in valuation of the embedded derivative in our senior notes.

Ivica Krolo: Adjusted net profit and adjusted EPS were negatively impacted by FX translation of EUR 17 million or EUR 0.09 respectively, and by a EUR 15 million one-time non-cash expense or EUR 0.08 per share from the change in valuation of the embedded derivative in our senior notes. We generated EUR 29 million in operating cash compared to the use of EUR 18 million in Q2 2025. We ended the quarter with cash and cash equivalents of EUR 201 million. Our inventory to sales ratio was 39% in the quarter, up from 36% a year ago. The primary reason is due to FX. While our inventory is largely euro-based, LTM sales are negatively impacted by the depreciation of the US dollar and other currencies. On a currency neutral basis, our inventory to sales ratio was 37%.

Speaker #4: We generated 29 million in operating cash compared to the use of 18 million in Q2 2025. We ended the quarter with cash and cash equivalents of 201 million euro.

Speaker #4: Our inventory-to-sales ratio was 39% in the quarter up from 36% a year ago. The primary reason is due to FX. While our inventory is largely euro-based, LTM sales are negatively impacted by the depreciation of the US dollar and other currencies.

Speaker #4: On a currency-neutral basis, our inventory-to-sales ratio was 37%. The increase from 36% last year is largely driven by increased work in progress as we increase pre-production of semi-finished goods, especially in clocks to reduce the bottleneck we have faced in final assembly.

Ivica Krolo: The increase from 36% last year is largely driven by increased work in progress as we increase pre-production of semi-finished goods, especially in clogs, to reduce the bottleneck we have faced in final assembly. Inventory level was also impacted by the increase of capitalized tariffs. Our DSO for the quarter were a healthy 49 days, up from 46 days a year ago, primarily due to the higher B2B mix and timing of large shipments that occurred later in the quarter. During the quarter, we spent EUR 21 million in CapEx, adding to our production capacity in Arouca, Görlitz, Stroitz, and Pasewalk, and beginning the build-out of Wittichenau. Finally, continuing our investments in retail and IT. Our net leverage was 1.7x as of 31 March 2026, up from 1.5x at 30 September 2025, due to normal cash seasonality.

Speaker #4: Inventory level was also impacted by the increase of capitalized tariffs. Our DSO for the quarter were a healthy 49 days up from 46 days a year ago primarily due to the higher B2B mix and timing of large shipments that occurred later in the quarter.

Speaker #4: During the quarter, we spent 21 million euro in CAPEX adding to our production capacity in Aruka, Görlitz, Strötz, and Pasewalk, and beginning the build-out of Wittichenau.

Speaker #4: And finally, continuing our investments in retail and IT. Our net leverage was 1.7 times as of March 31st, 2026, up from 1.5 times at September 30th, 2025 due to normal cash seasonality.

Speaker #4: Turning to our outlook for the remainder of fiscal 2026. In both the third and the fourth quarters, we expect revenue growth in constant currency within our annual guidance of 13 to 15 percent.

Ivica Krolo: Turning to our outlook for the remainder of fiscal 2026. In both Q3 and Q4, we expect revenue growth in constant currency within our annual guidance of 13% to 15%. We expect to experience less headwind from FX in Q3 and expect FX to be relatively neutral in Q4. At the EUR 1.17 to US dollar rate, which our annual guidance is based on, we expect approximately 200 basis points of headwind to reported revenue growth in Q3 and almost no difference between reported and constant currency growth in Q4. On margin for Q3 and Q4, we expect tariffs to have a similar impact on gross margin and EBITDA margin in Q3 of about 100 basis points. In Q4, the impact will be around 50 basis points. FX pressure should be around 60 basis points in Q3 and neutral in Q4.

Speaker #4: We expect to experience less headwind from FX in Q3 and expect FX to be relatively neutral in Q4. At the 117 euro to US dollar rate, which our annual guidance is based on, we expect approximately 200 basis points of headwind to reported revenue growth in Q3 and almost no difference between reported and constant currency growth in Q4.

Speaker #4: On margin for Q3 and Q4, we expect tariffs to have a similar impact on gross margin and EBITDA margin in Q3 of about 100 basis points.

Speaker #4: In Q4, the impact will be around 50 basis points. FX pressure should be around 60 basis points in Q3 and neutral in Q4. Our business is remarkably resilient and we are confident we will be able to meet our fiscal 2026 guidance despite the additional headwinds from the Middle East war, inflation, increased tariffs, and persistent FX pressures.

Ivica Krolo: Our business is remarkably resilient and we are confident we will be able to meet our fiscal 2026 guidance despite the additional headwinds from the Middle East war, inflation, increased tariffs, and persistent FX pressures. We are reiterating our guidance for 2026 for constant currency revenue growth of 13% to 15%. The FX headwind to revenue growth should be about 350 basis points for the full year, resulting in reported revenue growth of 10% to 12% to EUR 2.3 to 2.35 billion. This assumes an average euro to US dollar exchange rate of 1.17.

Speaker #4: We are reiterating our guidance for 2026 for constant currency revenue growth of 13 to 15 percent. The FX headwind to revenue growth should be about 350 basis points for the full year resulting in reported revenue growth of 10 to 12 percent to 2.3 to 2.35 billion euros.

Speaker #4: This assumes an average euro to US dollar exchange rate of 117. We expect adjusted gross margin of 57 to 57.5 percent in fiscal 2026 inclusive of the 200 basis points of pressure from FX and US tariffs combined.

Ivica Krolo: We expect adjusted gross margin of 57% to 57.5% in fiscal 2026, inclusive of the 200 basis points of pressure from FX and U.S. tariffs combined. We expect adjusted EBITDA of at least EUR 700 million for the year, implying an adjusted EBITDA margin of 30% to 30.5% inclusive of the 200 basis points pressure from FX and tariffs. Our expected tax rate is 26% to 28%. Adjusted EPS is expected to be EUR 1.90 to EUR 2.05, including approximately EUR 0.15 to EUR 0.20 of pressure from FX. This does not include the impact of any additional share repurchase. We remind you that we intend to repurchase share for a total consideration of $200 million during fiscal 2026, subject to market condition.

Speaker #4: We expect adjusted EBITDA of at least 700 million euros for the year implying an adjusted EBITDA margin of 30 to 30.5 percent inclusive of the 200 basis points pressure from FX and tariffs.

Speaker #4: Our expected tax rate is 26 to 28 percent. Adjusted EPS is expected to be 1.90 euros to 2.05 euros including approximately 15 to 20 euro cents of pressure from FX.

Speaker #4: This does not include the impact of any additional share repurchase. We'll remind you that we intend to repurchase share for a total consideration of 200 million dollars during fiscal 2026 subject to market condition.

Speaker #4: Capital expenditures should be in the range of 110 to 130 million euros. We have a net leverage target for the end of fiscal 2026 of 1.3 to 1.4 times excluding the impact of any additional share repurchases.

