In the U.S., Birkenstock is targeting running specialty stores by offering its signature sandals with an orthopaedic footbed as recovery footwear for athletes after their workout. The move is part of the German brand’s diversification strategy in a key market.
“In Q4, we took advantage of the macroeconomic situation to execute what we term land grabs in white spaces, particularly shoes, based on our heightened leverage in sandals and clogs, maintaining strong sell-through and healthy inventory at retail. In addition, we made significant inroads in expanding our distribution so that the benefits of our footbed make it front and center in running specialty shops,” said David Kahan, president for the Americas, during a conference call on the group’s results for the full year that ended Sept. 30.
“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. The mantra we use is run, Birkenstock, repeat. And this helps us ensure the benefit of our footbed leads a growing revenue base to complement purchases made by some who may buy for fashion-led reasons,” he added.
“Please note that, by and large, we do not expand distribution other than in some specific doors, where we believe an end user may be underserved. Here, run specialty, sports recovery is a good example,” he pointed out.
For the full year, Birkenstock’s top line totaled €1,492 million, up by 20 percent on a reported and constant currency basis. Revenues were underpinned by volume growth of 6 percent and an increase in the average selling price (ASP) of 14 percent.
The Americas were the brand’s main market with sales of €804.7 million in the full year, up by 21 percent in euros and by 20 percent in local currencies.
Kahan noted that the brand chose to remain “very disciplined” in wholesale (B2B) channels in the Americas “so that we leave a significant unrequited demand and ensure scarcity across all retail partners with healthy inventories at retail.” This approach led to B2B revenue growth of 16 percent in the region during the fiscal year. “Using our engineered distribution strategy, we have steered greater inventory to capture more of this consumer demand in our own DTC (direct-to-consumer) channels, where the profit per pair sold is the highest. DTC revenues grew in fiscal ’23 by 26 percent, on a level far above B2B, which leads to a further expansion of DTC penetration.”
“During fiscal ’23, we have also gained significant penetration in our closed-toe shoe silhouettes, which supported the ASP increase. Closed-toe performance is approximately 3x higher in our own channels compared to B2B, which shines a light on the growth potential not only in DTC but also in B2B. In our fourth quarter, revenues increased by 40 percent, primarily driven by a strong B2B quarter with 73 percent growth. We experienced strong consumer demand in spring and summer, which even gained further momentum in the back-to-school retail season,” Kahan added referring to the Americas.
