Birkenstock raises prices to combat Trump's tariffs

On May 16, 2025, Birkenstock, the German sandal and shoe maker, reported impressive quarterly results that surpassed expectations for the fiscal second quarter. The company's shares experienced considerable growth, rising nearly 10% over the preceding week. In spite of this success, Birkenstock's management announced plans to raise prices globally to counterbalance the effects of a 10% tariff imposed by the Trump administration on imports coming into the U.S. This escalation in tariffs was reaffirmed by Commerce Secretary Howard Lutnick, who indicated that these baseline tariffs would likely remain in place for the foreseeable future. The company's resilience against the tariff impacts stems from its manufacturing and sourcing strategies. Analyst Lorraine Hutchinson from Bank of America emphasized that Birkenstock has no manufacturing in Asia, thereby avoiding the tariffs that would typically apply to products imported from that region. Instead, the company sources 95% of its products from Germany and 100% from Europe, with approximately 96% of raw materials also sourced from Europe. This strategic supply chain setup allows Birkenstock to maintain pricing power through intentional scarcity, making it well-equipped to confront any challenges posed by the tariffs. In her analysis, Hutchinson projected a price target for Birkenstock shares of $73, reflecting a potential upside greater than 26% from their closing price just before the report. The suggestion that only a low single-digit price increase would be necessary to fully offset the tariff impacts indicates that the company is not only prepared to adapt to market conditions but also poised for growth. This resilient approach is particularly noteworthy as Birkenstock continues to enhance its global presence while upholding a commitment to sustainable sourcing practices. Having already achieved a share price increase of nearly 2% year to date, Birkenstock is demonstrating significant potential even amid the challenges presented by the current political climate and trade dynamics. As the company approaches this upcoming price increase, market analysts will undoubtedly be observing how consumers respond to these adjustments and whether Birkenstock's strategies will ensure its continued success in the footwear segment despite external pressures.