Ivica Krolo: Capital expenditures should be in the range of EUR 110 to 130 million. We have a net leverage target for the end of fiscal 2026 of 1.3 to 1.4 times, excluding the impact of any additional share repurchase. With that, I'll turn it back to Oliver to close.

Ivica Krolo: Capital expenditures should be in the range of EUR 110 to 130 million. We have a net leverage target for the end of fiscal 2026 of 1.3x to 1.4x, excluding the impact of any additional share repurchase. With that, I'll turn it back to Oliver to close.

Speaker #4: With that, I'll turn it back to Oliver to close.

Speaker #1: Thanks, Ivica. We are confident in our business model and its resilience. Even in the face of pressures from war, inflation, tariff, and FX. Demand for our beloved brand remains strong.

Oliver Reichert: Thanks, Ivica. We are confident in our business model and its resilience, even in the face of pressures from war, inflation, tariffs and FX. Demand for our beloved brand remains strong. We are a democratic and accessible brand. Our addressable market is every human being that walks on two feet. We are unique in that we have products to address consumers with price points from $50 to our 70, 1774 collabs at up to $2,000. At Birkenstock, we turn challenges into opportunities. As a brand with a heritage of over 250 years, we stick to our plans. Continue to take share, steer product between geographies and channels to optimize margins, and use our strong balance sheet and capital allocation decisions to increase shareholder returns. In an overall challenging context, we continue to see plenty of opportunities.

Speaker #1: We are a democratic and accessible brand. Our addressable market is every human being that walks on two feet. We are unique in that we have products to address consumers with price points from $50 to our $70, $74 collapse at up to $2,000.

Speaker #1: At Birkenstock, we turn challenges into opportunities. As a brand with a heritage of over 250 years, we stick to our plans. Continue to take share, steer product between geographies and channels to optimize margins, and use our strong balance sheet and capital allocation decisions to increase shareholder returns.

Speaker #1: In an overall challenging context, we continue to see plenty of opportunities. We see it in the fast-growing APAC market in our expanding own retail fleet and in our developing close-toe business.

Oliver Reichert: We see it in the fast-growing APAC market, in our expanding own retail fleet, and in our developing closed-toe business. We have proven our ability to mitigate external challenges and difficult market conditions to drive strong, profitable growth. Now we will take your questions. Thank you.

Speaker #1: We have proven our ability to mitigate external challenges and difficult market conditions to drive strong profitable growth. Now we will take your questions. Thank you.

Speaker #3: We will now begin the question and answer session. A reminder to please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand.

Operator 1: We will now begin the question and answer session. A reminder to please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss with J.P. Morgan. Matthew, your line is now open.

Operator: We will now begin the question and answer session. A reminder to please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss with J.P. Morgan. Matthew, your line is now open.

Speaker #3: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matthew Boss with JPMorgan.

Speaker #3: Matthew, your line is now open.

Speaker #4: Great, thanks. So Oliver, first half revenue growth averaged 15 percent, full year reiterated forecast calls for 13 percent constant currency growth in the back half.

Matthew Boss: Great, thanks. Oliver, H1 revenue growth averaged 15%. Full year reiterated forecast calls for 13% constant currency growth in the H2. Could you just break apart the factors that you're embedding in the H2 forecast, if we could think about capacity constraints, Middle East exposure, and channel mix? Could you elaborate on the impact that you're seeing today, where you cited the more muted consumer sentiment in Europe tied to higher energy costs and inflation?

Speaker #4: Could you just break apart the factors that you're embedding in the second half forecast if we could think about capacity constraints, Middle East exposure, and channel mix?

Speaker #4: And could you elaborate on the impact that you're seeing today where you cited the more muted consumer sentiment in Europe tied to higher energy costs and inflation?

Speaker #1: Thanks for your question, Matt. The clear answer to the first part of your question is that we're not seeing any slowdown in the second half of fiscal 26.

Oliver Reichert: Thanks for your question, Matt. The clear answer to the first part of your question is that we're not seeing any slowdown in H2 of fiscal 2026. From everything we see that we can control, of course, demand remains strong and resilient despite the headwinds from the different conflicts, inflation, FX, and tariffs. Actually, as you know, we've to pay 10 percentage points higher tariffs compared to pre-Liberation day. As you know, we are a super resilient, purpose-driven brand. We can reach consumers with price points from $50 to up to $2,000, and we have a global addressable market of every human being. The stage is set, and we reach consumers with a broad range of products for almost all use occasions and across thousands of stores globally.

Speaker #1: From everything we see, that we can control of course, demand remains strong and resilient despite the headwinds from the different conflicts: inflation, FX, and tariffs.

Speaker #1: Actually, as you know, with. To pay 10 percentage points higher tariffs compared to day. As you know, we are super resilient purpose-driven brand. We can reach consumers with price points from 50 to up to 2,000 US dollars, and we have a global addressable market of every human being.

Speaker #1: So the stage is set. And we reach consumers with a broad range of products for almost all usage occasions and across thousands of doors globally.

Speaker #1: Keep in mind, we own most parts of our supply chain, which shields us and protects us other than most of our industry peers. From the disruption in the global supply chain and the risk related to shipment delays, I think this is very important especially in these days.

Oliver Reichert: Keep in mind, we own most parts of our supply chain, which shields us and protects us other than most of our industry under industry peers, from the disruption in the global supply chain and the risk related to shipment delays. I think this is very important, especially in these days. All this together supports our business and brand through tough times of disruption. To sum it up, we've always shown the ability to overcome challenges. Our track record supports this through all kinds of external headwinds. COVID, war, energy crisis. We are seeing no difference this time around. Still, as you know, we cannot be blind what's going on in the world around us. Yes, we are conservative in how we guide for the rest of the year.

Speaker #1: All this together supports our business and brand through tough times of disruption. To sum it up, we've always shown the ability to overcome challenges.

Speaker #1: Our track record supports this through all kinds of external headwinds. COVID, war, energy crisis, we are seeing no difference this time around. Still, as you know, we cannot be blind to what's going on in the world around us.

Speaker #1: So yes, we are conservative in how we guide for the rest of the year. Keep in mind, the third and the fourth quarters are our two largest quarters, and are very DTC-heavy.

Oliver Reichert: Keep in mind, the Q3 and Q4 are our 2 largest quarters and are very DTC heavy, especially in EMEA, which is most directly exposed to these external changes and challenges. It's important that we recognize this uncertainty in our outlook. That's how we think about the guidance for the H2 of the year. That said, we are confident in our guidance of 13% to 15%, a range we can deliver even if unexpected challenges arise. I hope this answers your questions. Thank you, Matt.

Speaker #1: Especially in EMEA. Which is most directly exposed to the external changes and challenges. It's important that we recognize this uncertainty in our outlook. That's how we think about the guidance for the second half of the year.

Speaker #1: But that said, we are confident in our guidance of 13 to 15 percent, a range we can deliver even if unexpected challenges arise. I hope this answers your questions.

Speaker #1: Thank you, Matt.

Speaker #3: Your next question comes from the line of Laurent Vasilescu with BNP Paribas. Laurent, your line is now open.

