The traditional sandal manufacturer Birkenstock is going public in the USA. The company, headquartered in Linz am Rhein in Rhineland-Palatinate, presented its prospectus on Tuesday. Key data such as the volume of the share placement initially remained open. The financial news agency Bloomberg reported in July that Birkenstock could go public with a total valuation of more than eight billion dollars.
According to the company, Birkenstock’s origins date back to 1774. Almost 250 years ago, the shoemaker Johannes Birkenstock laid the foundation for “a shoemaking dynasty”. The company describes itself as the “inventor of the footbed”.
Since 2021, the main owner has been the investment company L Catterton, which is linked to the luxury group LVMH (including Louis Vuitton, Christian Dior) and its billionaire boss Bernard Arnault. L Catterton will retain control of Birkenstock after the IPO. The company will be listed on the New York Stock Exchange under the symbol “BIRK”.
The brand image rotated 180 degrees
The sandals have long since broken away from their former eco-slipper image; in recent years they have increasingly developed into a fashion accessory, also through collaborations with high-end brands such as Dior and Manolo Blahnik. Both celebrities who appeared wearing the sandals and the company’s marketing contributed to the change. Last year, a pair of worn-out Birkenstock sandals belonging to Apple co-founder Steve Jobs sold at auction for more than $218,000.
Most recently, Birkenstocks appeared in a symbolic role in the successful “Barbie” film. There, Barbie first has to decide between the artificial Barbie world and the real, human world and choose between pink pumps and brown Birkenstock sandals. Later she can be seen in pink Birkenstocks. “Excellent product placement,” praises Martin Fassnacht, marketing and strategy professor at the WHU Otto Beisheim School of Management. “Great, you can’t do it better.”
Even in times of globalization, Birkenstock remains committed to Germany as a location. In the last financial year, the entire footbed production took place in the German companies – and 95 percent of the finished products came from here. There is additional component production in Portugal.
As is often the case with IPOs, you can learn more about the business from the prospectus. In the first half of the current financial year, which ended at the end of March, Birkenstock increased sales by 18.7 percent to around 644.2 million euros. The bottom line is that a profit of 40.2 million euros remained in the books, after around 73.5 million euros a year earlier. The decline was primarily due to unfavorable exchange rates. Birkenstock ended the last financial year with sales of 1.24 billion euros and a profit of 187 million euros.
North and South America are the most important region with a share of 54 percent in the last financial year, followed by Europe with 36 percent. Women make up 72 percent of customers. Birkenstock increased the share of direct sales in sales from 18 percent in 2018 to 38 percent most recently. The most successful design is the Arizona model, introduced in 1973.
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In the obligatory list of risks, Birkenstock refers, among other things, to threats to the brand’s reputation from counterfeits sold on the Internet and similar-looking shoes from retail groups’ own brands. Some Birkenstock designs are not protected – so the company cannot legally take action against imitations.
Management of the company passed from the family’s hands for the first time in 2013 to two managers, Markus Bensberg and Oliver Reichert. The partnership with L Catterton 2021 has already brought Birkenstock more growth, emphasizes Fassnacht. “They understand how to manage luxury brands, which brings in money and expertise.”
The family remained in the company. “Of course, this still means that the DNA and soul of the brand can continue to live on,” says Fassnacht. According to the expert, changes in the fashion world also contribute to the success of sandals. “The whole fashion is becoming more informal. People want to feel more comfortable,” he says. “Sometimes it’s a leather shoe or a pair of pumps and sometimes it’s a Birkenstock, even on high-profile occasions. This made Birkenstock more socially acceptable.”
The company now sells not only shoes, but also beds and natural cosmetics. As of June 30, Birkenstock employed around 6,200 people, including around 4,800 full-time positions. Women make up 56 percent of the workforce.
Fassnacht sees development potential, especially outside of Europe. “China, India, Brazil, these are big markets.” The IPO could help raise money for expansion there. “In China and Brazil the sales structures are different, the customer preferences are different. “It’s all expensive.”
2023-09-13 05:51:00
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