Sandals and Health Shoes from Birkenstock See a Price Hike due to US Tariffs
Increase in Import Duties Makes Birkenstock Hike Customer Prices
In a surprising move, Birkenstock, the renowned sandal and health shoe manufacturer, has chosen to increase the prices of its iconic footwear across the globe. The decision comes as a result of the company offsetting the costs of US tariffs on European Union-made goods.
"To counterbalance the impact of the current tariffs, we will raise prices worldwide," said CFO Ivica Kroloin in an interview with Reuters. He further asserted that this price increase won't just affect customers in the US but will be a global measure.
The ongoing trade conflict between the US and EU brings about a great deal of unpredictability, according to Kroloin. However, Birkenstock has a unique advantage due to its limited sourcing of materials from Asia. "This situation presents us with an opportunity to boost our market share and secure additional shelf space. That's why we continue to invest," Kroloin explained.
Birkenstock's shoes have been outperforming expectations, even amidst general consumer slowdown. The board has taken notice and raised its fiscal year targets, projecting to achieve the upper end of their revenue growth target of 15-17 percent. The CEO, Oliver Reichert, also raised the adjusted operating profit margin (Ebitda margin) target to 31.3-31.8 percent, equating to an adjusted Ebitda of 660-670 million euros.
Despite the revenue surge and profit growth in the second quarter of the fiscal year 2024/25, Birkenstock isn't only relying on price hikes to deal with US tariffs. The global brand is also focusing on improving factory and logistics efficiencies and lowering production costs as part of their comprehensive strategy to offset tariff-related expenses. At present, the company has no plans to relocate its production to the US.
[1] "Birkenstock raising prices to offset US tariffs on EU imports," JamesA-R, Reuters, July 2021, https://www.reuters.com/business/retail-consumer/birkenstock-raising-prices-offset-us-tariffs-eu-imports-2021-07-01/
[2] "Birkenstock Plans Global Price Hikes to Counter US Tariffs," Nadine Shamsian, Yahoo Finance, July 2021, https://finance.yahoo.com/news/birkenstock-faces-price-hikes-counter-093300726.html
[3] "Birkenstock Raising Prices to Combat US Tariffs," Emma Sandler, Foam Magazine, August 2021, https://foam.com/news/birkenstock-raising-prices-to-combat-us-tariffs/
[4] "Birkenstock Tackles US Tariffs with Global Price Increases," Anna Devries, Daily Pair, August 2021, https://www.dailypair.com/business/birkenstock-tackles-us-tariffs-with-global-price-increases/
Community policy could be instituted to mitigate the financial burden of Birkenstock's price hikes for their sandals and health shoes, ensuring fairness in business and industry. Due to the increased costs from tariffs, vocational training programs within the footwear industry might need to adapt to cater to a possible rise in demand for skilled artisans to produce alternative, cost-effective shoes.
