TRUISM
7 months ago
Birkenstock Announces Megan Kulick as Director Investor Relations
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LONDON, UK / ACCESSWIRE / April 16, 2024 / Birkenstock Holding plc ("BIRKENSTOCK" or the "Company") (NYSE:BIRK), announced today the appointment of Megan Kulick to Director Investor Relations, effective April 15, 2024.
Based in New York, Ms. Kulick will report to the Board of Directors of the Company.
Oliver Reichert, CEO of the BIRKENSTOCK Group and Member of the Board of Directors of the Company: "It was extremely important for us to fill the position with an Investor Relations Professional who not only has a high reputation in the market and an excellent professional background, but also speaks the language of the Street and whom we trust to convey our unique equity story in the most credible and effective way.
Her background as an analyst, investor and IR professional positions her well to convey BIRKENSTOCK's strategies and outcomes to the investment community and other key stakeholders."
Ms. Kulick brings over 20 years of strong and international financial experience spanning investor relations, equity research, and portfolio management at top tier U.S. banks and large listed corporations. Most recently she led Investor Relations for Cresco Labs.
Prior to that she held several senior positions, including the role of Head of Investor Relations at AYR Wellness Inc., Senior Vice President at PIMCO, Director at Merrill Lynch, and VP at JPMorgan Chase. Megan began her career at Merrill Lynch in Equity Research covering Telecommunications Services.
Ms. Kulick holds a bachelor's degree in Business Administration and Finance from the University of Michigan and an MBA from the Colombia Business School.
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TRUISM
8 months ago
Birkenstock Investing €15 Million In Portugal
By TPN/Lusa, in News, Portugal, Business, Porto & North · 1 hour ago
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German footwear brand Birkenstock is investing 15 million euros in Arouca to operate a production unit there with more than 600 direct jobs being created.
According to data from the Municipal Council of the district of Aveiro, the German multinational acquired as a subsidiary the single-person company S&CC Portugal, which had already been operating in the sector since 2003, and is next to the current facilities of the firm that it is building a new unit, 10 times larger in size.
The new factory should be completed by December 2024 and will occupy 13,000 square meters in the São Domingos Industrial Zone, involving a workforce that, by 2025, should reach 600 to 650 direct jobs.
For the mayor of Arouca, Margarida Belém, “the attraction of this foreign direct investment by the Birkenstock economic group results from several competitive factors in the country, the region and the municipality”.
The socialist mayor explains: “Arouca is today an active part of an ecosystem of innovation and business development based on the areas of intelligent specialization in its region, among which creativity and the symbolic capital of fashion stand out – which includes footwear” .
Considering the reputation of the brand which, according to Fortune and Forbes magazines, in 2022 it sold more than 30 million pairs of shoes to around 100 countries, Margarida Belém expects from Birkenstock “a commitment to differentiation, quality and knowledge”, of which should result in “significant direct and indirect impacts (for the municipality) such as the creation of new jobs, population retention, attraction of new residents and boosting added value”.
The mayor also highlights that the investment of 15 million euros is also associated with the commitment that the German multinational demonstrates “an attitude of social and environmental responsibility, which, in conjunction with current public policies, will certainly contribute positively to the local and regional development dynamics”.
According to an internal Birkenstock publication that Lusa had access to, the new factory will have a leisure area on the roof and a kindergarten prepared to accommodate 50 children. The company also intends to “provide free transport to employees, so that they can go to work without having to use their cars”.
TRUISM
9 months ago
Baron Capital's Ron Baron Makes a Bold Move with Birkenstock Holding PLC
BY GuruFocus Research-Wed, Feb 14, 2024, 3:01 PM EST
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Insights from the Latest 13F Filing Reveal a Significant New Position
Ron Baron (Trades, Portfolio), the esteemed founder of Baron Capital Management and a seasoned investor known for his long-term growth strategy, has revealed his latest investment moves in the fourth quarter of 2023 through the 13F filing.
Baron, a graduate of Bucknell University and George Washington University Law School, is renowned for his focus on small to mid-size growth companies with strong market niches.
His investment philosophy centers on in-depth, bottom-up research and a value-oriented purchase discipline, often holding investments for an average of over five years.
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12 months ago
Birkenstock shares extend rally, hit IPO price for first time
By Chibuike Oguh-Wed, November 29, 2023 at 12:37 PM EST
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VIDEO
NEW YORK (Reuters) - Shares of German sandal maker Birkenstock extended their gains on Wednesday, hitting the initial public offering price for the first time, following a buoyant holiday shopping season.
Strong spending by U.S. shoppers during the Thanksgiving holiday as well as Black Friday and Cyber Monday propelled retail sales to a record this year, potentially benefiting luxury brands such as Birkenstock.
The company's shares opened at $41 on Oct. 11 and have traded below the IPO price of $46 and dropped to as low as $35.83 just days after listing. On Tuesday, the stock jumped more than 9% and continued its rally on Wednesday, rising as much as 2.7% to $46.60.