Operator 2: Your next question comes from the line of Laurent Vasilescu with BNP Paribas. Laurent, your line is now open.

Operator: Your next question comes from the line of Laurent Vasilescu with BNP Paribas. Laurent, your line is now open.

Speaker #5: Good morning. Thank you very much for taking my question. Oliver, Ivica, I wanted to follow up on EMEA. The growth was 11 percent for the quarter the prior quarter was up 17 percent.

Laurent Vasilescu: Good morning. Thank you very much for taking my question. Oliver, Ivica, I wanted to follow up on EMEA. Your growth was up 11% for the quarter. The prior quarter was up 17%. You mentioned the war has reduced EMEA growth by about 300 basis points. Can you quantify the ongoing risk of exposure in the Middle East region for the rest of the fiscal year? Should we be lowering our EMEA growth rate for Q3 and Q4? What are you seeing in terms of overall consumer sentiment in EMEA? Thank you very much.

Speaker #5: You mentioned the war has reduced EMEA growth by about 300 basis points. Can you quantify the ongoing risk of exposure in the Middle East region for the rest of the fiscal year?

Speaker #5: And should we be lowering our EMEA growth rate for three Q and four Q? And what are you seeing in terms of overall consumer sentiment in EMEA?

Speaker #5: Thank you very much.

Speaker #1: Hey, Laurent. This is Nico. Thank you for your question. I'm going to answer this. I'm being responsible for the EMEA region. So let me start by saying that we continue to deliver double-digit growth in EMEA.

Mehdi Nico Bouyakhf: Hey, Laurent, this is Nico. Thank you for your question. I'm gonna answer this, being responsible for the EMEA region. Let me start by saying that we continue to deliver double-digit growth in EMEA in a market that is overall flat to slightly negative. In this context, we believe 11% on a constant currency reflects the underlying brand strength and is a pretty robust result. As in previous quarters, we continue to be one of the very few chosen brands, as Oliver just mentioned, and we will continue and do continue to take share with a very strong full price realization. Now, with regards to the impact of the current situation in Middle East, Q2 was indeed a very busy quarter for us, specifically at the end of the quarter. We saw some external disruptions related to the Middle East situation.

Nico Bouyakhf: Hey, Laurent, this is Nico. Thank you for your question. I'm gonna answer this, being responsible for the EMEA region. Let me start by saying that we continue to deliver double-digit growth in EMEA in a market that is overall flat to slightly negative. In this context, we believe 11% on a constant currency reflects the underlying brand strength and is a pretty robust result. As in previous quarters, we continue to be one of the very few chosen brands, as Oliver just mentioned, and we will continue and do continue to take share with a very strong full price realization. Now, with regards to the impact of the current situation in Middle East, Q2 was indeed a very busy quarter for us, specifically at the end of the quarter. We saw some external disruptions related to the Middle East situation.

Speaker #1: In a market that is overall flat to slightly negative. So in this context, we believe 11 percent on a constant currency reflects the underlying brand strength and is a pretty robust result.

Speaker #1: As in previous quarters, we continue to be one of the very few chosen brands, as Oliver just mentioned, and we will continue and do continue to take share with the very strong full-price realization.

Speaker #1: Now, with regards to the impact of the current situation in the Middle East, Q2 was indeed a very busy quarter for us, specifically the end of the quarter.

Speaker #1: And we saw some external disruptions related to the Middle East situation. Most importantly, all our team members and partners in the region are safe.

Mehdi Nico Bouyakhf: Most importantly, all our team members and partners in the region are safe, our partner stores are open, and our online business is operating. The team has shown really strong resilience to continue our business under extreme conditions, yet we saw a revenue impact of EUR 6 million, equaling 300 basis points headwind to our growth. Two impacts. One direct impact, which is half of it, primarily in B2B, related to the Strait of Hormuz being blocked. We could effectively not ship product into the region. The other one is an indirect impact, mostly in Europe, in both our DTC channels, due to reduced tourism in some of our key cities and the more cautious sentiment among local consumers. Excluding those effects, growth would have been in line with our planned fiscal year guidance of 13% to 15%.

Nico Bouyakhf: Most importantly, all our team members and partners in the region are safe, our partner stores are open, and our online business is operating. The team has shown really strong resilience to continue our business under extreme conditions, yet we saw a revenue impact of EUR 6 million, equaling 300 basis points headwind to our growth. Two impacts. One direct impact, which is half of it, primarily in B2B, related to the Strait of Hormuz being blocked. We could effectively not ship product into the region. The other one is an indirect impact, mostly in Europe, in both our DTC channels, due to reduced tourism in some of our key cities and the more cautious sentiment among local consumers. Excluding those effects, growth would have been in line with our planned fiscal year guidance of 13% to 15%.

Speaker #1: Our partner stores are open. And our online business is operating. The team has shown really strong resilience to continue our business under extreme conditions, yet we saw a revenue impact of 6 million equaling 300 basis points headwind to our growth.

Speaker #1: To impact one direct impact, which is half of it, primarily in B2B related to the Strait of Hormuz being blocked, we could effectively not ship product into the region.

Speaker #1: And the other one is an indirect impact, mostly in Europe, in both our DTC channels due to reduced tourism in some of our key cities and the more cautious sentiment among local consumers.

Speaker #1: Excluding those effects, growth would have been in line with our planned fiscal year guidance of 13 to 15 percent. With regards to the outlook in EMEA for H2, we believe there will be an ongoing direct impact in our Middle East business, our Middle East team is exploring all measures to offset this risk.

Mehdi Nico Bouyakhf: With regards to the outlook in EMEA for H2, we believe there will be an ongoing direct impact on our Middle East business. Our Middle East team is exploring all measures to offset this risk. We now put a bigger focus on Saudi Arabia that has proven more resilient due to more local consumers, and we also have started to ship product on different routes into alternative ports to get product into the region. However, the majority of our Middle East business sits within the war-impacted region. That was the direct impact that we anticipate. The indirect risk is really difficult to predict at this point. If inflation continues to rise, we can anticipate further pressure on the consumer wallet, consumer sentiment.

Nico Bouyakhf: With regards to the outlook in EMEA for H2, we believe there will be an ongoing direct impact on our Middle East business. Our Middle East team is exploring all measures to offset this risk. We now put a bigger focus on Saudi Arabia that has proven more resilient due to more local consumers, and we also have started to ship product on different routes into alternative ports to get product into the region. However, the majority of our Middle East business sits within the war-impacted region. That was the direct impact that we anticipate. The indirect risk is really difficult to predict at this point. If inflation continues to rise, we can anticipate further pressure on the consumer wallet, consumer sentiment.

Speaker #1: We now put a bigger focus on Saudi Arabia that has proven more resilient due to more local consumers. And we also have started to ship product on different routes into alternative ports to get product into the region.

Speaker #1: However, the majority of our Middle East business sits within the war-impacted region. That was the direct impact that we anticipate in the indirect risk is really difficult to predict at this point.

