Birkenstock Valued at $10 Billion: Discover the Untapped Potential Behind the Iconic Brand
Birkenstock's skyrocketing value soars to an astounding $10 billion, proving that stylish sandals are a lucrative business venture
Theres big money in trendy sandals.
German shoemaker Birkenstock could be valued at up to $10 billion when it lists its shares on the stock market for the first time.
The well-known shoe brand intends to offer shares at a price range of $44 to $49 per share when it makes its debut on the New York Stock Exchange. The company aims to raise up to $1.6 billion, as stated in a filing on Monday. No specific date has been set for its initial public offering.
With the highest price in the range, Birkenstock's market value would reach $9.9 billion, considering all shares in the company, including those owned by current investors and shares given to employees.
The family-owned firm traces its origins back to 1774, when church archives mention Johannes Birkenstock, who worked as a cobbler in Langen-Bergheim, Germany.
A Birkenstock store in Berlin, Germany, on Friday, Sept. 22, 2023. (Krisztian Bocsi/Bloomberg via Getty Images).
Krisztian Bocsi/Bloomberg/Getty Images
In 2021, Birkenstock, a company owned by LVMH which owns brands like Tiffany & Co. and Dior, was acquired by L Catterton, a private equity firm. The majority stake was purchased by L Catterton, while brothers Christian and Alex Birkenstock retained a minority stake.
According to the filing on Monday, the company's revenues have experienced significant growth in recent years. Between the 2020 and 2022 financial years, revenues surged by 71%. In the nine months leading up to the end of June this year, revenues grew by 21% compared to the same period in 2022, reaching â¬1.12 billion ($1.17 billion). During that period, the firm achieved a pre-tax profit of â¬154.2 million ($161.7 million).
Birkenstock experienced a significant surge in popularity during the summer after one of its sandals was prominently showcased in the highly successful "Barbie" movie. (Warner Bros. Discovery, the parent company of CNN and "Barbie" distributor Warner Bros. Pictures, contributed to this achievement.)
Traders work on the floor of the New York Stock Exchange during afternoon trading on September 26, 2023 in New York City.
Michael M. Santiago/Getty Images
Most of the world's initial public offerings (IPOs) are being snatched up by smaller players in the stock market. The upcoming listing of a shoemaker is considered a significant achievement for the US market, but it adds yet another setback for stock exchanges in Europe. Arm, a chip designer based in the UK, made the move to the US last month and is now listed on the Nasdaq. It currently holds a market capitalization of $54 billion.
The Birkenstocks IPO is one of many prominent listings this year that have sparked investor optimism for a resurgence in the global market for new share offerings, following a prolonged period of decline. In Europe and the United States, listings have particularly struggled due to elevated interest rates, resulting in increased yields on safe investments like government bonds and a decrease in investor willingness to take on more risky ventures.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, stated on Monday that Birkenstocks step is a clear indication that the IPO engine is resurging after an 18-month decline. However, she emphasized that the volatility in share prices after recent listings, like Arm and grocery delivery firm Instacart (CART), demonstrates the continued sensitivity of investor sentiment, especially in light of the expectation of prolonged high interest rates.