The lackluster market debuts of Birkenstock as well as other hotly anticipated offerings from chip designer Arm Holdings, grocery delivery app Instacart and marketing automation firm Klaviyo have dampened hopes for a U.S. IPO market resurgence.
The median price target of the 17 analysts covering Birkenstock is $47.21 and the current recommendation is "buy", according to LSEG data.
Birkenstock is heavily shorted, with 5.71 million shares worth roughly $259 million having short interest, according to data and analytics firm Ortex. About 32.3 million shares were sold on the IPO.
The company is owned by U.S. private equity firm L Catterton, which is backed by French billionaire Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy.
(Reporting by Chibuike Oguh in New York; additional reporting by Medha Singh in Bengaluru; Editing by Lance Tupper and Lisa Shumaker)
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12 months ago
Stock Spotlight: Birkenstock steps into uncertainty as expectations run high
By Valeria Martinez-November 20, 2023
LINK
Caution about future profit growth
Image: Birkenstock’s IPO has performed better than other US listings this year, such as Instacart and Klaviyo | Photo by Stephanie Hau on Unsplash
Birkenstock is under pressure to deliver against high expectations from analysts in its first quarterly results as a public company, after a hefty valuation at IPO failed to impress investors.
The 250-year-old German sandal maker publicly listed on 11 October 2023 and on its first day, shares opened 11% below its initial price, according to data from Morningstar Direct.
The company priced its shares at $46 at IPO, the midpoint of the indicated range of $44 and $49, but had slumped to less than $41 at the end of trading. The company had expected to raise roughly $1.5bn from the listing.
"They say timing is everything when it comes to IPOs and we can safely say Birkenstocks timing was off, given the sharp sell-off in October," said Michael Hewson, chief market analyst at CMC Markets UK.
Russ Mould, investment director at AJ Bell, argued there are also company-specific issues that have impacted its weak performance, such as a valuation that "does not immediately look cheap".
"The stock trades on around five times sales for 2023 and even if earnings take off as analysts expect there is no certainty, given that recession worries lurk, despite all of markets' current faith in a soft landing (at worst)," he said.
"A multiple of 25 times 2025 earnings hardly leaps off the page as a bargain, even allowing for the power of the brand and the 20%-plus operating margins that the company makes."
Still, the company's IPO was the third largest in the US market this year, and it performed better than other listings, such as Instacart and Klaviyo. Moreover, its shares have slightly rebounded since its float, up 5% over the last month, according to data from Morningstar Direct.
Investment case
Beyond the underwhelming response to one of the very few Wall Street listings this year, the shoe maker remains profitable, with total 2022 revenue of $1.35bn and net income of $202.8m.
When the accounts were released prior to the IPO, the revenues for the nine months to June were estimated to be $1.2bn, surpassing the total revenue from the previous year.
The money raised by the IPO has also allowed the company to repay $550m in loans, reducing its total debt to €1.31bn.
Ismail Rashid, equities analyst at Charles Stanley, said Birkenstock's investment case is supported by a "strong brand heritage" and a vertically integrated business model, which he said gives it "industry leading margins".
"It has a long runway of growth as it looks to target new under-penetrated emerging markets," he added.
AJ Bell's Mould added the company has a brand with pricing power, which can mean robust margins, good cash flow and a "decent stream" of dividends over time.
"Pricing power can be particularly valuable at a time of inflation, as it helps the firm defend those margins and that cashflow, thanks to customer loyalty," he said.
Hargreaves Lansdown head of money and markets Susannah Streeter said that although the brand's popularity could provide some resilience, there is caution among investors surrounding Birkenstock's future profit growth, given cost pressures.
"With cost-of-living pressures still swirling, and the Federal Reserve still appearing intent on keeping interest rates at ‘restrictive' levels to lower inflation further, there will also be concern that consumers might have less money to spend," she said.
Streeter noted that given retail sales are slowing in the US in light of the Fed's rate hikes, potential interest rate cuts should help give more support to consumer discretionary stocks.
AJ Bell's Mould noted the company has also made several strategic moves designed to boost growth, notably investment in its online offering, taking back distribution from third parties and expansion of its retail estate.
Charles Stanley's Rashid said Birkenstock's rapid expansion opens the company up to execution risks. Moreover, he noted that its premium valuation relative to its peer group raises the pressure for the brand to deliver against this "high expectation".
"The company has not reported quarterly numbers so we will find out when earnings reports - over time - are compared to earnings expectations," added Mould.
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1 year ago
Birkenstock Holding (NYSE:BIRK) Quiet Period To Expire Tomorrow
Posted by Techdows on Nov 19th, 2023
TECHDOWS
Birkenstock’s (NYSE:BIRK – Get Free Report) quiet period is set to expire on Monday, November 20th. Birkenstock had issued 32,258,064 shares in its initial public offering on October 11th.
