Rating action and rationale
S&P Global Ratings has upgraded Birkenstock's issuer credit rating to BB+ from BB and assigned a stable outlook. The rating agency attributes the move to the footwear company's solid operating performance and a measured approach to capital allocation that together underpin its credit profile.
Leverage trajectory and balance-sheet expectations
S&P expects Birkenstock's adjusted debt to be approximately 2x at the end of fiscal 2026 and to remain below 2x in the subsequent fiscal year. The rating agency explicitly cites the company's brand equity as a supporting factor for this leverage profile.
Top-line forecasts
For fiscal 2026, S&P projects Birkenstock's total reported revenue to be close to 2.3 billion, rising to about 2.5 billion in fiscal 2027. Those forecasts correspond to growth of roughly 11%-12% in 2026 and 10%-11% in 2027.
Channel dynamics
The business-to-business channel, which accounts for approximately 62% of the company's overall sales, is expected to continue expanding faster than the direct-to-consumer channel. S&P explains this is being driven by broader product assortments at existing wholesale partners and by gains in new distribution points, supported by an emerging youth customer cohort that is showing stronger preferences for multi-brand brick-and-mortar shopping.
Margins and cost pressures
S&P forecasts an adjusted EBITDA margin in the range of 28%-29% for 2026. The agency notes that this margin level is being weighed down by foreign exchange headwinds and U.S. tariffs, though it anticipates a moderate improvement in margins the following year.
Cash flow and capital returns
Free operating cash flow before leases is expected to be in the range of 165 million-185 million for 2026, strengthening to 280 million-300 million in 2027. S&P highlights that this cash generation should give Birkenstock flexibility to continue investing in the business, to manage its debt profile and to support its share buyback program.
In fiscal 2025, Birkenstock executed about 175 million of share repurchases, and management plans to repurchase roughly $200 million in 2026. S&P's view is that buybacks are likely to continue through the medium term at an estimated 150 million-180 million annually, though the agency notes such activity is subject to market conditions.
Recent operating momentum and leverage reduction
Preliminary results for the first quarter of fiscal 2026 showed strong revenue growth of 17.8% year-on-year on a constant currency basis, and 11.1% on a reported basis. Over the two fiscal years since its initial public offering, Birkenstock delivered an annualized compound growth rate of about 20% in sales on a constant currency basis.
Net leverage has declined materially from pre-IPO levels. S&P reports net leverage around 1.5x at year-end 2025, down from 1.8x in 2024 and 3.3x prior to the IPO.
Fiscal 2025 results and unit economics
For fiscal 2025, Birkenstock reported revenue of 2.1 billion, a 16.2% increase on a reported basis. S&P attributes that growth to a mix of organic like-for-like expansion and strategic growth in retail channels. At the end of fiscal 2025, the company operated 97 of its own retail stores.
The B2B channel contributed about 62% of revenue in 2025, while the D2C channel represented 38%, up from 30% in 2020. Growth reflected supportive volume trends, with unit growth of roughly 12%, together with a selective increase in average selling prices equivalent to about 5% in constant currency.
Strategic priorities and product mix
S&P outlines Birkenstock's strategic focus areas as continued product and distribution diversification, expanded manufacturing capacity and increasing the contribution to earnings from the Asia-Pacific region, which accounted for 11% of sales in 2025.
Part of the portfolio shift is an effort to broaden footwear styles. As of year-end 2025, closed-toed shoes made up 38% of reported sales, up from 27% in 2023. S&P notes this category grew at a compound annual growth rate of more than 40% from 2022 to 2025.
The company is also working to strengthen its D2C channel, improve the online shopping experience and expand its physical footprint with a target of 150 stores by 2027, up from 97 at the end of 2025.
Bottom line
S&P's upgrade to BB+ reflects a combination of accelerating top-line growth, improved leverage and rising cash flow that collectively support capital returns and ongoing investment. The rating action emphasizes both the operational momentum and the risks to near-term margins from currency movements and tariff exposure.