Birkenstock Holding Plc "Conviction in LT Growth Outlook Unchanged;..."

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Birkenstock Holding Plc "Conviction in LT Growth Outlook Unchanged;..."

Birkenstock Holding Plc UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: How big is BIRK's total addressable market?

We think BIRK's addressable market includes casual footwear, such as clogs and sandals, as well as

outdoor. We estimate these categories amount to a $56B opportunity as of CY22 and should rise at a

3% to 4% CAGR through CY28E.

Q: How much could BIRK's top-line grow?

We believe BIRK's sales should grow at a ~13% 5-yr. CAGR. We expect BIRK to drive this growth via

international expansion, particularly given white space opportunities in Asia Pacific, while it also

increases penetration in more mature markets in the Americas and Europe. From a channel

standpoint, we model faster DTC growth given retail store rollout and launch of eCommerce

websites in new regions, while also expanding wholesale distribution in a disciplined manner. The

company targets mid-to-high teens LT growth.

Q: What should BIRK's operating margins be?

We anticipate BIRK's operating margin should reach ~27% by FY30E, ~30 bps higher than FY25

levels. We model operating margin contraction in FY26E due to FX and incremental tariff impacts.

While longer term we think a mix shift to higher B2B sales will put pressure on EBIT margins. However

we think continued factory optimization and incremental price increases will continue to support

strong operating margins. Plus, we forecast BIRK's adjusted EBITDA margin expanding to ~32% by

FY30E. This compares to the company's LT guide of 30%+ adjusted EBITDA margin.

UBS VIEW We rate BIRK Buy. We think BIRK's sales and EPS outlook warrants a higher valuation. We believe