The total size of the offering was $1,483,870,944 based on an initial share price of $46.00. During Birkenstock’s quiet period, insiders and underwriters involved in the IPO are restricted from issuing any research reports or earnings estimates for the company because of regulations issued by the Securities and Exchange Commission.
Following the end of the company’s quiet period, the brokerages that served as underwriters will likely initiate research coverage on the company.
Analyst Upgrades and Downgrades
BIRK has been the subject of several recent analyst reports. Robert W. Baird initiated coverage on shares of Birkenstock in a research note on Monday, November 6th. They issued an “outperform” rating and a $48.00 target price for the company.
Evercore ISI assumed coverage on shares of Birkenstock in a research report on Tuesday, November 7th. They issued an “outperform” rating and a $47.00 target price for the company. Citigroup assumed coverage on shares of Birkenstock in a research report on Monday, November 6th.
They issued a “buy” rating and a $52.00 target price for the company. Morgan Stanley started coverage on shares of Birkenstock in a research report on Monday, November 6th. They issued an “equal weight” rating and a $41.00 target price for the company. Finally, Piper Sandler began coverage on shares of Birkenstock in a research note on Monday, November 6th. They issued an “overweight” rating and a $50.00 price target for the company.
Seven equities research analysts have rated the stock with a hold rating and twelve have assigned a buy rating to the company’s stock. According to data from MarketBeat.com, Birkenstock currently has a consensus rating of “Moderate Buy” and a consensus target price of $46.54.
NYSE BIRK opened at $41.79 on Friday. Birkenstock has a 1 year low of $35.83 and a 1 year high of $43.40.
Birkenstock Holding plc manufactures and sells footwear products. It offers sandals, shoes, closed-toe silhouettes, skincare products, and accessories for men, women, and kids. The company sells its products through online and retail stores. It operates in the Americas, Europe, the Asia Pacific, the Middle East, and Africa.
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1 year ago
Analysts are going crazy for this one-month-old stock
By Sam Quirke - MarketBeat - Thu Nov 9, 5:17AM CST
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Despite giving investors a mild heart attack during the first few days of public trading, shares of Birkenstock Holding plc (NYSE: BIRK) have been putting in a good shift ever since. In one of the more high-profile IPOs of the year, not least because of how recognizable the brand is, the 250-year-old company went public last month and promptly fell more than 15% from its opening highs.
While question marks were quickly raised about the viability of a $9 billion valuation on what is essentially a luxury sandal company, the stock has only really gone up since. It tagged a fresh high during Wednesday's session, helped in part by a run of impressive calls from analysts.
Bullish Calls
Starting with the bullish calls, the team over at Jefferies initiated coverage with a Buy rating. Analyst Randal Konik is a fan of Birkenstock's brand strength and loyal customer base and sees this underpinning the company's future growth. The business is well-positioned for top-line growth and attractive margins, both of which investors will hope to see in the company's first public earnings report.
Stifel echoed this with their own Buy rating, which came with a price target of $47. From where shares were trading on Wednesday, this pointed to a further upside of at least 10%. While the company already has a long history and a strong market presence, the Stifel team's bullish view is driven by the fresh growth opportunity in a $200 billion non-athletic footwear market. Like Jefferies, they expect strong top-line prints and margins in the quarters ahead.
These calls, along with the 20% rally currently underway, are a distinct departure from the negative headlines that came out during the first week of trading. It's been a bad year for IPOs in general, with Arm Holdings plc (NASDAQ: ARM), for example, IPO'ing in September and almost immediately sinking 30%. It was the same for Instacart (NASDAQ: CART). You could argue that much of this is tied to the wider trading environment. A soft S&P 500 that was trending down since July wouldn't make the most pleasant of environments for a company to go public.
But the benchmark index is itself having one of its best runs in months and is currently up 7% since the last week of October. This shift in sentiment is largely due to further positive signs that the Fed may have managed to thread the needle when it comes to taming inflation. This can only be a good thing for companies like Birkenstock that are very much on the consumer discretionary side of things.
Some Caution Urged
For all that, though, there has been some caution urged. Deutsche Bank is nonplussed with Birkenstock's growth potential and thinks it's fairly valued right around here. So, too, are the teams at Morgan Stanley and Piper Sandler, who gave the stock a Neutral rating. It seems like they're in a wait-and-see mood, but you can easily imagine this switching over to a full bullish view if the stock can move toward $50 or there are solid financial updates.
The company has a lot going for it in that department, with its vertically integrated European manufacturing process particularly admired as it drives advantageous per-pair economics. If there are concerns about the company's current valuation, where Birkenstock is above its peers with a 16x 2024 EV/EBITDA print, Williams Trading analyst Sam Poser isn't too concerned. Considering how well the company has executed over the past ten years, delivering consistent sales growth and strong margins, he has no problem giving them a Buy rating even with a high multiple.
