Dive Brief:
- Birkenstock expects the impact of tariffs on the cost of goods sold to increase in the 2026 fiscal year compared with 2025, according to a Dec. 18 earnings call.
- The footwear maker offset most of the impact of tariffs in the 2025 fiscal year ending Sept. 30 through a summer price increase while shipping the majority of its goods before the duty hikes, CFO Ivica Krolo said on the call.
- "This will not be the case in 2026," Krolo said.
Dive Insight:
Birkenstock was one of many brand manufacturers that turned to price hikes to battle tariffs last year. The shoemaker was also among the companies that used frontloading to temper the impact of President Donald Trump's sweeping tariff regime, which evolved erratically in 2025.
In FY 2026, Birkenstock expects about a 100-basis-point decline in both gross margin and EBITDA due to incremental tariffs, Krolo said. The company plans to offset most of the levy impact through pricing changes, but Krolo told analysts that higher prices alone won't fully protect margins.
The CFO explained that the company can match a $10 tariff on a $100 shoe to maintain the product's 60% gross profit and 40% cost of goods sold. However, the product's gross margin would fall from 60% to 54.5%. To maintain the higher margin, Birkenstock would need to raise the price by $25, thereby increasing gross profit to $75.
"The price increase would have to be 2.5x the tariffs," Krolo said. "This is not something we would do to our customers, being a democratic brand."
Instead, the company plans to review prices each season and adjust them style by style, Krolo said. The company also will continue to mitigate the impact of tariffs on gross margins by lowering the cost of goods sold through production efficiencies, improved logistics and better supplier terms across its vertically integrated supply chain.
"But this naturally takes time," Krolo said. "In addition, our growing share of business in [Asia-Pacific region] will, for the longer term, reduce our exposure to the U.S. dollar and to U.S. tariffs regime."
Editor’s note: This story was first published in our Procurement Weekly newsletter. Sign up here.
