Birkenstock Files for New York IPO

The rumors first appeared in early July. Two months later, Birkenstock has officially confirmed its attempt to launch an IPO. It has submitted an application to the U.S. Securities and Exchange Commission.

During the period when everything was still just hearsay, there was speculation that Birkenstock's valuation could exceed $8 billion. To put that in perspective, the final purchase price of LVMH's acquisition of Tiffany was $15.8 billion, and Estée Lauder's acquisition of the Tom Ford brand was for $2.8 billion. For companies that have similarly experienced unexpected growth due to the pandemic, the success and outcome of Birkenstock's IPO will be an important market indicator. It may even once again draw attention from investors looking for potential gems in the fashion industry.

Birkenstock has clearly made extensive preparations for this IPO. 

The application document provides clear insights into Birkenstock's financial status. In the year ending September 30th of the last year, the company recorded total sales of €1.2 billion. Adjusted EBITDA was €434.6 million, and net profit was €187 million. In the first half of this year, the company's total sales reached €644.2 million, with adjusted EBITDA at €224.4 million. North America and Europe are Birkenstock's two most important markets, contributing 54% and 36% of the brand's revenue last year, respectively.

Of particular note is that Birkenstock is known in the industry for its insoles, which have remained unchanged for 120 years. Every insole sold by the company is manufactured at its factory in Germany, and 95% of its products are assembled there as well. 

The brand mentions its operational structure, "We optimize growth and profitability through the synergy of DTC and B2B operations. We use the B2B channel to promote brand accessibility while directing consumers to our DTC channel, which offers a complete product range and our most popular unique styles. In both channels, we execute strategic allocation and product segmentation processes, often down to the single-door level, to ensure we sell the right products in the right channels at the right price. We co-operate channels, aiming for growth in both." From 2018 to 2022, Birkenstock's DTC business revenue achieved a compound growth rate of 42%.

However, the document does not specify the planned price or quantity of stocks to be sold, leaving imagination for the market and investors. 

Currently, Birkenstock is owned by L Catterton, which is backed by LVMH Group and claims to be the world's largest consumer-focused private equity. In 2021, L Catterton acquired the majority of Birkenstock's shares, and at that time, both parties did not disclose the transaction amount, although rumors suggested it was approximately €4 billion.

The registration application is accompanied by an open letter signed by the brand's CEO, Oliver Reichert. In the letter, Reichert describes Birkenstock as more than just a shoe; it's a mindset and a lifestyle. He characterizes Birkenstock as a "sleeping giant": "A brand that had endured for centuries since 1774 and was widely revered, resonating with and even shaping the zeitgeist for decades to this day, stubborn in a positive sense, undeterred by fashion trends and proudly German. Birkenstock had all the essential elements of a super brand — a rich heritage at its core built around our purpose to empower all people to walk as intended by nature; an unyielding approach to craftsmanship combined with an obsession for quality; a vast product archive with an impressive variety of iconic silhouettes; a steadily growing global following sharing similar values and beliefs, and a uniquely democratic approach to innovation, pricing and distribution. "