Global lifestyle and footwear brand Birkenstock has gone public. Learn everything we know about Birkenstock's IPO.
What do we know about the Birkenstock IPO?
German sandal maker Birkenstock went public on Wednesday October 11. The company priced its IPO at $46 per share, in the middle of its $44 to $49 price range. That raised about $1.48 billion and gave Birkenstock a valuation of around $8.64 billion.
Birkenstock received about one-third of the proceeds and plans to use them to pay-down debt, with the rest going to its current owner, private equity firm L Catterton.
The Birkenstock IPO came just months after another L Catterton-backed brand’s IPO, Oddity Tech. The online beauty products retailer raised more than $400 million when it was listed on the Nasdaq stock exchange.
Birkenstock IPO: Is it overvalued?
Birkenstock came to market with a valuation that is equal to around 6.9x annual sales and a price-to-earnings ratio of over 45x, based on its last set of annual results.
That means Birkenstock believes it deserves a significant premium over other big players in the footwear space, such as Nike, Adidas, Puma, Deckers, Crocs and Skechers, all of which trade at just 1.0x to 3.0x forward sales and, mostly, at much lower earnings multiples.
But will markets agree? Clearly not. Birkenstock shares opened at just $41 when it started trading and ended up closing down 12.6% at $40.20. That shows its valuation was hard to swallow for markets. Birkenstock would have to deliver rapid revenue and earnings growth to justify its IPO valuation multiple, and that looks all the less likely considering the brakes are coming down on consumer spending and the economic outlook is becoming more challenging. Birkenstock saw sales rise 21% year-on-year in the nine months to the end of June, but profits declined thanks to rising costs and unfavourable foreign exchange movements. Birkenstock has reliably grown sales for at least eight consecutive years, but not at a pace that would be enough to bring its sales multiple in-line with the broader industry anytime soon.
Birkenstock decided not to push its luck nd priced its IPO at the in the middle of its target range, unlike many of the most recent listings that went for the very top-end. Still, the premium valuation appears to have proven too high for investors and Birkenstock has come under immediate pressure. Instacart took less than a week to slip below its IPO price after setting its valuation too high, while Arm has also struggled to gain any significant ground because of its bumper price tag.
The big-name additions to have gone public in recent weeks and months have failed to revive the IPO market thus far, and Birkenstock looks poised to be another underwhelming listing that offers limited upside potential for IPO investors, while providing opportunities by allowing investors to snap-up shares at a cheaper price.
What does Birkenstock do?
Birkenstock is a famous footwear manufacturer based in Germany. According to its website, it's one of the top five global footwear brands. The company’s products, which include its famous contoured cork-soled sandal, are sold in more than 90 countries worldwide.
Birkenstock was originally positioned as an orthopaedic brand – earning them the nickname ‘fashion’s original ugly shoe’. So, Birkenstock’s current reputation as ‘the world’s most popular shoe’ – according to search platform Lyst – seems like a large rebrand. But over the years the company has held collaborations with luxury names such as Dior, Manolo Blahnik and Valentino, ultimately landing Birkenstock a place in the luxury shoe category.
Unlike other global brands, Birkenstock doesn’t outsource its manufacturing. The company still owns each step of its production line. This positions the firm well to respond to changes in demand and protect its heritage as a German company.
Birkenstock employs around 5,500 employees globally. Most of its operations are still in Germany, with production facilities in Rhineland-Palatinate, North Rhine-Westphalia, Bavaria, Hesse and Saxony. Birkenstock has been investing heavily in building out its production sites in Germany, including a new €120 million factory in Pasewalk, a town north of Berlin.
Birkenstock has sales operations in the US, Brazil, China, Singapore, Hong Kong, Japan, Denmark, Poland, Slovakia, Spain, France, Norway, Dubai, India and the United Kingdom.
How much is Birkenstock worth?
Birkenstock’s value is estimated to be around $8.6 billion based on its IPO price. The company was last valued in 2021 when L Catterton bought a majority stake for €4 billion.
How does Birkenstock make money?
Birkenstock makes money through the sale of the various iterations of its cork-based sandals. In 2019, it was estimated the brand sold over 23.8 million pairs of shoes and they’ve only grown in popularity over recent years.
Notably, the business saw an uplift in sales in the summer of 2023 following the release of the Barbie movie, in which actress Margot Robbie was seen wearing a pair of Birkenstocks in one scene.
Is Birkenstock profitable?
Yes, Birkenstock reported a net profit of EUR103.3 million in the nine months to the end of June 2023, when revenue rose 21% year-on-year to EUR1.12 billion. Still, profits plunged 20% from the year before to EUR103.3 million as costs increased and it booked a substantial loss on foreign exchange movements.
Who owns Birkenstock?
Private equity firm L Catterton predominantly owns Birkenstock but relatives of the footwear brand’s founder – brothers Alex and Christian Birkenstock – have kept a minority stake in the business.
French luxury fashion house LVMH backs L Catterton itself. The equity firm was formed in 2016 when LVMH and Bernard Arnault’s family holding company merged with the US private equity firm Catterton. It’s estimated that L Catterton manages over $30 billion in assets, including consumer brands like Scandinavian fashion company Ganni and fitness company ClassPass.
It’s rumoured that L Catterton is also considering a public listing.
Who is Birkenstock’s CEO?
Oliver Reichert is currently CEO of the Birkenstock Group. He took on the position at the end of 2012, alongside Markus Bensberg. But since May 2021, he has been the sole CEO.