Morgan Stanley reaffirms its "overweight" rating on Birkenstock (BIRK.US) due to the significant expansion potential of the US stores.

JPMorgan reiterates its "Overweight" rating on Birkenstock (BIRK.US) and shares key insights from its meeting with management.

Birkenstock has 71 owned stores globally as of Q1 2025, with only 9 in the US. Management plans to open stores in Nashville and Houston this month, targeting 14 stores by the end of the year.

New stores will focus on areas of hybrid work growth, large university districts, and destination locations.

Analyst Matthew R. Boss said management plans to accelerate store openings in the US, targeting 25-30 stores by 2027, above IPO expectations. Store openings typically drive e-commerce sales in the surrounding area.

Birkenstock aims to expand its direct-to-consumer retail stores from 71 globally (including 9 in the US) to ~150 by FY27.

The plan includes doubling European stores, focusing on major destinations such as Milan and Madrid, opening 20-25 small stores in the US, and targeting APMA major cities.

Management expects incremental revenue of ~€120mn (~$130mn) from 25 new stores in the US retail business over the next three years.

Additionally, the company expects double-digit digital sales growth in the US due to a 30% increase in DTC members and increased member spend.

Total DTC revenue in the Americas is expected to reach ~€630mn in FY27, with a CAGR of 16%. Global DTC revenue is expected to grow 19% in FY27, taking a larger share of total revenue.

For Q2, management expects balanced growth between DTC and wholesale channels, with DTC growth outpacing wholesale channels in Q3 and Q4.