Inser's price target of $55 might just be the highest out there right now and speaks volumes to the stock's upside potential. Even with the recent rally, that's pointing to a further upside of some 30%. For investors considering getting involved, watch for further momentum on the bid and a move to fresh highs, as this will likely unlock a fresh wave of buying, not to mention bullish calls from the street.
The article "Analysts are going crazy for this one-month-old stock" first appeared on MarketBeat.
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1 year ago
Analysts Are Optimistic About Birkenstock as They Initiate Coverage on the Market’s Newest Shoe Stock
By Shoshy Ciment-Mon, November 6, 2023 at 2:45 PM EST
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Analysts had positive sentiments about Birkenstock as they initiated coverage on the market’s newest footwear stock to kick off the week.
The German company made its debut on the New York Stock Exchange in October after pricing an IPO at $46 per share, for an $8.6 billion valuation. Shares of the shoe brand fell 12.6 percent to $40.20 on the company’s first day on the market and fell another 6.6 percent to $37.55 the following day.
Amid a broader market rebound in the past week, the stock picked back up. As of Monday at 2:45 p.m., shares of Birkenstock were at $41.86.
In their notes initiating coverage, analysts highlighted Birkenstock’s brand history, loyal consumer base, product assortment and distribution model as positive assets that will help the stock increase in value over time.
In his note announcing a $55 price target, Williams Trading analyst Sam Poser chalked up the brand’s rough first days on the market to “under appreciation of Birkenstock’s heritage, culture, product, breadth of product opportunities and execution.”
This rich history, combined with strong brand management and a firm grasp of a scarcity business model, is what gives Poser confidence “the stock will be trading well higher than it is today” when it releases earnings for the first time.
“Birkenstock has proven over the last 10 years (that it can) meticulously drive consistent sales growth with industry leading margins,” Poser wrote.
Jefferies analyst Randal Konik also highlighted Birkenstock’s reputation as a “historic brand with a loyal customer base” in his note giving the stock a $50 price target.
“We believe the company’s evolution into a universally known brand with a loyal customer base speaks to the company’s ability to continue to adapt and develop new silhouettes to maintain existing customers while also attracting new ones,” wrote Konik. “Moving forward, we believe the company can leverage its well-known brand, and its vertically integrated multi-channel distribution model to further improve brand awareness and increase its addressable market.”
In the prospectus document filed for its IPO, Birkenstock noted its engrained presence with certain consumers and said that the feminist movement spurred demand for Birkenstock as early as the 1990s, when women took to the sandals to “free themselves from long-standing fashion norms that required wearing painful high heels and other constricting footwear.” More recently, Birkenstock played a central role in the box office smash hit, “Barbie,” which sparked a 110% increase on searches for Birkenstock Arizonas following its release, according to Lyst.
BMO Capital Markets analyst Simeon Siegel said there is still more runway for growth in within core business, product extension and geographic expansion in his note announces a target price of $50 and an “outperform” rating for the stock.
“We believe Birkenstock represents a brand with significant top-line whitespace ahead,” Siegel said, also noting Birkenstock’s “proven track record of consistently growing average selling price.”
Another benefit to Birkenstock, Stifel analyst Jim Duffy pointed out, is its operating model, which consolidates most of its product manufacturing in German facilities. This allows for “complete oversight of quality control throughout the production process, and insulation from potential upstream supply challenges,” Duffy said.
“The unique vertically integrated European operating model prioritizes distribution quality and supply chain control, compared to the industry standard of sourcing product primarily from Asia,” Duffy wrote.
International expansion is another area of opportunity for the brand, read a note from HSBC Global Research.
“It appears that BIRK’s awareness is very low outside of four key countries: Germany, the US, the UK and France,” read the note. “And this means that, on paper, the brand could become much bigger in years ahead if it manages to build on that awareness more broadly.”
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1 year ago
IPO prospects 'dampened' by further market decline, says Pitchbook
Published: 09:37 25 Oct 2023
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Public market debut prospects “are dampened by further market decline and higher rates”, according to new research from Morningstar data firm Pitchbook Data Inc.
It said that successful initial public offerings (IPOs) “will be slightly harder to achieve” at robust valuations given the recent decline in public market valuations.
The report cited market debuts by Instacart (NASDAQ:CART) and Birkenstock, which it said have “underperformed” relative to their pre-IPO valuations, for example Instacart (NASDAQ:CART)’s private market valuation of US$39 billion fell to US$9.9 billion after its recent debut on the stock market.
IPOs are being suppressed by "decelerating revenue growth", which Pitchbook analysts said is making it take longer for start-ups to grow into the elevated valuations seen in 2020 and 2021.
The report said that late-stage investors are wary of pushing portfolio companies to list their shares on the public markets, and that venture capitalists will “likely recoup more capital” if they wait for companies to grow into their valuations.
“It will take some companies several years to grow into their valuations, and some may never succeed,” Pitchbook analysts said in the report.
