Birkenstock Holding plc — FY2023 Form 20-F
Reporting period: Fiscal year ended September 30, 2023. This is an annual report, not a standalone Q4 filing; the provided filing text does not give separate Q4 financial results. The consolidated financial statements are prepared under IFRS as issued by the IASB and audited by Ernst & Young.
Business context
Birkenstock designs and sells footwear, principally through B2B wholesale and direct-to-consumer (DTC) channels. It emphasizes its German-made footbed products and vertically integrated European production. B2B generated 60% of FY2023 revenue and DTC 40%. The Americas, Europe and APMA accounted for approximately 54%, 35% and 10% of revenue, respectively.
Key financial metrics
| Metric (€ millions, except per-share data) | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | 1,491.9 | 1,242.8 | +20% |
| Gross profit | 925.8 | 749.8 | +23% |
| Gross margin | 62.1% | 60.3% | +1.8 percentage points |
| Operating profit | 260.7 | 363.0 | -28% |
| Net profit | 75.0 | 187.1 | -60% |
| Net margin | 5.0% | 15.1% | -10.1 percentage points |
| Adjusted EBITDA | 482.7 | 434.6 | +11% |
| Adjusted EBITDA margin | 32.4% | 35.0% | -2.6 percentage points |
| Adjusted net profit | 207.2 | 174.7 | +19% |
| Basic/diluted EPS (€) | 0.41 | 1.02 | -60% |
| Adjusted basic/diluted EPS (€) | 1.13 | 0.96 | +18% |
FY2023 revenue growth reflected 6% more units sold and a 14% increase in average selling price (ASP). DTC revenue rose 28% and B2B revenue 15%. On a constant-currency basis, revenue growth was also 20%.
Cash generated from operating activities was €358.7 million, versus €234.1 million in FY2022. Investing cash outflow was €100.7 million, including €102.2 million of property, plant and equipment purchases; financing cash outflow was €199.3 million. Cash and cash equivalents were €344.4 million at year-end, up from €307.1 million.
At September 30, 2023, the balance sheet showed loans and borrowings of €1,853.0 million including current amounts and the senior-note embedded derivative, with lease liabilities of €130.1 million. The ABL revolving facility was undrawn; stated maximum capacity was €200 million. Current assets were €1,080.5 million and current liabilities €378.6 million.
Material changes and unusual items
- Net profit fell despite higher revenue and gross margin. Selling and distribution expenses rose 31% to €455.9 million, and general and administrative expenses nearly doubled to €171.4 million.
- Management attributed much of the administrative expense increase to €58.0 million of one-time management investment plan costs. Total share-based compensation expense was €65.4 million.
- Foreign exchange results swung from a €45.5 million gain in FY2022 to a €36.1 million loss in FY2023. The filing cites USD/Euro movements affecting intercompany receivables and loans.
- The effective tax rate increased to 51% from 25%, mainly reflecting non-deductible management investment plan expenses and other tax items.
- Adjusted measures exclude various items, including IPO costs, share-based compensation and foreign-exchange gains or losses; they are non-IFRS measures and are not directly comparable across companies.
Outlook, management commentary and risks
The company expects to fund operations and working capital over the next 12 months from operating cash generation. It expects approximately €150 million of FY2024 capital expenditures for capacity expansion at Gorlitz and Arouca and retail-store growth. Management aims to add several million pairs of annual production capacity over five years. The filing provides no specific FY2024 revenue or earnings guidance.
Following the October 2023 IPO, the company used proceeds and cash on hand to repay €100 million of the Vendor Loan and $450 million of USD term-loan borrowings. The filing reports total indebtedness of €1,306.2 million equivalent as of November 30, 2023. Debt remains a significant risk, including floating-rate exposure, restrictive covenants and substantial future interest and principal obligations.
Management reported that one previously identified material weakness—insufficient accounting and supervisory personnel—was remediated by September 30, 2023. A separate weakness relating to formal business-process controls and ineffective IT general controls remained unremediated; disclosure controls and procedures were deemed ineffective at year-end. The auditor did not provide an opinion on internal-control effectiveness.
Other notable risks include consumer demand and brand reputation, reliance on wholesale partners, supply-chain and raw-material costs, seasonality and inventory management, currency and interest-rate changes, and the controlling shareholder’s influence. A French distributor is claiming €94.7 million following termination of its business relationship; Birkenstock has recorded a provision for management’s estimate of probable outflow and intends to defend the claim. The filing states that no legal proceedings were expected to have a material adverse effect individually or in aggregate.
Goodwill and indefinite-lived intangible assets totaled approximately €3.0 billion at September 30, 2023. The annual impairment test identified no impairment, but the valuation depends on forecasts and discount-rate assumptions. The IPO-related tax receivable agreement generally requires payments to MidCo equal to 85% of certain realized or deemed tax savings and may require accelerated lump-sum payments in specified circumstances.
Important facts for investors to verify
- Review audited IFRS statements and the reconciliation of adjusted results to IFRS net profit, especially the effect of management investment plan compensation and foreign-exchange items.
- Confirm post-September 30 debt repayments, remaining debt balances, interest-rate exposure and available borrowing capacity; the filing reports year-end and later-date figures separately.
- Track remediation of the remaining internal-control and IT general-control material weakness.
- Assess the outcome and provision adequacy for the €94.7 million French distributor claim and any other material contingencies.
- Evaluate the assumptions supporting goodwill and brand-name valuations, and the potential cash and liquidity effects of the tax receivable agreement.
- Monitor execution of the €150 million FY2024 capital expenditure plan, capacity additions, inventory levels and margin trends as DTC expands.