Speaker #1: If inflation continues to rise, we can anticipate further pressure on the consumer wallet, consumer sentiment. As per today, we identified approximately 10 to 12 million of revenue risk in EMEA.

Mehdi Nico Bouyakhf: As per today, we identified approximately EUR 10 to 12 million of revenue risk in EMEA, which at this point, we believe we can offset with other regional segments. There's no change in our overall revenue guidance.

Nico Bouyakhf: As per today, we identified approximately EUR 10 to 12 million of revenue risk in EMEA, which at this point, we believe we can offset with other regional segments. There's no change in our overall revenue guidance.

Speaker #1: Which at this point, we believe we can offset with other regional segments. So there's no change in our overall revenue guidance.

Speaker #3: Your next question comes from the line of Ed Oban with Morgan Stanley. Ed, your line is now open.

Operator 2: Your next question comes through the line of Edouard Aubin with Morgan Stanley. Ed, your line is now open.

Operator: Your next question comes through the line of Edouard Aubin with Morgan Stanley. Ed, your line is now open.

Speaker #6: Yeah. Good afternoon, guys. Thank you for taking my question. So Oliver, you've addressed the impact of the Middle East on revenues. But what about the COGS side?

Edouard Aubin: Yeah, good afternoon, guys. Thank you for taking my question. Oliver, you've addressed the impact of the Middle East on revenues. What about the COGS side? What's the impact of energy and other inflation on your business?

Ed Aubin: Yeah, good afternoon, guys. Thank you for taking my question. Oliver, you've addressed the impact of the Middle East on revenues. What about the COGS side? What's the impact of energy and other inflation on your business?

Speaker #6: What's the impact of energy and other inflation on your business?

Speaker #1: Hi, Laurent. This is Ivica. Thanks for your question. Where we currently see higher inflation related to Middle East is energy, is freight rates, and is raw materials.

Ivica Krolo: Hi, Ed. This is Ivica. Thanks for your question. Where we currently see higher inflation related to Middle East is energy, is freight rates, and is raw materials, especially in everything that is petroleum-based materials such as EVA granulate and sole sheets, for example. In general, the exposure is mitigated by our strong inventory position, the impact naturally is and will be gradual. As you know, as a manufacturing company, we always address input cost inflation as we make our pricing decisions. No change to this approach, we see no impact on margin guidance for the overall fiscal 2026.

Speaker #1: Especially in everything that is petroleum-based materials, such as EVA granulate and salt treats, for example. In general, the exposure is mitigated by our strong inventory position.

Speaker #1: So the impact naturally is and will be gradual. And as you know, as a manufacturing company, we always address input cost inflation as we make our pricing decisions.

Speaker #1: So no change to this, no change to this approach. And we see no impact on margin guidance for the overall fiscal 26.

Speaker #3: Your next question comes from the line of Lorraine Hutchinson with Bank of America. Lorraine, your line is now open.

Operator 2: Your next question comes from the line of Lorraine Hutchinson with Bank of America. Lorraine, your line is now open.

Operator: Your next question comes from the line of Lorraine Hutchinson with Bank of America. Lorraine, your line is now open.

Speaker #7: Thank you. Good morning. You mentioned tariffs are now 10 percentage points higher versus pre-liberation day. Is this structure hold? What's the impact on gross margin guidance?

Lorraine Hutchinson: Thank you. Good morning. You mentioned tariffs are now 10 percentage points higher versus pre-Liberation Day. If this structure holds, what's the impact on gross margin guidance, and how quickly can you raise prices to offset the margin dollars associated with the new tariffs?

Speaker #7: And how quickly can you raise prices to offset the margin dollars associated with the new tariffs?

Speaker #1: Hey, Lorraine. It's Ivica speaking. Thanks for your question. So as a background, and as you rightly said, if you recall prior to April 25, we were paying average tariffs of just over 10 percent, depending on the product mix.

Ivica Krolo: Hey, Lorraine Hutchinson, it's Ivica Krolo speaking. Thanks for your question. As a background, and as you, as you rightly said, if you recall, prior to April 2025, we were paying average tariffs of just over 10%, depending on the product mix. In April 2025, our average tariff initially went up to 25%. With the European Union agreement in July of 2025, this settled to just over 15%. Now, after the U.S. Supreme Court ruling, we are at just over 20%, so this including the Section 122 temporary tariffs. If the current tariff structure were to hold, which is still very unclear at this point, we could see some additional increase in margin pressure in Q4.

Speaker #1: In April 25, our average tariff initially went up to 25 percent. Then with the European Union agreement in July of 25, this settled to just over 15 percent.

Speaker #1: Now, after the US Supreme Court ruling, we are at just over 20 percent. So this including the section 122 temporary tariffs. So if the current tariff structure were to hold, which is still very unclear at this point, we could see some additional increase in margin pressure in Q4.

Speaker #1: However, given our strong inventory position in the US, which is now tariffed at a range of rates, we don't believe it would push us out of our targeted margin range for the year.

Ivica Krolo: However, given our strong inventory position in the US, which is now tariffed at a range of rates, we don't believe it would push us out of our targeted margin range for the year. With regards to your second part of the question on pricing, we will follow the same approach we have always followed. Our pricing is very targeted, very granular on a season-by-season, style-by-style level, and it's designed in a way to protect our margin in the first instance, and to pass through higher input costs and inflation. We have lots of moving parts here, including the Section 122 tariffs, which are temporarily limited to the 24 July. Currently, we see trade negotiations between US and EU.

Speaker #1: And with regards to your second part of the question on pricing, we will follow the same approach we have always followed. So our pricing is very targeted.

Speaker #1: Very granular on a season-by-season style-by-style level. And it's designed in a way to protect our margin in the first instance. And to pass through higher input cost and inflation.

Speaker #1: And we have lots of moving parts here, including the section 122 tariffs, which are temporarily limited to the 24th of July. And currently, we see trade negotiations between US and EU.

Speaker #1: So we will not jump any conclusions here. And stick to the approach that we have followed in the past already.

Ivica Krolo: We will not jump any conclusions here and stick to the approach that we have followed in the past already.

Speaker #3: Your next question comes from the line of Michael Benetti with Evercore. Michael, your line is now open.

Operator 2: Your next question comes from the line of Michael Binetti with Evercore. Michael, your line is now open.

Operator: Your next question comes from the line of Michael Binetti with Evercore. Michael, your line is now open.

Speaker #8: Hey, guys. Thanks for taking all our questions. So two for me, just the adjusted EPS. At 50 cents, I see from the release today that came in a little below expectations, but there was a partly driven by 15 million euro non-cash negative revaluation of an embedded derivative in your senior notes.

Michael Binetti: Hey, guys. Thanks for taking all our questions. Two for me. Just the adjusted EPS at EUR 0.50. I see from the release today that, you know, came in a little below expectations, but there was a partly driven by a EUR 15 million non-cash negative revaluation of an embedded derivative in your senior notes. Maybe just a quick explanation of that derivative, why the revaluation occurred, and whether the volatility continues in the future. Also, I think I know you walked through some of the gross margin bridge for the quarter. Would you mind going through the details on that and how the gross margin components beyond tariffs and that backs roll through Q3 and Q4 for us?