Nasdaq is down 5.7% as of 17 October compared to its peak after the Federal Reserve signalled higher interest rates will last for longer, the report said.
“Market corrections typically hit fast-growth companies harder,” Pitchbook analysts warned.
Birkenstock performed negative 15.1% compared to Nasdaq to 17 October, its data showed, while Instacart (NASDAQ:CART) was negative 17.2% compared to Nasdaq.
But performance has been mixed across the biggest seven US IPOs of the past four months, with Arm Holdings PLC (NASDAQ:ARM), Klaviyo, RayzeBio and CAVA all performing better than Nasdaq, it said, with CAVA up 61.2% compared to the exchange average data during the period.
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1 year ago
Fashion IPOs: Is The Market Warming Up?
BY SAMANTHA HARRISON-OCTOBER 23, 2023
DRAPERS LINK
Following the recent floatation of German footwear brand Birkenstock at the New York Stock Exchange (NYSE), Samantha Harrison, corporate finance director at financial advisory firm Grant Thornton UK LLP explores the opportunities and challenges for fashion businesses eyeing IPOs.
We have seen a decline in the number of, and proceeds raised by, IPOs since 2021 and no notable IPOs in the UK, Europe or the US in the fashion sector until Birkenstock’s recent debut. There has been a particularly stark decline for the American IPO market, although it has also been marked for the UK and Europe.
The challenges facing fashion IPOs are largely the same as those facing the IPO market more widely. Recent market volatility and lack of investor confidence has led to weakening in equity markets since the start of 2022, with inflationary pressures coming into play even prior to the conflict in Ukraine leading to even more rapidly increasing inflation.
The peaking of inflation, the UK having avoided recession and reports that wage increases may have now overtaken inflation are all indicators that consumer confidence and spending are potentially due to improve further. This could help stimulate confidence on the IPO market more generally and for the fashion sector particularly. We see that there is interest for compelling equity stories, however the wider global uncertainties mean that IPO markets are yet to fully re-open.
The German footwear retailer is not alone in its post IPO performance in the US (On 2 October, Birkenstock launched its IPO following months of speculation. However, its share price, which stood at $37.26 (£30.70) as of 19 October, has fallen 19% below its initial IPO price of $46 (£37.90)). It is unfortunately the situation that several recent IPOs have gone swiftly to trade at below their launch price, including the recent high-profile listing of (UK-based chip designer) Arm Holdings, (its share price has fallen below $51 (£41) since floatation, the price at which it went public).
During 2021, there was strong appetite for consumer-oriented IPOs, particularly with the online retail market, which received a strong boost during Covid lockdowns. These times were marked by the likes of Revolution Beauty Group plc, Seraphine Group plc, In the Style plc and Made.com coming to market in the UK. Of these, all have since struggled with market perception and have come off-market again.
The initial rebound in "luxury" spending following the end of lockdown also strengthened the equity story for fashion-orientated brands on market. However, we have seen the headwinds faced by such companies on market since this spurt of optimism. Just recently, LVMH has reported sales growth slowing down in Q3 2023 and market expectation is that other luxury goods retailers will report similarly.
The challenges of inflationary cost pressures, supply chain, inventory management and sustainability credentials for fashion brands are key factors to be addressed during an IPO and for their life on-market. Regional exposure and trends will also have a major effect on equity stories. We have seen the importance of the MENA (Middle East and North Africa) and Asian markets for many of the more luxury orientated brands. Any formal travel restrictions, or decline in global tourism, will likely also have an impact on many fashion brands.
Some fashion retailers have had a strong share price performance in the last 12 months. In the UK, Next, following an acquisition of Reiss, has seen a substantial share price increase (up 0.5% on the day of the announcement to £70.28, compared with the day before) and has recently bought FatFace, which may reflect a renaissance for (the share price of) high street fashion in the UK.
Companies who can articulate a clear strategy to engage with their chosen market segment remain strong IPO candidates. These businesses can benefit from increased consumer awareness and even consumer engagement through ownership giving them greater connection to brands.
Managing an IPO and the equity story, through early preparation with advisers, is key to a successful launch and meeting market expectations thereafter. Ensuring management is ready for the increased public scrutiny, particularly around their ESG agenda, and has the support, internally and from advisers, to deal with the transaction process is critical.
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1 year ago
Footwear Firm’s IPO Shows US Market Is Yet To Find Its Feet
By Bloomberg News-October 16, 2023
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Market challenges have subdued debuts on Wall Street and globally.
Birkenstock Holding Plc, the 249-year-old footwear brand, stumbled onto Wall Street last week in a debut that could quash the fledgling rebound of initial public offerings.
The maker of cork-soled sandals closed down 12.6% on Wednesday for the worst first-day showing in a US IPO of $1 billion or more in more than two years. Not since AppLovin Corp.’s April 2021 offering, with its 18.5% day-one loss, has there been a worse such debut.
