Birkenstock wants to go public: hit the trading floor with slippers

Birkenstock wants to go public: hit the trading floor with slippers

With Birkenstock, a traditional German brand is likely to go public soon. The former eco-friendly shoes have long been worn by world stars. But is that enough for Birkenstock to establish itself as a luxury brand?

By Siems Luckwaldt, Lutz Meier and Katja Michel

Now also Barbie. When the film blonde wakes up one morning with flat feet, she swaps her pumps for more comfortable shoes. Instead of high heels, Barbie now walks around the world in pink Birkenstocks. However, Barbie is not a trendsetter: stars such as US actresses Sarah Jessica Parker and Kristen Stewart also appear in the iconic sandals with the wide footbed, which were once considered clumsy eco-friendly shoes.

And the product placement in the “Barbie” film scene is just one of the German brand’s two major appearances on the international stage in a short space of time: The Hollywood number is now to be followed by the company’s listing on the New York Stock Exchange. As the “Handelsblatt” reports, Birkenstock wants to officially announce the IPO this week. The first day of trading is planned for the week starting October 9th. Birkenstock could be valued at at least $8 billion.

It would be the current climax of an eventful company history that once began quite calmly. The brand’s founding date is 1774, when Johannes Birkenstock opened his shoemaker’s shop. Over a hundred years later, Konrad Birkenstock invented and patented the characteristic wide cork footbed. The company from Linz am Rhein was family-owned for six generations before the brothers Alexander and Christian Birkenstock sold a majority of around 65 percent to the private equity company L Catterton in 2021.

Sales increased tenfold in ten years

L Catterton was created in 2016 when the US private equity company Catterton and the private equity arm of the French multi-billionaire Bernard Arnault’s luxury goods group LVMH, which includes Louis Vuitton, Moët & Chandon and Dior, among others, joined forces. Arnault holds another 20 percent of the Birkenstock shares through his investment company and family holding Financière Agache, and another ten to 15 percent of the shares are now to be sold.

Oliver Reichert has been at the helm of the medium-sized company since the end of 2012 as the first non-family CEO; the founding family was considered divided when he joined. Reichert initially ran the company together with Markus Bensberg, and since 2021 alone. Under Reichert, a former football player and former head of the sports channel DSF (now Sport1), Birkenstock achieved the feat of permanently bringing the hippie slippers of the 1970s into the style mainstream. In 2012, sales were a good 120 million euros, but in 2022 they were around 1.2 billion euros.

In addition to sandals, Birkenstock now also produces sneakers, beds and natural cosmetics. There are six production locations in Germany. The latest one has just been put into operation: production started at the beginning of September in a new factory in Pasewalk in Mecklenburg-Western Pomerania. Birkenstock invested around 120 million euros in the factory near the Polish border, which will primarily produce sandals made of plastic. 200 people work there and there are plans to grow to 1,000 more. They are expected to produce up to 6.4 million pairs of shoes per year.

Kate Moss in Birkenstocks on the beach

The fashion industry discovered Birkenstocks much earlier than the mainstream. The magazine “The Face” had the then 16-year-old Kate Moss photographed in sandals on an English beach in 1990; it was a time when fashion was tentatively democratizing. Birkenstocks only became really cool in 2014, when designers Giambattista Valli and Celine showed the former Jesus or Roman slippers on the catwalk. A great renaissance began.

Today, the traditional company works under the “Birkenstock 1774” line with high-end brands such as the shoe manufacturer Manolo Blahnik, which achieved cult status through the US series “Sex and the City”. The bright blue or pink sandals come decorated with crystal stones – and the usual wide footbed. The streetwear brand Supreme would also have liked to release shoes with Birkenstock – but received a rejection from CEO Reichert. Dior is different: in 2022, models on the Paris catwalk presented sandals and clogs that were the result of a collaboration between the French luxury brand, which belongs to Arnault’s luxury group LVMH, and Birkenstock. Birkenstock was able to benefit from Arnault’s network.

The entry of the luxury entrepreneur Arnault as majority owner had raised great hopes at the company’s headquarters in Linz am Rhein and elsewhere, especially since the company’s value in this deal was estimated at almost 5 billion euros, according to reports. Birkenstock has become “one of the few iconic brands” in the shoe industry, Arnault said at the time. In this way and with Arnault’s help, could Birkenstock become one of the few German beneficiaries of the global luxury boom?

Birkenstock was never integrated into LVMH

Arnault never integrated Birkenstock into his global luxury champion LVMH. However, it is suspected in the industry that Arnault could expand his shares as part of the IPO. The fact that Arnault is now sending Birkenstock public instead of integrating it into LVMH could also be an indication that the shoe company has not proven itself worthy enough for the really big global luxury business in the Frenchman’s eyes.

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And in order to compete in the luxury market, a brand needs one thing above all: capital. This must flow into the global distribution of the products. Because successful luxury brands are keen to eliminate the middleman and control prices (which are also significantly increased at the same time), they have to spend a lot of money to set up their own chain stores in preferred business locations. They have to spend more money on marketing in order to increase the desire for the products. And in order for sales to justify the immense expenditure, a successful luxury brand must constantly expand its product range without betraying the brand essence.

All of these are not only costly but also difficult tasks. And luxury conglomerates like LVMH usually do this better than a single company. According to research by consulting firm Bain, the top 10 in the global luxury sector control more than half of the sales and more than 80 percent of the growth and profits in this market. So it won’t necessarily be easy for a brand like Birkenstock to survive here, even with stock market money.

Customers don’t care much about this: Today, US model and fashion icon Kendall Jenner wears Birkenstocks – with tennis socks that were once frowned upon.

Source: Stern

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