Sandal manufacturer, Birkenstock, is poised to list on the New York Stock Exchange next week amidst a backdrop of a looming cost of living crisis, making consumers more cautious about their spending. Investors and analysts have highlighted the need for the company to diversify, not only by bolstering sales of clogs and boots but also by strengthening their online and boutique sales channels. Despite this, the 250-year-old firm, backed by an LVMH-affiliated private equity firm, has plans to sell up to 32 million shares priced between $44 and $49, potentially raising as much as $1.58 billion.
While the IPO proceeds are designated for debt reduction, there is speculation that some of the funds may be redirected to support further expansion. The brand, known for its iconic sandals, has managed to remain relevant, riding on trends of casual dressing, especially during the COVID-19 pandemic. However, the current economic climate poses challenges, especially as luxury and discretionary spending may face a downturn.
The company does have support from key players in the luxury sector. Alexandre Arnault, the son of billionaire LVMH Chairman Bernard Arnault, is set to join its board. Additionally, post-offering, the private equity firm L Catterton, which currently owns 100% of Birkenstock, will retain about 83% of the company. This significant backing by industry heavyweights is seen as a vote of confidence in the brand's resilience and potential growth.
However, the overall outlook for Birkenstock's IPO remains uncertain, especially when considering the performance of other footwear brands that have recently gone public. Brands like AllBirds (BIRD), Dr Martens (DOCS), and On Running (ONON), have seen their market valuations dip post-IPO. Only time will reveal if Birkenstock, with its rich history and evolving brand image, will fare differently.