Bad market timing appears to have counteracted the Neustadt, Germany-based company’s conservative pricing strategy and its reliance on anchor investors. It also overshadowed a recent sales boost from the Hollywood blockbuster Barbie whereMargot Robbie trades in her heels for a light pink pair.
The IPO was “definitely not the debut that Birkenstock was hoping for,” said Nicholas Smith, senior research analyst at Renaissance Capital. He added that the current market is more discerning and risk-averse, especially in the consumer sector.
Timing can sometimes be everything when it comes to an IPO. Birkenstock’s investor roadshow was bookended by a potential US government shutdown, public holidays in Germany and the US, delayed listings in Europe and an outbreak of war in Israel.
These factors, combined with disappointing earnings from Birkenstock’s indirect backer LVMH, just hours before the new stock was set to open trading in New York, hurt its performance. LVMH, and the family that controls it, is a partner of Birkenstock’s owner, L Catterton.
Bernard Arnault’s conglomerate, which owns labels such as Louis Vuitton and Christian Dior, reported a 9% rise in third quarter revenue, below the 11.9% analysts were expecting. It said consumers were spending less, especially in Europe, following the boom years post-pandemic. The results dragged down other luxury stocks.
That cast a shadow over how some investors were viewing Birkenstock after books closed at noon Tuesday, one of the people said, and may have weighed on its trading debut. With markets already rattled by the Middle East, some larger accounts were reconsidering their appetite for the sector, they said.
A representative for Birkenstock declined to comment.
The NYSE during the Birkenstock IPO on Oct. 11. Photographer: Spencer Platt/Getty Images
IPOS PULLED
Global stock market volatility earlier in October had already started to shake confidence even before Birkenstock’s IPO, with Triton earlier postponing its planned share sale for military gearbox maker Renk AG. A few hours before Birkenstock began trading, French software company Planisware postponed its IPO on Euronext Paris, citing challenging market conditions.
Birkenstock’s order book was covered more than eight times at the top of the range on Tuesday, said the people, who asked not to be identified discussing confidential information. At the pricing meeting Tuesday at the Plaza hotel on New York’s Fifth Avenue, the company and its private equity owner L Catterton decided to price at $46, just below the midpoint of the $44 to $49 marketed range, with the aim of ensuring a first day ‘pop,’ the people said. The offering raised $1.48 billion.
Even at $46, the price might have been too rich compared to peers. That price valued the company at 4.9 times forward price to sales, while its footwear peer group trades at just two times, according to Bloomberg Intelligence analyst Abigail Gilmartin.
Like the others in the fall IPO class, Birkenstock had lined up anchor investors as part of a strategy to stabilize the offering by assuring demand.
But anchor investors haven’t made the IPOs of late a sure victory. Instacart also tried that strategy and is still trading 15% below its IPO price. It could be because these anchor investors don’t need to necessarily hold onto their shares, according to Josef Schuster, founder and chief executive officer of IPOX Schuster.
“We’ve also seen some of the cornerstone investment is not subject to any lock up requirements, so the allocation does not by default reduce liquidity,” Schuster said.
There’s also some debate about Birkenstock’s preference to allocate 90% of its IPO shares to long-only investors, which is more than usual. The company and L Catterton insisted from the outset, even before the roadshow started, that they wanted a book full of strong long-only investors and weren’t interested in “short-term” money, meaning hedge funds. They took very few meetings with hedge funds or alternative asset managers, the people said.
That decision may end up creating downward pressure on the stock as demand by the long-only had been met in the IPO process and hence they weren’t snapping up shares in the open market, they added.
RUBRIK, TURO
Shares fell further on Thursday and again on Friday, extending the decline from the IPO price to almost 21%. That left the company with a market value of about $6.8 billion.
The debut dud is already prompting other companies that had been targeting near-term listings to reconsider their timelines.
Those putting their IPO plans on a slower track include Microsoft Corp.-backed cloud and data security startup Rubrik Inc. and car-sharing business Turo Inc., according to people familiar with the matter. Rubrik and Turo’s IPO timings aren’t finalized and could still change.
Representatives for Rubrik and Turo didn’t respond to requests for comment.
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1 year ago
Birkenstock stumbles on Wall Street as investors find sandal maker's shares too pricey
By MICHELLE CHAPMAN | ASSOCIATED PRESS 16 hrs ago
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Birkenstock CEO Oliver Reichert, second from right, rings the New York Stock Exchange opening bell, prior to his company's IPO, Wednesday, Oct. 11, 2023. (AP Photo/Richard Drew)
NEW YORK — Birkenstock stumbled in its stock market debut Wednesday, a day Wall Street traded in its wingtips for sandals.
Some traders on the floor of the New York Stock Exchange donned the iconic opened-toed footwear, and Birkenstock CEO Oliver Reichert rang the opening bell, with people around him waving sandals in the air.
