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Birkenstock is ringing in its 250th anniversary year with its first earnings report as a public company. Amidst the mix of good and bad financial updates, the German sandal company’s CEO sprinkled in news that its shoe prices will increase in 2024.

The reason? The company was hit harder by inflation last year than expected, CEO Oliver Reichert said in a call with investors Thursday (Jan. 18). Birkenstock reported a loss equivalent to about $30 million in its fourth quarter (ending Sept. 30, 2023). This year, Reichert said improving its factories and ramping up production will add further costs, again biting into the company’s margins. Reichert noted that increasing prices will help offset these costs.

Luckily, Birkenstock buyers can probably afford the price hikes. Once seen as not-so-hot shoes for granola hippie-types, Birkenstocks are now favored by high-fashion folk from celebrities to influencers. Reichert says these customers won’t really mind the price bumps.

“Our customers are very loose with our pricing power. So we have enough leg space to further increase pricing…helping [digest] the one-off costs [of] factory improvements and the further investment in our capacity,” he said. Birkenstock’s bestselling sandals and clogs go for about $160.

While inflation has driven consumers to taper many of their buying habits, Birkenstock said it’s one of the brands for which demand is unwavering. “The US consumer is somewhat fragile, but is resilient. And it is a bit counterintuitive, because the more the buying power of the consumers has been constrained, the more [they’ve] been focused on those products that they most covet and demand,” said David Kahan, CEO of Birkenstock Americas.

“We are one of the few real key intentional purchases that people are searching for, and I think they’re searching with even more vigor than ever before for those few brands that are really important to them.”

Investors react poorly to Birkenstock’s earnings

Even though Birkenstock has confidence its consumers will remain faithful to the brand, investors gave the company a big fat thumbs down on Thursday. Shares sank nearly 10% in midday trading to $45.16.

Despite the bad news about its margins in the fourth quarter and going into fiscal year 2024, Birkenstock CEO assured investors that its higher costs are a one-time thing and will pay off in 2025. And the company had a pretty good earnings report overall, with revenue growing 20% and profits rising 62% for the full year ending Sept. 30, 2023.

The company’s stock price, while below its December highs, is well up from lows of around $36 in October following its disappointing IPO.

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