Speaker #8: Maybe just a quick explanation of that occurred, and whether the volatility continues in the future. And then also, if you I think I know you walked through some of the gross margin bridge.

Speaker #8: For the quarter, would you mind going through the details on that and how the gross margin components beyond tariffs and NABAC's role through 3Q and 4Q for us?

Speaker #6: Hi, Michael. It's Ivica speaking. Thanks for your question. First, on the EPS, with regards to the senior notes, so we have the option for early repayment of the senior note.

[Company Representative] (Birkenstock Holding PLC): Hi, Michael. It's Ulrike speaking. Thanks for your question. First on the EPS with regards to the senior notes. We have the option for early repayments of the senior note. This is basically a redemption feature, and this is what created the embedded derivative. The valuation of the embedded derivative is largely impacted by the current price of the notes. In Q1, the notes price was unusually high above the call price. From a valuation and model perspective, this made early repayment more likely, resulting in a non-cash gain of EUR 10 million in Q1 of fiscal 2026. In Q2, we see an opposite picture as we approach the call date. The notes price dropped to slightly below the call price.

Ivica Krolo: Hi, Michael. It's Ulrike speaking. Thanks for your question. First on the EPS with regards to the senior notes. We have the option for early repayments of the senior note. This is basically a redemption feature, and this is what created the embedded derivative. The valuation of the embedded derivative is largely impacted by the current price of the notes. In Q1, the notes price was unusually high above the call price. From a valuation and model perspective, this made early repayment more likely, resulting in a non-cash gain of EUR 10 million in Q1 of fiscal 2026. In Q2, we see an opposite picture as we approach the call date. The notes price dropped to slightly below the call price.

Speaker #6: This is basically a redemption feature. And this is what created the embedded derivative. The valuation of the embedded derivative is largely impacted by the current price of the notes.

Speaker #6: In Q1, the notes price was unusually high, above the call price. From a valuation and model perspective, this made early repayment more likely, resulting in a non-cash gain of 10 million in the first quarter of fiscal 26.

Speaker #6: In Q2, we see an opposite picture as we approach the call date. The notes price dropped to slightly below the call price. Now it's no longer, again, technically obvious whether we will call the note or not.

Ivica Krolo: Now it's no longer, again, technically obvious, whether we will call the note or not, and that uncertainty makes the option more sensitive to volatility and resulted in a devaluation of the derivative, and this made the non-cash impact of EUR 0.08 expense in Q2. Excluding these non-cash impacts, recovering finance costs should be in the range of EUR 18 to 20 million in each Q3 and Q4 2026. On the second part of your question, on the adjusted gross margin, it was 54.6%, down 310 basis points. To bridge the change here, negative impacts were FX with 230 basis points, tariffs 90 basis points, channel 30 basis points. On the positive side, we saw absorption of 30 basis points, sales price over inflation of 10 basis points.

Speaker #6: And that answered uncertainty makes the option more sensitive to volatility and resulted in a devaluation of the derivative and this made the non-cash impact of 8 euro cents expense in Q2.

Speaker #6: Excluding these non-cash impacts, recurring finance cost should be in the range of 18 to 20 million in each Q3 and Q4 26. On the second part of your question, on the adjusted gross margin, it was 54.6 percent, down 310 basis points.

Speaker #6: To bridge the change here, negative impacts were FX with 230 basis points. Tariffs, 90 basis points. Channel 30 basis points. On the positive side, we saw absorption of 30 basis points.

Speaker #6: Sales price over inflation of 10 basis points. Excluding tariff and FX, this margin expansion of 10 basis points even with a channel shift. And looking ahead for Q3, FX should be in the range of 60 basis points and tariffs a 100 basis points, drag.

[Company Representative] (Birkenstock Holding PLC): Excluding tariff and FX, this margin expansion of 10 basis points even with a channel shift. Looking ahead for Q3, FX should be in the range of 60 basis points and tariffs a 100 basis points drag. For Q4, FX should be largely neutral and tariffs a drag of 50 basis points. Pretty much the same picture on EBITDA margin for this quarter, like for like, so excluding tariffs and FX, it was an improvement of 60 basis points year over year.

Ivica Krolo: Excluding tariff and FX, this margin expansion of 10 basis points even with a channel shift. Looking ahead for Q3, FX should be in the range of 60 basis points and tariffs a 100 basis points drag. For Q4, FX should be largely neutral and tariffs a drag of 50 basis points. Pretty much the same picture on EBITDA margin for this quarter, like for like, so excluding tariffs and FX, it was an improvement of 60 basis points year over year.

Speaker #6: For Q4, FX should be largely neutral and tariffs a drag of 50 basis points. And pretty much the same picture on EBDA margin for this quarter, like for like.

Speaker #6: So excluding tariffs and FX, it was an improvement of 60 basis points year over year.

Speaker #3: Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Simeon, your line is now open.

Operator 2: Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Simeon, your line is now open.

Operator: Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Simeon, your line is now open.

Speaker #1: Thanks. Hey, everyone. Ivica, inventory grew faster than revs. Can you speak to that trend, how you're thinking about the opportunity to improve working capital going forward?

Simeon Siegel: Thanks. Hey, everyone. Ulrike, inventory grew faster than revs. Can you speak to that trend, how you're thinking about the opportunity to improve working capital going forward? Sticking with the balance sheet, just DSOs also, I guess, grew year over year, even if I adjust for the higher B2B revenues. Could you elaborate a little bit more on what's driving that increase? I think you mentioned something about timing in the prepared remarks. Is this a new baseline, or do you expect this to move back down to historically lower levels? Thanks, guys.

Speaker #1: And then sticking with the balance sheet, just DSOs also, I guess, grew year over year, even if I adjust for the higher B2B revenues.

Speaker #1: So could you elaborate a little bit more on what's driving that increase? I think you mentioned something about timing and the prepared remarks. And is this a new baseline or do you expect this to move back down to historically lower levels?

Speaker #1: Thanks, guys.

Speaker #6: Hey, Simeon. Thanks for your question. So as we mentioned on the call, the increase in the inventory to sales ratio was largely due to FX impacts.

[Company Representative] (Birkenstock Holding PLC): Hey, Simeon. Thanks for your question. As we mentioned on the call, the increase in the inventory to sales ratio was largely due to FX impacts. Inventory in euros and sales, a mix of USD, euros, and other currency. On a constant currency basis, it was up only slightly from 36% to 37%. The main driver of this was raw materials and semi-finished goods, which grew 19% year-over-year, which is EUR 26 million. This was intentional. We have told you that we have greatly expanded our pre-production of uppers in our plant in Arouca, in Portugal, to be more flexible, to be faster in final assembly, and this addresses one of our production bottlenecks. This is the main driver of the increase.

