Birkenstock IPO: Barbie Boost or Tight Fit?

Birkenstock,
established
in
1774
in
the
German
village
of
Langen-Bergheim,
was
in
the
hands
of
its
founding
family
for
a
quarter
of
a
millennium.
Six
generations
later
in
2021,
Christian
and
Alexander
Birkenstock
sold
the
company
to
private
equity
firm
L.
Catterton,
which
is
backed
by
luxury
brand
LVMH
Moet
Hennessy
Louis
Vuitton.
PitchBook
data
records
the
transaction’s
value
at
$4.9
billion
(£3.84
billion).
After
only
two-and-a-half
years,
the
French-American
private
equity
house
is
looking
to
cash
out.
Goldman
Sachs
and
JPMorgan
reportedly
will
facilitate
the
IPO
with
a
target
valuation
of
over
$8
billion.

But
that
might
be
a
bit
too
ambitious,
according
to
Morningstar
analyst
Jelena
Sokolova.
“Recent
growth
for
the
brand
has
been
strong,”
she
says,
“and
it
has
affordable
price
points
and
universal
appeal
among
both
fashion-forward
and
non-fashion-forward
consumers,
and
will
likely
benefit
from
additional
popularity
thanks
to
featuring
in
the
Barbie
movie.”
But
she
says
an
IPO
price
over
$8
billion
“seems
steep,
especially
compared
with
a
somewhat
similar
footwear
player
like
Dr.
Martens,
which
now
has
a
market
cap
of
$1.9
billion
on
a
comparable
revenue
…
with
a
share
price
decline
of
65%
since
the
IPO.”

According
to
PitchBook,
Birkenstock’s
revenue
grew
to
$1.26
billion
in
2022,
compared
with
$843
million
in
2020.
The
company
more
than
doubled
its
adjusted
earnings
to
$414.3
million,
compared
with
$194
million
in
2020.

One
driver
behind
this
success
has
been
a
forceful
sales
campaign
in
the
US
and
Asia,
including
the
successful
product
placement
in
a
major
Hollywood
movie,
which
ramped
up
after
L.
Catterton
took
the
reins.
Meanwhile,
the
sandals
are
still
produced
exclusively
in
Germany.
A
new
plant
in
Eastern
Germany
is
being
built
at
record
speed.
The
total
investment
almost
€120
million
makes
it
the
largest
single
investment
in
Birkenstock’s
history,
according
to
company
sources.

While
Birkenstock
makes
its
footwear
in
Europe,
New
York
was
preferred
for
the
listing.
In
general,
companies
are
valued
higher
on
the
US
market
than
in
Europe,
which
drives
European
companies
to
the
other
side
of
the
Atlantic
for
public
listings.
In
this
case,
the
US
is
also
the
home
market
of
the
owner,
L.
Catterton.

German
companies
shunning
the
Frankfurt
stock
exchange
is
not
a
new
phenomenon.
Pharmaceutical
firms
BioNTech
and
CureVac preferred
New
York,
and
former
DAX
company
Linde
delisting
from
the
German
exchange
earlier
this
year
sent
shockwaves.

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