Birkenstock IPO: Where Comfort Meets Finance

What is Birkenstock?

Birkenstock is a sixth-generation family-owned business that was founded in 1774. The company is known for its comfortable and supportive sandals, which have become increasingly popular in recent years. The company's demand for the sandal soared since it was featured in one of the most popular and iconic movies of 2023, Barbie, with searches for womens Birkenstocks increasing by 518% and Birkenstock sales in the UK by 184% according to research conducted by 3DLOOK.  The inclusion of Birkenstock in the movie has been praised by many for its subversion of traditional gender stereotypes and its promotion of self-acceptance. Barbie is seen wearing them as she walks down the street, symbolising her life in the real world.  

It’s worth noting that Birkenstock has also expanded its product line to include other types of shoes, such as clogs, sneakers, and boots.

Birkenstock is a profitable company, with revenue of €740 million in 2022. The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) were €190 million in 2022.

What do we know about the Birkenstock IPO?

The German premium footwear brand went from socks and sandals to aiming for a $10 billion valuation in its initial public offering (IPO) on the New York Stock Exchange. The company filed its prospectus with the US Securities and Exchange Commission on October 2, 2023, and is expected to price its IPO shares in the coming weeks.

Birkenstock is planning to sell at least 32 million shares, priced between $44 and $49 apiece. At the top end of that range, the IPO would raise about $1.58 billion for the company. It has been said that Birkenstock intends to use the proceeds of the IPO to pay down debt.

Birkenstock is entering the IPO market at a time when investor sentiment is mixed. On the one hand, there is strong demand for consumer brands with a loyal customer base. On the other hand, the stock market has been volatile in recent months, and some investors are hesitant to commit to new investments.

Despite the challenges, Birkenstock is a well-known brand with a strong track record. The company is also in a good position to benefit from the growing trend towards comfortable and sustainable footwear. If the IPO is successful, Birkenstock could become one of the largest publicly traded footwear companies in the world.

When is the Birkenstock IPO date?

The IPO of Birkenstock Holding Limited is expected to be on Wednesday, 11 October 2023.

How to buy into Birkenstock’s IPO?

Birkenstock has not been listed on the stock market yet, however, you will be able to trade it the same way as any other stock on the market once it goes live. 

If you have thoroughly researched and understand the company and its prospects and are interested in purchasing shares in the Birkenstock IPO, here is what you should do:

• Open a brokerage account. You will need a brokerage account to buy shares in the Birkenstock IPO. At XTB we request clients to fill out an online application form either through the website or the mobile app.Upon successful completion of the application and your KYC documents your trading account will be established. 
• Fund your brokerage account. You will need to fund your brokerage account with enough money to buy the number of shares you want. At XTB we offer fractional shares. Instead of specifying the number of whole shares you want to buy, you enter the dollar amount you want to invest. Once you submit your order, the brokerage will execute it, buying the appropriate fraction of the selected asset. XTB handles all the calculations.
• Set a stop loss order. A Stop-Loss Order is a type of closing order, allowing the trader to specify a specific level in the market where if prices were to hit, the trade would be closed out by our systems automatically, typically for a loss.
• Open a demo-account. If you aren’t ready to trade yet why don’t you start your trading journey by creating a demo account? XTB offers a demo account for 30 days where you can trade with fake money and explore your trading skills and platform. 

Once the IPO is announced, you will be able to place a stop order to buy shares. The price of the shares in the IPO will be determined by supply and demand, so it is impossible to say for sure how much they will cost. However, you can use your limit order to ensure that you do not pay more than you are willing to pay for shares in the company.

It is important to remember that investing in IPOs is a risky proposition. The price of shares in an IPO can be volatile, and there is no guarantee that you will make money. You should only invest in an IPO if you are comfortable with the risk involved. Don’t invest more than you can afford to lose.

How does Birkenstock make money?

Birkenstock makes money primarily through the sale of its footwear, but it also generates revenue from accessories and skincare products. The company's footwear sales are driven by a combination of factors, including:

• Product quality and comfort: Birkenstock are known for their high-quality materials and construction, as well as their contoured footbeds that provide support and comfort. This has made them a popular choice for people of all ages and lifestyles, including those with foot and back problems.
• Brand recognition: Birkenstock is a well-established brand with a strong reputation for quality and comfort. This brand recognition helps the company to attract and retain customers, and to charge premium prices for its products.
• Fashion trends: Birkenstock have been embraced by the fashion industry in recent years, making them even more popular with consumers. This has helped to boost Birkenstock's sales and expand its customer base.

In addition to footwear sales, Birkenstock also generates revenue from the sale of accessories, such as socks, insoles, and shoe care products. The company also recently launched a line of skincare products that are made with natural ingredients and are designed to promote foot health.

