Despite Donald Trump's tariffs, Birkenstock remains unscathed, profiting from increased sales instead
In the world of footwear, Birkenstock is making strides, thanks to a robust tariff strategy and strong consumer demand. The German footwear giant reported better-than-expected profits for the third quarter, with profits climbing 16pc to £100million and revenues increasing 12 per cent to £546million.
The company's third-quarter results, as stated by its CEO Oliver Reichert, prove the strong foundation of the brand. Strong demand for Birkenstock's sandals and shoes, including suede leather Boston clogs that sell for £150 a pair online in the UK, contributed to the company's growth.
Birkenstock's tariff strategy, which includes targeted price increases and leveraging vertical integration to mitigate tariff impacts, has allowed the company to maintain strong revenue and profitability growth despite heightened tariffs. This strategy has resulted in a 16% revenue growth and improved gross and operating margins, with minimal negative impact from the EU and U.S. tariff increases.
The growth was driven partly by shifting consumer preferences toward closed-toe/leather products that boosted average selling prices and by expansion into emerging youth markets, which helped sustain profitability in tariff-influenced markets.
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In a surprising turn of events, Birkenstock saw 'no pushback or cancellations' after raising prices in response to Donald Trump's tariffs. The company managed to offset the 15% EU tariff increase through targeted price hikes and cost management, minimizing gross margin impact to a minor degree while maintaining a 60.5% gross margin in Q3 2025.
Similarly, in the U.S., despite 15% import tariffs, Birkenstock increased sales by 12% (16% currency-adjusted) and grew operating profit by 17%, with an adjusted EBITDA margin improving to 34.4%. CEO Oliver Reichert confirmed no consumer backlash to price hikes and reiterated the ability to manage tariff effects through pricing, cost discipline, and inventory management.
The company’s vertical integration in Europe reduces exposure to tariffs affecting Asian-made competitors, enhancing tariff resilience. Birkenstock’s premium “ugly luxury” brand positioning and controlled distribution support pricing power, allowing low single-digit global price increases without losing demand, contrasting tariff-affected mass-market rivals who face margin pressure.
Despite early trading falls, Birkenstock's shares are not expected to be significantly impacted by the tariffs or the weaker dollar. The company expects to manage the tariffs through price increases as well as by tightening control on costs and stocks.
Upmarket footwear rivals such as On Holding and Deckers Outdoor, which owns Hoka and Ugg, have also recently seen strong full-price sales, indicating a positive trend in the luxury footwear market.
In conclusion, Birkenstock's tariff strategy has proved effective in protecting its profit margins and supporting robust growth amid a challenging global tariff environment, distinguishing it from competitors who have suffered greater cost and margin pressures due to tariffs.
The growth of Birkenstock, a leading footwear brand in the industry, is not limited to the world of footwear alone. In the realm of finance and business, the company's stock seems resilient, withstanding the challenges posed by tariffs and the weaker dollar, making it a potential investment opportunity for those interested in finance and investing.
Birkenstock's success story in maintaining profitability in the face of tariffs serves as an inspiring case study for other businesses, illustrating the power of a strategic tariff strategy and effective cost management in the realm of finance and industry.
