I put the TLDR at the top cause I know you regards won't read the bulk of this:
- Tariffs pressured this company's stock price throughout 2025, causing it to drop from its highs of $60+. Currently trading in $39-$40 range.
- Birkenstock lowered guidance in the December 2025 Earnings due to Tariffs and FX headwinds. Their all-in tariff rate should have been \~30% during the December 2025 and again in the February 2026 earnings call
- Since then, Supreme court ruled IEEPA illegal, they now qualify for IEEPA Tariff refunds, and recently, section 122 was ruled illegal by the trade courts
- Currently, the all-on tariff rate should be \~20% at the maximum, potentially only 8-10% if nothing replaces 122 that specifically targets European footwear.
- May 13th (BMO) will be the first time they will be able to address the now improved tariff situation since they lowered guidance in December.
- This leads me to believe there are 3 catalysts going into May 13th earnings: tariff rate reduction, Tariff refund claim disclosure, guidance revision.
- This is a luxury apparel growth stock trading like a value stock because it has been highly shorted due to tariffs eating into margins. And now those tariffs might go away entirely, plus a refund for past tariffs.
- If management signals tariff headwinds won't be as bad as previously guided, the narrative shifts to it being a growth stock. Under that scenario, a 19 forward P/E is much more reasonable and that puts BIRK at $55.
Full DD:
Guidance Revision
At their December earnings, management guided FY2026 with a 100bps tariff headwind baked into both gross margin and EBITDA margin guidance that assumed the \~30% all-in rate persisting through the year. That assumption is now wrong by at least 10 percentage points. They haven't had a chance to update it publicly.
February's call maintained full-year guidance because the SCOTUS ruling happened eight days later and Section 122 took effect four days after that. Management had no basis to update numbers on the Feb call. May 13th is the first opportunity to do so, and I don't think it's been priced in due to how thinly traded and overly shorted this stock got during the Iran war.
If the 100bps tariff headwind assumption shrinks to reflect the lower rate, that flows directly into updated gross margin and EBITDA margin guidance. America is their largest market, so the margin improvement will be substantial. They also have a strong record of beating the streets estimates, so I hope a strong beat tomorrow means they lift their guidance.
IEEPA refund disclosure
BIRK almost certainly qualifies for IEEPA tariff refunds. CBP opened the CAPE refund portal on April 20th. The refundable amount is the IEEPA-attributable layer (roughly 10 percentage points) on all German imports entered between April 2025 and February 24, 2026. Other footwear companies disclosed CAPE filings on the day the portal opened. Analysts will ask BIRK the same question tomorrow.
Section 122 now Illegal too
The CIT ruled Section 122 unlawful on May 7. The injunction only covers named plaintiffs (Burlap & Barrel, Basic Fun), so BIRK is still paying the 10% rate. But the legal foundation for a future refund claim now exists. Management will be asked whether they're preserving entry documentation to protect those rights. Given the July 24 expiry of Section 122 regardless, and the political impossibility of congressional extension, the 10% rate is likely gone after July 24. Their rate would then drop to 8-10%, from its current \~20% rate, which is what their tariff rate was pre-liberation day. The risk here is that future tariffs may increase it back to 20%, but I have reason to believe that the next round of tariff attacks may not even touch Birkenstock.
Why I think they will overcome future tariff pressures:
Trump has specifically directed his recent tariff threats at EU steel, aluminum and autos, not apparel. EU footwear and leather goods have face