The Birkenstock sandal is known for two things: the characteristic cork soles, and the endless discussion about whether it is hideous or excellent footwear. In any case, love for the brand seems to be predominant at the fair for the time being. The launch of the share is being followed with great interest by analysts, after a year and a half with hardly any major IPOs.
On Monday, the German Birkenstock announced that it is aiming for a valuation of around 9 billion dollars (approximately 8.5 billion euros) for the upcoming IPO in New York, at the high end of the original expectations. Birkenstock originally aimed for a valuation of just over $8 billion, but it expects to exceed that after months of consultations with potential investors. The footwear manufacturer’s IPO is scheduled for later this month.
It is not completely surprising that the company is aiming high. Sales of the sandals have been going well for some time. Last year, Birkenstock’s turnover increased by 29 percent to 1.2 billion euros. The company sells tens of millions of shoes per year. The margins on the products are high: profits amounted to almost 400 million euros in 2022.
The sandal brand, which has approximately 3,000 employees, is currently investing in expansion. It is building a new factory in Pasewalk, in northeastern Germany, for more than 100 million euros. This will become the fifth production location in Germany.
Fully owned by the founding family
Until recently, Birkenstock was fully owned by the founding family, who began experimenting with foot pads in 1896. Two years ago, private equity firm L Catterton, partly owned by luxury group LVMH, bought a majority of the shares (whereby Birkenstock was still valued at 4 billion dollars). That was the first time that shares went to an outsider.
Under the leadership of the private equity owner, Birkenstock has entered the market for more luxurious models in recent years, including in a collaboration with Dior, which is part of LVMH. Suede Birkenstocks came onto the market. CEO Oliver Reichert defended the experiment with a reference to the Catholic Church: if the old and great Birkenstock never did anything new, the company ran the risk of degenerating into a closed institution that would succumb to its own greatness.
The big question now is what the stock will do after the launch. In terms of size, Birkenstock fits into a recent list of IPOs, alongside those of chip company Arm and delivery company Instacart.
The three IPOs are seen as tests for the stock market climate. So far, results have been mixed: Arm and Instacart launched at high valuations as planned, but shares have slumped since then.
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