Stock Markets June 15, 2026 11:58 AM

S&P Lowers Birkenstock Outlook as Planned Buybacks Increase Leverage

Ratings agency affirms BB+ but flags higher adjusted debt-to-EBITDA and near-term margin pressure tied to tariffs, channel mix and FX

By Derek Hwang
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S&P Global Ratings shifted Birkenstock Holding PLC's outlook from stable to negative while keeping the company's BB+ long-term issuer credit rating intact. The agency also assigned a BB+ issue rating to a proposed €900 million senior unsecured note due 2033 issued by a Birkenstock subsidiary, citing an expected rise in leverage driven by refinancing and planned share buybacks.

S&P Lowers Birkenstock Outlook as Planned Buybacks Increase Leverage
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Key Points

  • S&P moved Birkenstock's outlook to negative from stable while affirming a BB+ long-term issuer credit rating and assigning a BB+ issue rating to a proposed €900 million 2033 senior unsecured note.
  • Proceeds from the new note will refinance a €432 million 2029 senior unsecured note and support strategic initiatives, including share buybacks; a $250 million accelerated repurchase announced in May 2026 is expected to complete by June 30, 2026.
  • S&P expects adjusted debt-to-EBITDA to rise to about 3.0x in 2026 (from 2.1x in 2025) before improving to roughly 2.5x in 2027, and foresees margin pressure in 2026 from tariffs, channel mix and foreign exchange effects.

S&P Global Ratings has changed its view of Birkenstock Holding PLC, moving the outlook to negative from stable while maintaining the company's BB+ long-term issuer credit rating. The agency also assigned a BB+ issue rating to a planned €900 million senior unsecured note due 2033 to be issued by subsidiary Birkenstock Group B.V. & Co. KG, and gave that instrument a recovery rating of 3.

Proceeds from the new note are earmarked to refinance an existing €432 million senior unsecured note maturing in 2029 and to finance strategic initiatives that include share repurchases and other corporate purposes. The issuance follows a $250 million accelerated share repurchase agreement Birkenstock announced in May 2026, which the company expects to complete by June 30, 2026.

S&P projects Birkenstock's adjusted debt-to-EBITDA ratio will rise to about 3.0x in 2026 from 2.1x in 2025, before easing to roughly 2.5x in 2027. The ratings agency's outlook reflects the higher leverage profile driven by refinancing activity and the company’s use of cash for buybacks alongside other strategic spending.

On the operating side, Birkenstock reported second-quarter fiscal 2026 revenue of €618 million for the period ended March 31, an increase of 14% on a constant currency basis. Regional performance showed the Americas up 14% and Asia Pacific rising 30%.

The company reaffirmed its full-year guidance calling for 13%–15% revenue growth in constant currency and an adjusted EBITDA margin of 30.0%–30.5%, down from 31.8% in the prior year. S&P, factoring in foreign exchange headwinds, expects reported revenue growth of about 9%–10% for 2026.

S&P anticipates Birkenstock's adjusted EBITDA margin to be approximately 28.5%–29.0% in 2026, compared with 30.8% in 2025. The agency attributes the margin decline to tariff effects, shifts in channel mix and foreign exchange pressures.

Free operating cash flow is forecast by S&P at about €210 million–€240 million for 2026, improving to around €290 million–€320 million in 2027. This cash flow outlook assumes capital expenditures of about €120 million and potential recurring share buybacks of $200 million per year.


Overall, the ratings action underscores S&P's view that near-term credit metrics will weaken due to the planned financing and buyback activity, even as operating performance continues to deliver revenue growth and positive cash generation.

Risks

  • Higher leverage - Planned refinancing and share buybacks are expected to increase adjusted debt-to-EBITDA to about 3.0x in 2026, raising credit risk for debt and credit markets (Debt, Financials).
  • Profitability pressure - S&P forecasts adjusted EBITDA margin to compress to about 28.5%–29.0% in 2026 due to tariffs, channel mix shifts and foreign exchange headwinds, which affects retail profitability (Retail, Consumer Discretionary).
  • Execution and cash allocation - The company's use of proceeds for refinancing and repurchases, alongside capital expenditure of about €120 million, introduces uncertainty in free operating cash flow outcomes despite projected improvement into 2027 (Corporate finance, Capital markets).

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