Birkenstock, the renowned German footwear brand, posted stronger-than-expected sales for its fiscal first quarter, fueled by strong holiday demand and the growing popularity of its closed-toe clogs. However, the companysU.S.-listedshares (NYSE: BIRK) were down about 3% in premarket trading Thursday as of the time of this writing.Strong demand meets investor skepticismThe company reported quarterly revenue of 361.7 million, exceeding analyst expectations of 356.2 million. However, it maintained its annual margin forecast, as Reuters reported.The drop in share price is likely related to a cautious outlook on profit margins for fiscal 2025, with investors also concerned about the long-term impact of Birkenstocks expansion strategyespecially the rising costs associated with new retail locations and manufacturing facilities.Expansion costs weigh on marginsThe footwear brand has been aggressively expanding, particularly in Asia. In October 2024, Birkenstock launched a dedicated e-commerce platform inSouth Koreaand announced plans to open brick-and-mortar stores in the region by spring 2025. The companys gross margins fell by330basis points in fiscal 2024, as the Wall Street Journal reported, largely due to increased spending on new retail locations and manufacturing facilities, including a new production plant inPasewalk, Germany. Investors may be wary of how long these expenditures will continue to pressure profits before yielding meaningful returns.Market expectations and profit missesBirkenstocks revenue forecast for fiscal 2025between 15% and 17% growthfell slightly below expectations. Analysts had anticipated a more aggressive outlook, especially given the companys recent momentum.Additionally, while sales have been strong, profits have not kept pace. Birkenstocks earnings report showed that despite higher revenues, net income was lower than analysts had projected. This discrepancy suggests that rising operational costs, supply-chain expenses, and promotional spending may be eating into profitability.Brand strength vs. market concernsBirkenstock remains a strong brand with cultural relevance, thanks in part to high-profile collaborations and celebrity endorsements. However, the stocks decline reflects broader market concerns about whether the company can translate its current sales momentum into sustained long-term profitability.This isnt the first time investors have reacted negatively to Birkenstocks financial performance. InAugust 2024, the companys stock plummeted 15% after missing profit estimates. While the latest dip isnt as severe, it signals continued skepticism about the companys ability to balance growth with profitability.