Ivica Krolo: Hey, Simeon. Thanks for your question. As we mentioned on the call, the increase in the inventory to sales ratio was largely due to FX impacts. Inventory in euros and sales, a mix of USD, euros, and other currency. On a constant currency basis, it was up only slightly from 36% to 37%. The main driver of this was raw materials and semi-finished goods, which grew 19% year-over-year, which is EUR 26 million. This was intentional. We have told you that we have greatly expanded our pre-production of uppers in our plant in Arouca, in Portugal, to be more flexible, to be faster in final assembly, and this addresses one of our production bottlenecks. This is the main driver of the increase.

Speaker #6: So inventory in euros and sales a mix of USD, euros, and other currency. On a constant currency basis, it was up only slightly from 36 to 37 percent.

Speaker #6: The main driver of this was raw materials and semi-finished goods, which grew 19 percent year over year, which is 26 million. And this was intentional.

Speaker #6: We have told you that we have greatly expanded our pre-production of uppers, in our plant in Aruca in Portugal, to be more flexible, to be faster, in final assembly.

Speaker #6: And this addresses one of our production bottlenecks. And this is the main driver of the increase. Also, keep in mind, our tariffs increased. And which means we are capitalizing more tariff expense into inventory.

[Company Representative] (Birkenstock Holding PLC): Also, keep in mind, our tariffs increased, and which means we are capitalizing more tariff expense into inventory. When you adjust for all of these factors, our inventory level actually improved modestly year over year. Be reminded, the largest part of finished goods are carryover products and/or allocated already to existing customer orders. 85% of all our units carry over, and this allows us for pre-production and production balancing. To that regard, our B2B business allows us to manage that and organize that very efficiently. Coming back to the second part of your questions on DSO, we saw slightly higher B2B share, which had some impact as well as timing of deliveries in the quarters. That said, our receivables are very healthy. We have very long-standing relationship with our partners. Our credit losses are very minimal.

Ivica Krolo: Also, keep in mind, our tariffs increased, and which means we are capitalizing more tariff expense into inventory. When you adjust for all of these factors, our inventory level actually improved modestly year over year. Be reminded, the largest part of finished goods are carryover products and/or allocated already to existing customer orders. 85% of all our units carry over, and this allows us for pre-production and production balancing. To that regard, our B2B business allows us to manage that and organize that very efficiently. Coming back to the second part of your questions on DSO, we saw slightly higher B2B share, which had some impact as well as timing of deliveries in the quarters. That said, our receivables are very healthy. We have very long-standing relationship with our partners. Our credit losses are very minimal.

Speaker #6: When you adjust for all of these factors, our inventory level actually improved modestly year over year. And be reminded the largest part of finished goods are carryover products and/or allocated already to existing customer orders.

Speaker #6: So 85 percent of all our units carry over. And this allows us for pre-production and production balancing. And to that regard, our B2B business allows us to manage that and organize that very efficiently.

Speaker #6: Coming back to the second part of your questions on DSO, we saw slightly higher B2B share. Which had some impact, as well as timing of deliveries in the quarters.

Speaker #6: That said, our receivables are very healthy. We have very long-standing relationship with our partners. Our credit losses are very minimal. And in fact, we released more credit loss reserved than we added this quarter.

[Company Representative] (Birkenstock Holding PLC): In fact, we released more credit loss reserved than we added this quarter. We remain very diligent and rigorous when it comes to credit management, so no changes here.

Ivica Krolo: In fact, we released more credit loss reserved than we added this quarter. We remain very diligent and rigorous when it comes to credit management, so no changes here.

Speaker #6: So we remain very diligent and rigorous when it comes to credit management. So no changes here.

Speaker #3: Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Dana, your line is now open.

Operator 2: Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Dana, your line is now open.

Operator: Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Dana, your line is now open.

Speaker #7: Thank you. Good morning, everyone. With the additional stores in the investments in digital that you're talking, should we expect to see an acceleration in DTC in the second half of the year?

Dana Telsey: Thank you. Good morning, everyone. With the additional stores and the investments in digital that you're talking, should we expect to see an acceleration in DTC in the H2 of the year? What measures are you taking to accelerate digital growth? You mentioned an acceleration of new store openings this year. What is that number tallying, and how does it differ by region? Thank you.

Speaker #7: What measures are you taking to accelerate digital growth? And you mentioned an acceleration of new store openings this year. What does that number tallying and how does it differ by region?

Speaker #7: Thank you.

Speaker #1: Hey, Dana. This is Nico again. Allow me to start with our own physical retail. This channel will continue to be our fastest growing channel.

Mehdi Nico Bouyakhf: Hey, Dana, this is Nico again. Allow me to start with our own physical retail. This channel will continue to be our fastest-growing channel and will enable us to capture in-person demand more strongly in the future. At the end of Q2, we mentioned this in the prepared remarks, we operate 111 stores and expect to reach around 140 stores by end of the year. The new stores that we open continue to outperform our longer-standing fleet. Through higher ASP and more units per transaction, we deliver higher transaction value. At the same time, these new stores continue to deliver against our overall return on CapEx target, which is 12 to 18 months. Having said this, we delivered double-digit growth in same-store sales, so the one doesn't go at the expense of the other.

Nico Bouyakhf: Hey, Dana, this is Nico again. Allow me to start with our own physical retail. This channel will continue to be our fastest-growing channel and will enable us to capture in-person demand more strongly in the future. At the end of Q2, we mentioned this in the prepared remarks, we operate 111 stores and expect to reach around 140 stores by end of the year. The new stores that we open continue to outperform our longer-standing fleet. Through higher ASP and more units per transaction, we deliver higher transaction value. At the same time, these new stores continue to deliver against our overall return on CapEx target, which is 12 to 18 months. Having said this, we delivered double-digit growth in same-store sales, so the one doesn't go at the expense of the other.

Speaker #1: And we'll enable us to capture in-person demand more strongly in the future. At the end of Q2, we mentioned this in the prepared remarks, we operate 111 stores.

Speaker #1: And expect to reach around 140 stores by end of the year. The new stores that we open continue to outperform our longer-standing fleet. Through higher ASP, more units per transaction, we deliver higher transaction value.

Speaker #1: And at the same time, these new stores continue to deliver against our overall return on CAPEX target, which is 12 to 18 months. Having said this, we deliver double-digit growth in same-store sales.

Speaker #1: So the one doesn't go at the expense of the other. With regards to online, we are now increasing investments in mid and upper funnel, specifically in social media.

Mehdi Nico Bouyakhf: With regards to online, we are now increasing investments in mid and upper funnel, specifically in social media, and particularly in the Americas region. In the US, we see a very strong ROAS with strong ability to capture demand there, while at the same time, we continue to drive retention with our membership base of almost 13 million members globally. In parallel, and you might remember that, the two more mature regions, Americas and EMEA, are currently executing against the online transformation agenda we outlined at our Capital Markets Day. 4 key areas, I repeat them from Capital Markets Day, it's distinctive offering, elevated storytelling, personalization, and new business models. APAC, as a younger online business, will continue to benefit from very strong organic growth in this channel.

