Shares in Birkenstock have opened 11% below their offer price on the company’s US stock market debut, valuing the German shoemaker at $8.3bn as investors bet there was less mileage in consumer demand for its cork-soled sandals, which have become an unlikely fashion success story.
On Tuesday evening the footwear firm priced its shares at $46 ahead of the first day of trading in New York, where it is using the symbol “BIRK”. That figure was in the middle of the $44 to $49 guidance provided last week and valued the company at $8.6bn (£7bn).
However, the shares opened at $41 on the New York Stock Exchange on Wednesday.
Birkenstock executives, including chief executive Oliver Reichert, waved the shoes aloft as they launched the stock market float on Wall Street earlier on Wednesday.
After plodding away successfully for decades the Birkenstock brand hit the big time during the pandemic when the shift to home working saw shoppers seek out companies that offered both comfort and heritage. With workers now back in the office, more relaxed dress codes mean there has been no need to switch back to traditional work attire.
This relaxed mood helped Birkenstock shift 30m pairs last year, with sales up almost 30% to £1.1bn, resulting in a bottom line of £162m.
With a customer base that is 72% female, Birkenstock is also benefiting from a change in mindset among young women who no longer subscribe to high heels and delicate footwear as a feminine ideal.
The initial public offering is raising about $1.5bn for the 250-year-old orthopaedic shoe brand. A third of it will be used to repay debt with the rest going to the private equity owner L Catterton, which acquired a majority stake in 2021.
As part of the company’s sales pitch to investors, Birkenstock’s chief executive, Oliver Reichert – who became the first non-family member to run it when he took the helm in 2013 – set out plans to sell other types of shoes, including clogs, trainers, shoes and boots, as it looks to end its reliance on sandals.
after newsletter promotion
However, analysts have warned that the shoemaker is making its debut as a public company in difficult market conditions. Investors are worried about the gloomy economic backdrop and declining consumer confidence, as well as the poor performance of initial public offerings by other footwear brands such as Dr Martens, which has suffered a collapse in value since its 2021 listing.
Kyle Rodda, a senior market analyst at Capital.com, said: “The Birkenstock IPO will be a good measure of broader market sentiment and sentiment toward consumer-sensitive stocks. It might tell us, too, whether cashed-up millennials like to buy the stocks of products they commonly find on the bottom shelf of their wardrobes.”
However the valuation looked “pretty rich”. “In a higher interest rate environment, these multiples may be hard to sustain in the short term, especially if consumer spending slows as expected next year,” said Rodda.