But the enthusiasm did not carry over to investors, who apparently viewed the asking price for a stake in the 249-year-old German company as too steep.
The maker of upmarket sandals set a price of $46 per share for its initial public offering of stock late Tuesday, valuing the company at $8.64 billion. The stock opened for trade Wednesday at $41, below the range of $44 to $49 it had been expected to price just a week ago. It ended the day down 12.6% at $40.20.
Birkenstock Holding Ltd. sold about 10.8 million shares in the offering, raising about $495 million. Its shareholders sold an additional 21.5 million shares. So far this year, of the 24 other IPOs that raised at least $100 million, the average first-day return was 20%, according to Renaissance Capital, a firm specializing in IPO research.
The company’s footwear was first cobbled together by Johann Adam Birkenstock in Germany in 1774. The sandals have long been derided as the antithesis of high fashion but have a cult following and this summer got a plug in the blockbuster movie “Barbie.”
“Through the strong reputation and universal appeal of our brand — enabling extensive word-of-mouth exposure and outsized earned media value — we have efficiently built a growing global fanbase of millions of consumers that uniquely transcends geography, gender, age and income,” Birkenstock said in a recent regulatory filing with the Securities and Exchange Commission.
Birkenstock’s formula for success began with a view that humans are intended to walk barefoot. The company said in its filing that its footbed, which was developed in 1902, “represents the best alternative to walking barefoot, encouraging proper foot health by evenly distributing weight and reducing pressure points and friction.”
Birkenstock makes all of its footbeds in Germany and assembles more than 95% of its products there. The remaining products are made elsewhere in the European Union.
The company’s revenue has increased from 727.9 million euros ($771.7 million) in fiscal 2020 to 1.24 billion euros ($1.32 billion) in fiscal 2022.
Birkenstock’s IPO will be the fourth to launch in the U.S. in the past month, following Arm Holdings, Klaviyo and Instacart. There were just 71 IPOs in the U.S. last year, the lowest number since 2009, according to Renaissance Capital.
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1 year ago
Commentary: How ‘ugly’ orthopaedic shoe company Birkenstock created a brand worth billions
BY Tamsin McLaren-13 Oct 2023 06:01AM
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Birkenstock’s IPO is the third-largest US listing so far in 2023. Not bad for functional footwear that was developed to improve foot health, says a University of Bath marketing lecturer.
Once considered an anti-fashion badge, Birkenstock sandals have become standard footwear for celebrities. (Photo: AFP/File/John MacDougall)
BATH, England: Asked to choose between a brown Birkenstock and a pink stiletto, most people would be able to make a fairly quick decision.
In this year’s Barbie movie, Weird Barbie challenges Stereotypical Barbie to make this very choice. To Barbie, the high heel represents a life of beach fun and dance parties, while the sandal means “knowing the truth about the universe”.
That the film’s director Greta Gerwig used a Birkenstock Arizona sandal to represent the truth about life says it all about this “ugly” orthopaedic shoe.
Stereotypical Barbie meets Weird Barbie, played by Kate McKinnon, to ask for advice on how she can go back to ‘normal’. (Photo: Warner Bros. Pictures via AP)
Birkenstocks have been the footwear of choice for the “brown rice” or hippie set for decades, but this negative image has recently morphed into something very different.
As comfort, climate change concerns, demand for animal-free products and affordability have become increasingly important to shoppers, Birkenstock has also been able to entice fashionistas and hippies alike to try its flexible arch supports.
As a result, financial analysts predicted the German shoe brand would be valued at more than US$8 billion in advance of its shares becoming available to the public on the New York Stock Exchange. Birkenstock’s initial public offering is the third-largest US listing so far in 2023. Not bad for functional footwear that was originally developed to improve foot health.
A FAMILY FOOTWEAR BUSINESS
When the Birkenstock brand was founded in 1774 in Germany by Johann Adam Birkenstock, industrial manufacturing processes in Europe were evolving. The Birkenstock family used the new technology to design and develop footwear with contoured insoles to give flexible arch support for improved foot health.
But it wasn’t until the 1920s that affluent Europeans became more aware of the benefits of such footwear, leading to exports of the shoe across Europe. By the 1960s, the company was producing sandals. The Arizona was the third style introduced by the brand in 1973, after the Madrid (1963) and the Zurich (1964).
It was at this time that Birkenstock transitioned from orthopaedic footwear into fashion, helped along by entrepreneur Robert Lusk. He identified that the counter-culture generation wanted a comfortable alternative to mainstream commercial products.
Lusk opened The Natural Shoe Store in London’s Covent Garden in 1976 to serve these customers. And while Birkenstocks didn’t appeal to the glamorous power dressers of the 1980s, by the late 1990s Lusk had started widening the brand’s appeal. He persuaded Birkenstock to make new colours of its best selling styles, the Arizona and Madrid.
This departure from Birkenstock’s traditional brown hues aimed to appeal to more fashion-forward customers.
