APAC And China Trends Will Unlock Future Potential

Key Takeaways

• Expansion into new product categories and premium segments is driving diversification, reducing reliance on core offerings, and enhancing margins.
  
• Investments in production, retail footprint, and omni-channel strategies are positioning the brand for sustained growth and greater market penetration.
  
• Dependence on wholesale channels, narrow product focus, supply constraints, and external economic pressures could limit margin expansion and make revenue vulnerable to shifts in demand or costs.

Catalysts

Engages in the manufacture and sale of footwear products.

• The rapid growth and strong sell-throughs in key global markets, especially among new and younger demographics and a rising middle class in regions like APAC and China, suggest significant untapped demand for Birkenstock's core and expansionary products, foreshadowing continued revenue growth as these secular trends manifest.
  
• Persistent consumer momentum toward health and wellness, evidenced by high engagement with Birkenstock's ergonomic and orthopedic footwear offerings, underpins a foundation for sustainable volume growth and resilience in average selling prices, supporting both topline and margin expansion.
  
• Ongoing production capacity investments (new facilities, automation, and expanded logistics) directly address current supply constraints, setting the stage for higher volume throughput and enabling the company to fully meet robust demand, which is likely to result in additional revenue and earnings gains.
  
• Expanding closed-toe and new footwear categories-along with premiumization trends (higher ASPs, product mix shift to leather and new silhouettes)-demonstrate the brand's ability to diversify beyond its core sandals and capture greater wallet share and customer lifetime value, supporting margin enhancement and reducing reliance on a single product.
  
• Accelerated physical retail expansion (store openings in underpenetrated regions and own-store focus for higher ASPs and multi-unit transactions) complements strong B2B growth and provides additional high-margin DTC opportunities, with potential to boost net margin and earnings over time as omni-channel strategies evolve.

Birkenstock Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Birkenstock Holding's revenue will grow by 14.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 15.1% today to 18.1% in 3 years time.
• Analysts expect earnings to reach €555.6 million (and earnings per share of €3.05) by about August 2028, up from €306.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.6x on those 2028 earnings, down from 25.8x today. This future PE is greater than the current PE for the US Luxury industry at 19.9x.
• Analysts expect the number of shares outstanding to decline by 2.09% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.42%, as per the Simply Wall St company report.

Birkenstock Holding Future Earnings Per Share Growth

Risks

• Birkenstock's long-term reliance on the B2B/wholesale channel over direct-to-consumer, coupled with slower DTC growth and a limited own retail footprint, exposes the company to changing channel dynamics and increased wholesale partner bargaining power, which may limit future margin expansion and compress net margins and earnings.
  
• The company emphasizes strong growth in its classic silhouettes (e.g., Arizona, Boston), and although it is expanding into closed-toe products, there remains a risk of over-reliance on a narrow product range and iconic styles, which could leave future revenue vulnerable if consumer preferences shift or fashion trends change.
  
• Persistent pressure from tariffs and ongoing FX headwinds have already resulted in a material drag on reported revenue and margins; further geopolitical or currency volatility, or additional regulatory/tariff impositions, could increase costs and negatively impact gross margin, operating margins, and reported earnings.
  
• Production capacity constraints have repeatedly limited Birkenstock's ability to fully meet demand, especially in key regions like EMEA and APAC; if manufacturing and supply chain expansion efforts fall short or face delays, revenue growth will be capped and efficiency investments could pressure margins.
  
• While Birkenstock's brand remains strong and demand indicators are positive, the company acknowledges the potential volatility in global discretionary consumer spending, which, if it shifts away from physical goods or toward competing brands (especially in younger or fashion-driven consumer segments), may lead to slower top-line growth or increased promotional activity, thereby impacting both revenue and net margins.

Valuation

• The analysts have a consensus price target of $70.675 for Birkenstock Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $80.94, and the most bearish reporting a price target of just $57.25.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €3.1 billion, earnings will come to €555.6 million, and it would be trading on a PE ratio of 24.6x, assuming you use a discount rate of 9.4%.
  
• Given the current share price of $50.13, the analyst price target of $70.68 is 29.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.