Nico Bouyakhf: With regards to online, we are now increasing investments in mid and upper funnel, specifically in social media, and particularly in the Americas region. In the US, we see a very strong ROAS with strong ability to capture demand there, while at the same time, we continue to drive retention with our membership base of almost 13 million members globally. In parallel, and you might remember that, the two more mature regions, Americas and EMEA, are currently executing against the online transformation agenda we outlined at our Capital Markets Day. 4 key areas, I repeat them from Capital Markets Day, it's distinctive offering, elevated storytelling, personalization, and new business models. APAC, as a younger online business, will continue to benefit from very strong organic growth in this channel.

Speaker #1: And particularly in the Americas region in the US, we see a very strong ROAS with strong ability to capture demand there. While at the same time, we continue to drive retention with our membership base of almost 13 million members globally.

Speaker #1: In parallel, and you might remember that, the two more mature regions, Americas and EMEA, are currently executing against the online transformation agenda. We outlined at our capital markets day.

Speaker #1: Four key areas. I repeat them from capital markets day. It's distinctive offering, elevated storytelling, personalization, and new business models. APAC, as a younger online business, will continue to benefit from very strong organic growth in this channel.

Speaker #3: Your next question comes from the line of Mark Altschwager with Baird. Mark, your line is now open.

Operator 2: Your next question comes from the line of Mark Altschwager with Baird. Mark, your line is now open.

Operator: Your next question comes from the line of Mark Altschwager with Baird. Mark, your line is now open.

Speaker #1: Taking the question. Ivica, just following up on tariffs, where do you stand with the AIPA claim process? How are you thinking about the timing of the refund and the confidential you'll receive it?

Mark Altschwager: Taking the question. Ivica, just following up on tariffs, where do you stand with the IEEPA claim process? How are you thinking about the timing of the refund and the confidence you'll receive it? How do you plan to deploy those funds? Separately, I wanted to ask on the buybacks, $200 million authorization. You haven't done any year-to-date. I don't think the guidance incorporates any. Just given the stock price, maybe speak to your appetite for buybacks from here. Thank you.

Speaker #1: And how do you plan to deploy those funds? And then separately, I wanted to ask on the buybacks. 200 million authorization. You haven't done any year to date.

Speaker #1: I don't think the guidance incorporates any. Just given the stock price, maybe speak to your appetite for buybacks from here. Thank you.

Speaker #6: Thank you for your question, Mark. It's Ivica again. So you're right. Under the current US customs process, AIPA refunds are handled through a system which is called CAPE.

Ivica Krolo: Thank you for your question, Mark. It's Ivica again. You're right. Under the current US customs process, IEEPA refunds are handled through a system which is called CAPE, which is run by the U.S. Customs and Border Protection. The system went live on 20 April. However, we are not yet able to file for refunds because our custom entries are submitted as reconciliation cases, which will be handled at a later stage of the process. As such, we're waiting for the next administrative steps and are or will take action accordingly as it evolves over the next couple of weeks and months. To the second part of your question with regards to the buyback. Yes, we do have $200 million available for buybacks.

Speaker #6: Which is run by the US Customs and Border Protection. This system, when live on April 20th, however, we are not yet able to file for refunds because our custom entries are submitted as reconciliation cases.

Speaker #6: Which will be handled at a later stage of the process. As such, we're waiting for the next administrative steps and will take action accordingly as it evolves over the next couple of weeks and months.

Speaker #6: To the second part of your question with regards to the buyback. Yes, we do have 200 million dollars available for buybacks. It was originally the intention to use the buyback in conjunction with a sale by our majority shareholder, as we did last year.

Ivica Krolo: It was originally the intention to use the buyback in conjunction with a sale by our majority shareholder, as we did last year. Clearly, we have not had that opportunity this year. As we get now into our seasonal, so seasonally strong cash generation period, we consider definitely all options available to us, including open market repurchases.

Speaker #6: Clearly, we have not had that opportunity this year. As we get now into our seasonal or seasonally strong cash generation period, we consider definitely all option available to us, including open market repurchases.

Speaker #3: Your next question comes from the line of Janine Sticker with BTIG. Janine, your line is now open.

Operator 2: Your next question comes from the line of Janine Stichter with BTIG. Janine, your line is now open.

Operator: Your next question comes from the line of Janine Stichter with BTIG. Janine, your line is now open.

Speaker #1: Hey, morning. You've got Ethan on for Janine. Thanks for taking our questions. We've noticed a higher SKU count offered at discount on your website.

[Analyst] (BTIG): Hey, morning. You've got Ethan on for Janine. Thanks for taking our questions. We've noticed a higher SKU count offered at a discount on your website. Could you just give us some insight into what's driving this? How much of closed-toe penetration is the Boston right now, and what is growth in the Boston versus non-Boston silhouettes? Thank you.

Speaker #1: Could you just give us some insight into what's driving this? And then just how much of closed-toe penetration is the Boston right now? And what is growth in the Boston versus non-Boston silhouettes?

Speaker #1: Thank you.

Speaker #6: Hey, this is Nico. Thank you for your two questions. I'm going to answer both of them. With regards to your first one, at an overall industry level, we do see higher markdown activities as retailers are currently competing for more constrained consumer wallet.

Mehdi Nico Bouyakhf: Hi, this Nico. Thank you for your 2 questions. I'm gonna answer both of them. With regards to your first one, at an overall industry level, we do see higher markdown activities as retailers are currently competing for more constrained consumer wallet. In this context, we continue to deliver a superior full price realization at over 90%. This underlines the strength of our brand, but also this underlines our markdown discipline. Any active markdown we do is to effectively manage our real seasonal excess stock as the business continues to grow. As a reminder, and Ivica alluded to that, 80% of our business is core essentials and carry-over product, so season-less product. Our markdown assortment is centered around past seasons. Yes, there will be moments you may see some increase in discount items.

Nico Bouyakhf: Hi, this Nico. Thank you for your 2 questions. I'm gonna answer both of them. With regards to your first one, at an overall industry level, we do see higher markdown activities as retailers are currently competing for more constrained consumer wallet. In this context, we continue to deliver a superior full price realization at over 90%. This underlines the strength of our brand, but also this underlines our markdown discipline. Any active markdown we do is to effectively manage our real seasonal excess stock as the business continues to grow. As a reminder, and Ivica alluded to that, 80% of our business is core essentials and carry-over product, so season-less product. Our markdown assortment is centered around past seasons. Yes, there will be moments you may see some increase in discount items.

Speaker #6: In this context, we continue to deliver a superior full price realization at over 90%. This underlines the strength of our brand, but also this underlines our markdown discipline.

Speaker #6: Any active markdown we do is to affectively manage our real seasonal access stock as the business continues to grow. As a reminder, and Ivica alluded to that, 80% of our business is core essentials and carryover products.

Speaker #6: So seasonless product. And our markdown assortment is centered around past seasons. So yes, there will be moments. You may see some increase in discount items.

