German footwear brand Birkenstock made its market debut last week, briefly securing a $8.6 billion (€8.15 billion) valuation in what was the third-largest US listing of 2023.
The 250-year-old company has come a long way from the days when its sandals were seen as an anti-fashion statement favoured by hippy types. It shipped 30 million pairs last year and has been buoyed by its link with 2023′s blockbuster hit Barbie, with Margot Robbie wearing Birkenstock sandals in one of the movie’s final scenes.
However, there was no Barbie bounce last Wednesday, with the shares falling 11 per cent on the first day of trading.
It’s easy to see why. The company was valued at just $4.3 billion in 2021, when Birkenstock sold a majority stake to private equity firm L Catterton. As recently as July, reports indicated an initial public offering (IPO) would value the company at $6 billion.
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Bulls will point to the 21 per cent increase in Birkenstock’s revenues over the past year and the potential for expansion in the Asia-Pacific region, which accounts for just 10 per cent of company revenues. However, profits dropped 20 per cent last year to €103 million and sceptics also caution that footwear trends are famously faddish.
Ultimately, it’s hard to get past the discrepancy between 2021′s valuation and this year’s one. Companies often go public when a brand is hot, hence, the old joke that IPO stands for “it’s probably overpriced”. Birkenstock may be the latest such example.
