Birkenstock is building up its U.S. business with premium quality products, including its Boston sandal, as well as new sales channels, like stores catered to runners. At the same time, the brand is leaning into market scarcity, which has worked to boost its desirability and margins.
Birkenstock reported its first post-IPO earnings on Thursday, revealing that its revenue for fiscal 2023 increased 20%. The German footwear brand went public on October 11 with shares priced at $36. As of Friday afternoon, its shares were at $46. To ensure product scarcity, Birkenstock has adopted a disciplined approach to distribution through retail partners, which led to wholesale growth of 16% for the year. Direct-to-consumer revenue, meanwhile, increased 29%.
The company’s growth was driven by a 6% increase in number of units sold and a 14% increase in their average selling price. The latter was partly owed to consumers buying into the brand’s more premium products, like the $160 Boston clogs. The Boston clogs, which went viral on TikTok in the fall of 2022, are still going strong.
During the earnings call, Birkenstock president David Kahan said the brand had gained significant penetration in its closed-toe shoe silhouettes. “Closed-toe performance is approximately three times higher in our own channels compared to B2B, which shines the light on the growth potential not only in DTC, but also in B2B,” he said.
The Boston model has been particularly popular among younger consumers. Currently, the hashtag “Birkenstock Boston Clogs” has 371 million views on TikTok. The shoes have been worn by Kendall Jenner, Kaia Gerber and Kristen Stewart, among other popular celebrities. They’re more expensive than Birkenstock’s other styles like the Arizona sandals, which sell for $110.
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Birkenstock has continued to garner appeal among U.S. fashion customers. The cult Arizona was featured in the 2023 “Barbie” film that has grossed $1.45 billion worldwide from ticket sales, keeping the brand top of mind for customers. The sandal placed No. 5 on the Lyst Index’s Hottest Products for the third quarter of 2023.
According to the earnings, the Americas region was the top sales driver for the brand, with a 21% year-over-year increase in revenue on a reported basis and a 20% increase when adjusted for currency. As a result of this success in the states, Kahan said that the brand is exploring ways to further expand in the market. One way is by newly promoting the recovery benefits of its styles’ orthopedic footbeds within stores catered to runners.
“This is a new initiative and brings the benefits of our footbed directly where the most discerning consumers purchase their performance sports products, and whereby this consumer can benefit from Birkenstock as a recovery item as part of their athletic lifestyle,” said Kahan. “This helps us ensure the benefit of our footbed [reaches] a growing revenue base to complement purchases made by some who may buy for fashion-led reasons.”
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Birkenstock owes its products’ consistent performance in the U.S., even amid the brand’s annual pricing increases, to the intentional local customer. “The U.S. consumer is somewhat fragile, but resilient. … What we’re seeing is this incredible shift right now in shopping patterns, from general shopping to real intentional purchasing, where people are searching out those products, brands and experiences they really want,” said Kahan. “And obviously, Birkenstock is one of those few that’s benefiting.”