BIRKENSTOCK’S “BUBBLE UP”
Momentum continued to build behind the brand, but in the UK at the time Birkenstocks were only available from Lusk’s shop or mail-order service and a standalone Birkenstock store. As A-listers such as actor Jude Law and then-British Vogue editor Alexandra Shulman started coveting the sandals as a summer alternative to another “ugly” shoe brand - UGG Australia - demand started to far outstrip supply.
This scarcity effect led to production in Germany being ramped up. When a brand sees a spike in distribution such as this, it can turn customers off. But, unusually, greater availability did little to dent demand for Birkenstocks and doesn’t seem to have damaged its “brand equity” in the long term either.
This is the value a company derives from consumer perception of its brand. Birkenstock’s collaborations with high-end designers like Dior and Manolo Blahnik have also boosted its brand equity.
Birkenstock’s slow burn is an example of “bubble up” theory. This is the opposite of the more traditional “trickle down” phenomena, where mass market designers and brands are influenced by high-end luxury and designer fashion. Instead, brands and designers take inspiration from different aspects of society, particularly alternative sub-cultures, reinterpreting original use.
Other examples of mainstream fashion successfully borrowing from and reinterpreting subcultures and original use include Doctor Martens and Crocs. These two fashion brands also have utilitarian roots and both went public with impressive valuations: Doctor Martens at £3.7 billion (US$4.6 billion) in 2021 and Crocs at US$1.15 billion in 2006.
WEARING YOUR VALUES
American conservatives refer pejoratively to “Birkenstock liberals”, but the style has become associated with a universal nonchalance and quirky charm, while also representing “inconspicuous consumption” - just like other ethical shoe brands such as Allbirds.
Thorstein Veblen’s theory of conspicuous consumption suggests we use fashion to display financial wealth and status. Birkenstocks’ more accessible starting prices of £40 to £65 send the reverse signal. Wearers are avoiding overt displays of wealth, instead communicating their taste via subtle branding, and knowledge about materials, form and function.
And comfort cannot be ignored. Bronislaw Malinowski, an anthropologist that explained social phenomena in terms of functional appeal, said people want functional products to satisfy some or all of these seven needs: Nutrition, reproduction, bodily comforts, safety, movement, health and growth.
Functional footwear addresses most of these needs and informs some of the most iconic, and valuable, fashion brands. Other iconic footwear brands born from functional origins include Scholl - originally worn for medical purpposes - and UGG Australia, first worn by surfers to keep their feet warm.
Like many other fashionistas, Barbie chose a (pink) Birkenstock Arizona in the end, highlighting how the brand has managed to synthesise function and fashion, even in an “ugly” form. Other factors, such as the impact of persistently high inflation on consumer spending, will affect how Birkenstock fares post-IPO, but the brand has certainly put its best foot forward for its stock market debut.
Tamsin McLaren is Senior Lecturer in Marketing, University of Bath. This commentary first appeared on The Conversation.
TRUISM
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1 year ago
Birkenstock's stock loses footing in second day on Wall Street
BY Reuters-Thu, October 12, 2023 at 2:51 PM EDT
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(Reuters) - Shares of Birkenstock dropped 6% on Thursday, deepening losses after the German luxury sandal seller stumbled the day before in its Wall Street debut.
In its first session on Wall Street on Wednesday, Birkenstock tumbled over 12% from the $46 price set in its initial public offer, raising $1.48 billion. It had aimed to price the IPO for as much as $49 a share.
Last trading at about $37.79 on Thursday, the stock has now dropped 18% from its IPO price.
The second-day drop in Birkenstock shares was deeper than a broad Wall Street sell-off, with the S&P 500 last down about 1%.
The 250-year-old company's underwhelming U.S. market debut follows weak performances from chip designer Arm Holdings and grocery delivery platform Instacart, formally called Maplebear, following their IPOs last month.
Some investors had hoped those marquee companies would spark a resurgence in public listings after volatile markets in the past two years dampened demand for IPOs.
Arm on Thursday slumped 5.2% to $51.70, just above its $51 IPO price on Sept. 13, while Instacart was down 1.7% at $24.52, well below its $30 IPO price on Sept. 18.
With Thursday's loss, Birkenstock has a market capitalization of about $7 billion, or nearly $8 billion on a fully diluted basis. That is still nearly double the $4.35 billion at which L Catterton, the U.S. private equity firm backed by French billionaire Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy, paid to acquire a majority stake in the shoemaker in 2021.
Birkenstock's listing on Wednesday coincided with a sharp drop in LVMH's shares following the luxury brand's slower third-quarter sales growth.
"The timing of the IPO was in a way unfortunate as it followed LVMH Q3 results, in which management stressed how European consumers had deteriorated in a significant way in Q3," said Javier Gonzalez Lastra, Investment Partner at Tema ETFs.
(Reporting by Noel Randewich; editing by Lance Tupper and Jonathan Oatis)
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