How Would Birkenstock Fare on the Stock Market? Retail Experts Sound Off
After seeing exponential growth over the past few years, the future of Birkenstock could get even brighter.
Last week, FN sister publication WWD reported, citing sources, said that the brand’s main owner, private equity player L Catterton, has started to explore options for the hot brand, including a potential IPO. According to Bloomberg, some experts have valued the offering at $6 billion.
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While Birkenstock declined to comment on the matter, experts in the retail industry were largely optimistic about the German shoemaker’s prospects in the public markets.
After a flurry of consumer brand IPOs in 2021, the market quieted amid the post-pandemic consumer slowdown. The last footwear companies to actually complete the process and go public were Allbirds, On and Dr. Martens, in 2021. Others, such as Cole Haan and Authentic Brands Group, explored the option and abandoned it due to various factors. For Cole Haan, pandemic uncertainty was reportedly a major factor in pulling is filing in 2021, while Authentic canceled plans in 2022 after securing outside investment partners.
That stint of inactivity could work in Birkenstock’s favor, according to Matt Powell, an advisor at Spurwink River and senior advisor at BCE Consulting. “There is a lot of money on the sidelines. I think this is an excellent time for an IPO,” he told FN.
Birkenstock also has the advantage of strong name recognition. The nearly 250-year-old company has been a fixture in the U.S. footwear market since the mid-1960s, marketed primarily for its comfort and wellness benefits, but in recent years it has been embraced by mainstream consumers of all ages, as well as the fashion world (see: its award-winning Manolo Blahnik collaboration last year and tie-ups with Fear of God, Dior, Rick Owens and more).
“The crazy thing is that Birkenstock is almost the Nike of the brown shoe world. Everybody knows the name,” said Dan Ungar, owner of Mar-Lou Shoes in Lyndhurst, Ohio. “And the name has such incredible cachet.”
Should it embark on the IPO process, though, Birkenstock could face some macroeconomic headwinds. Jessica Ramirez, an analyst with research and consulting firm Jane Hali & Associates, pointed to the highly volatile consumer environment, which has dented some retail stocks in the first half of 2023.
In May, for instance, U.S. consumers spent just 0.1 percent more than the previous month, according to the Bureau of Economic Analysis. That followed after 0.6 percent spending growth in April.
“And now with the student repayment loans coming through, that’s another reason [for consumers] to really watch how they spend,” Ramirez said.
And as they evaluate Birkenstock, investors could look to the track records of other recent shoe IPOs, which have had mixed results. Allbirds and On both made splashy debuts on the New York Stock Exchange. But while On has managed to hold on to some of its support — as of press time, On Holding stock was down about 9% from its Sept. 13, 2021, opening price of $35.40 — Allbirds has struggled mightily, with a roughly 94% drop in its share price since Nov. 1, 2021.
However, Birkenstock’s strong track record could be highly appealing to potential investors.
“Consumers are still buying the brand and making repeat purchases,” said Liza Amlani, principal at the Retail Strategy Group consultancy.
Ramirez agreed. “Birkenstock for some time has had momentum behind it and it’s become a key part of the casual and comfort conversation,” she said, also pointing to its many collaborations and recent store openings. (Since 2019, Birkenstock has bowed four brick-and-mortar locations in California and New York.)
“And I think they’ve been able to really modernize their strategy and the product itself,” Ramirez added. “They found the room [to branch out] and the consumer has welcomed it into their wardrobe.”
At the height of the pandemic, when the world was stuck at home, the Birkenstock Arizona sandal was one of the most sought-after footwear styles. While retailers said that demand for the Arizona has waned somewhat, the brand’s Boston clog continues to be a strong performer, and its expanded offering of closed-toe styles is showing promise.
In an interview with FN in January, Birkenstock Americas CEO David Kahan said the closed-toe collection has had more momentum than expected. “People who came to us during the pandemic, as they get back to like their lives out there in the real world, the fact that they can bring the Birkenstock feeling to a sneaker or a boot, this is where the real momentum starts. And it’s building incredibly quick,” he said.
As to the brand’s continued appeal in the marketplace, Kahan emphasized that while Birkenstock has gained some star power recently, its foundation remains decidedly unsexy. “We make shoes that fashionable people like and purchase, but we’re certainly not making what we would say are ‘fashionable shoes,'” he said. “We’re making shoes that are built on a footbed and we’ll never ever deviate from that footbed, so whoever comes in contact with our product knows they’re getting something that truly benefits them from a true orthopedic standpoint.”
With a potential financing boost, Birkenstock could continue broadening its assortment.
Aside from its sneaker collection, Powell lauded the brand’s recent investments to update its duty market collection, which caters to health care professionals, hospitality workers and others in service industries.
As for Ungar, he hopes to see Birkenstock introduce more looks for the 65-and-older crowd. “For a consumer like ours, who’s more mature and mainstream, that is not the Birkenstock customer in America,” he said. “Selfishly for us, I wish the product selection was more in line with our target.”
And should Birkenstock decide to invest in growing its brick-and-mortar retail fleet, Ungar isn’t the least bit worried. “The Birkenstock dealers who are doing well with the brand, even if a Birkenstock store opens up near them, it only brings more awareness and potentially more sales,” he said.
But Amlani hopes the company would put the funds toward another important area of the business: R&D. “Investing in innovation would put Birkenstock on the map as a relevant leader in new and sustainable material developments,” she said. “Birkenstock’s management already invested $100 million euros in modernizing its factories in order to meet demand with supply and get faster to market. It’s now time to invest in innovation.”
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