Speaker #6: This is by design and doesn't really break our full price realization, which will continue to be very strong. Now, the second question was around closed-toe and Boston.

Mehdi Nico Bouyakhf: This is by design and doesn't really break our full price realization, which will continue to be very strong. The second question was around closed toe and Boston. We haven't given the closed toe share of Boston. We'll also not give it in the future. What we can say is that the Boston silhouette and its variations remain a major part of our closed toe business. At the same time, non-Boston silhouettes grew at a much higher pace than Boston. Again, it's not one at the expense of the other. We are really diversifying our portfolio. Currently, 11 out of 20 top styles are closed toe. 7 are clogs, like the Boston, the Naples, Tokio, Buckley, and 4 are traditional shoes like the London, the Highwood, the Utti, and the Bend.

Nico Bouyakhf: This is by design and doesn't really break our full price realization, which will continue to be very strong. The second question was around closed toe and Boston. We haven't given the closed toe share of Boston. We'll also not give it in the future. What we can say is that the Boston silhouette and its variations remain a major part of our closed toe business. At the same time, non-Boston silhouettes grew at a much higher pace than Boston. Again, it's not one at the expense of the other. We are really diversifying our portfolio. Currently, 11 out of 20 top styles are closed toe. 7 are clogs, like the Boston, the Naples, Tokio, Buckley, and 4 are traditional shoes like the London, the Highwood, the Utti, and the Bend.

Speaker #6: We haven't given the closed-toe share of Boston and we're also not giving it in the future. But what we can say is that the Boston silhouette and its variations remain a major part of our closed-toe business.

Speaker #6: At the same time, non-Boston silhouettes grew at a much higher pace than Boston. So again, it's not one at the expense of the other.

Speaker #6: We are really diversifying our portfolio. Currently, 11 out of 20 top styles are closed-toe. 7 are clogs. Like the Boston, the Naples, Tokyo, Buckley.

Speaker #6: And 4 are traditional shoes. Like the London, the Highwood, the Ooty, and the Bend. It's worth mentioning that also recent archive bringbacks like our Santa Clarita, our ballerina style, are quickly gaining share.

Mehdi Nico Bouyakhf: It's worth mentioning that also recent archive bring backs, like our Santa Clarita, our ballerina style, are quickly gaining share. You see that we are much more diversifying our closed toe business and have become a very strong full year brand.

Nico Bouyakhf: It's worth mentioning that also recent archive bring backs, like our Santa Clarita, our ballerina style, are quickly gaining share. You see that we are much more diversifying our closed toe business and have become a very strong full year brand.

Speaker #6: So you see that we are much more diversifying our closed-toe business and have become a very strong full-year brand.

Speaker #3: Our next question comes from the line of Azlean Duvalgier with Goldman Sachs.

Operator 2: Our next question comes from the line of Adrienne Yih with Goldman Sachs.

Operator: Our next question comes from the line of Adrienne Yih with Goldman Sachs.

Speaker #1: Hey, thank you very much for taking my question. I think we've spoken at length about the EMEA. We've spoken a bit about the DTC channel.

Adrienne Yih: Hey, thank you very much for taking my question. I think we've spoken at length about the EMEA. We've spoken a bit about the DTC channel. I was wondering if you could help me understand better the consumer environment across other regions. More specifically, could you comment on the US and on APAC, maybe help us understand the path to doubling revenue in that APAC region. Thank you very much.

Adrien Duverger: Hey, thank you very much for taking my question. I think we've spoken at length about the EMEA. We've spoken a bit about the DTC channel. I was wondering if you could help me understand better the consumer environment across other regions. More specifically, could you comment on the US and on APAC, maybe help us understand the path to doubling revenue in that APAC region. Thank you very much.

Speaker #1: I was wondering if you could help me understand better the consumer environment across other regions. More specifically, could you comment on the US and on APAC?

Speaker #1: Maybe help us understand the path to doubling revenue in that APAC region. Thank you very much.

Speaker #6: Thank you for your question, Adrien. It's Oliver again. The APAC grew at twice the pace of the other segments. That's in line with our expectations.

Oliver Reichert: Thank you for your question, Adrien. It's Oliver again. The APAC grew at twice the pace of the other segments. That's in line with our expectations, and with DTC, especially retail leading the growth, which is super important in this region. It's a very high qualitatively growth. This has continued despite all the conflict in the Middle East. The demand remains very strong, and the ASP was up double digits as consumers there continue to gravitate to higher price points. That's pretty unique in the APAC region, and it's including a lot of our 1774 collection. If you go to a store in China, or even India, you see a lot of very high-priced products, making the somehow the baseline there. In the Americas, our business remains super strong. We see no slowdown in our growth.

Speaker #6: And with DTC especially, retail leading the growth, which is super important in this region. It's a very high-qualitatively growth. This has continued despite all the conflicts in the Middle East.

Speaker #6: The demand remains very strong and the ASP was up double digits as consumers continue to gravitate to higher price points. That's pretty unique in the APAC region.

Speaker #6: And it's including a lot of our 70-74 collections. So if you go to a store in China, or even India, you see a lot of very high price products making the somehow the baseline there.

Speaker #6: In the Americas, our business remains super strong. We see no slowdown in our growth. We see continued strong full price sell-through at key partners.

Oliver Reichert: We see continued strong full price sell-through at key partners with many up around 30%. In DTC, our stores continue to perform very well, especially our newer stores like Sawgrass. Keep in mind, the beauty of Birkenstock is that even if you start to see consumers tightening up their spendings, we are an affordable luxury brand. We serve a broad range of price points, starting as low as $50, if needed. The beauty of our business model is that we can lean into stronger markets, stronger channels, and stronger product categories when we see softness elsewhere. Between us, Adrien, this is engineered distribution in real time.

Speaker #6: With many up around 30%. So in DTC, our stores continue to perform very well. Especially our newest stores like Sawgrass. Keep in mind the beauty of Birkenstock is that even if you start to see consumers tightening up their spendings, we are in an affordable luxury brand.

Speaker #6: We serve a broad range of price points, starting as low as 50 US dollar if needed. So the beauty of our business model is that we can lean into stronger markets, stronger channels, and stronger product categories when we see softness elsewhere.

Speaker #6: Between us, Adrien, this is engineered distribution in real-time.

Speaker #3: We are at time. There are no further questions at this time. I will now turn the call back to Birkenstock's executive team for closing remarks.

Operator 2: We are at time. There are no further questions at this time. I will now turn the call back to Birkenstock's executive team for closing remarks.

Operator: We are at time. There are no further questions at this time. I will now turn the call back to Birkenstock's executive team for closing remarks.

Speaker #2: Thanks for joining us, guys. If we didn't get to your questions, I apologize. We will follow up with you in our follow-up calls. Take care, everyone.

Megan Kulick: Thanks for joining us, guys. If we didn't get to your questions, I apologize. We will follow up with you in our follow-up calls. Take care, everyone.

Speaker #1: Thank you.

Oliver Reichert: Thank you.

Operator 2: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.