Birkenstock sells its products through a variety of channels, including its own website, retail stores, and wholesale partners. The company has a strong e-commerce presence, and its website is one of its largest sales channels. Birkenstock also has a network of over 10,000 retail partners in over 100 countries.

In recent years, Birkenstock has experienced significant growth in sales and profitability. In 2022, the company generated revenue of 1.24 billion euros ($1.33 billion), up 29% from the previous year. Birkenstock's gross profit margin was 60% in 2022, and the company was profitable.

Who owns Birkenstock Holdings? 

Birkenstock Holdings is owned by the private equity firm L Catterton, which is backed by Bernard Arnault's LVMH. L Catterton acquired a majority stake in Birkenstock in February 2021 for a reported €4 billion. The Birkenstock family, which founded the company in 1774, retains a minority stake in the company and continues to oversee production.

L Catterton is a global consumer-focused private equity firm with over $30 billion of equity capital raised. The firm has a long track record of investing in successful consumer brands, including Birkenstock, Ganni, Seafolly, Pepe Jeans, and Samsonite.

The acquisition of Birkenstock by L Catterton is seen as a sign of the company's strong growth potential and its appeal to a wide range of consumers. L Catterton is expected to help Birkenstock expand its global reach and launch new products and categories.

Who are the anchor investors of Birkenstock?

The anchor investors of the Birkenstock IPO are:

1. Financière Agache, the family holding company of Bernard Arnault, chairman and CEO of LVMH
2. Norges Bank Investment Management, the Norwegian sovereign wealth fund
3. Durable Capital Partners LP, a US investment firm

These three investors have committed to buying up to $625 million worth of Birkenstock shares in the IPO. Their backing is a significant vote of confidence in the company and its growth potential.

If you are not aware, anchor investors are institutional investors who agree to purchase a certain number of shares in an IPO at a fixed price before the IPO launches. Anchor investors play an important role in IPOs by providing stability and confidence to the market. They also help to ensure that the IPO is successful by guaranteeing to buy a certain amount of shares.

The presence of these high-profile anchor investors is a positive sign for Birkenstock's IPO. It suggests that there is strong demand for the company's shares and that investors are confident in its future growth.

What are the risks associated with the Birkenstock IPO?

There are a number of risks associated with the IPO that investors should be aware of before making an investment decision. One of the biggest risks is market risk. The stock market is volatile and can experience sharp declines. If the stock market declines after Birkenstock's IPO, it could have a negative impact on the company's share price.

Another risk is industry risk. The footwear industry is competitive and Birkenstock faces competition from a number of other brands, including Nike, Adidas, and Crocs. If the footwear industry declines or if Birkenstock's competitors become more successful, it could have a negative impact on the company's business and share price.

Company risk is also a concern. Birkenstock is a privately held company and has not previously been subject to the same level of public scrutiny as a publicly traded company. If any negative information about Birkenstock comes to light after the IPO, it could have a negative impact on the company's share price.

In addition to these general risks, Birkenstock also faces some specific risks, such as:

Counterfeit products: Birkenstock products are popular and counterfeit products are a problem for the company. If counterfeit products become more widespread, it could damage Birkenstock's brand reputation and reduce sales.

Supply chain disruptions: Birkenstock relies on a network of suppliers to produce its products. Any disruptions to this supply chain, caused by factors such as labour disputes, natural disasters, or political instability, could have a negative impact on the company's business.

Seasonality: Birkenstock's sales are seasonal, with higher sales in the spring and summer months. This seasonality could make it difficult for the company to maintain consistent revenue and earnings throughout the year.

Investors should carefully consider all of these risks before investing in the IPO.

Final Thoughts 

Birkenstock is a strong company with a well-known brand and a loyal customer base. The company is also growing rapidly and is expanding into new markets. However, there are a number of risks associated with the IPO as we mentioned above. 

Investors should also make sure that they understand the company's business model and financial performance. 

Here are some things to consider when deciding whether or not to invest in the Birkenstock IPO. 

Your investment goals. What are you hoping to achieve by investing in the Birkenstock IPO? Are you looking for short-term gains or long-term growth? Your risk tolerance. How much risk are you comfortable with? The Birkenstock IPO is a high-risk investment, so you should only invest if you are comfortable with the possibility of losing money. Your understanding of the company. Do you understand Birkenstock's business model and financial performance? Are you confident that the company is well-positioned for future growth? The IPO market. The IPO market is volatile and there is no guarantee that the Birkenstock IPO will be successful. Be prepared for the possibility that the company's share price could decline after the IPO.

Overall, the Birkenstock IPO is a high-risk, high-reward investment opportunity.