German sandal-maker Birkenstock, once considered the choice of “dorky aunty or a science teacher,” has undergone a style revolution. Now, its shares are gearing up for a Wall Street debut, putting its $8.6 billion valuation to the test.
Fashion Evolution of Birkenstock: From “Dorky” to Supermodel Chic
Initially embraced by hippies in the ’60s for its comfort and sturdy support, Birkenstock was far from a fashion-forward choice. New York Times fashion reporter Elizabeth Paton notes it was the shoe for your “dorky aunty” or science teacher. However, fashion evolved, and by the ’90s, supermodel Kate Moss gave it the seal of approval.
Pandemic Comfort Boost: A 30 Million Pairs Success Story
The last decade saw Birkenstock surge in popularity, selling around 30 million pairs of shoes last year. The pandemic’s emphasis on comfort, collaborations with designers, and celebrity sightings, from Gwyneth Paltrow to Kaia Gerber, propelled its growth.
Wall Street Debut: A Moment or a Long-lasting Trend?
With its shares hitting the New York Stock Exchange, the question arises: Can Birkenstock sustain its momentum? The IPO, priced at $46 per share, values the company at double what it was worth three years ago. Investors wonder if going public will boost or burden the brand.
CEO’s Confidence: A 250-Year “Moment”
CEO Oliver Reichert is optimistic, stating, “Birkenstock is having a moment that has lasted for 250 years, and it will continue.” While the share sale allows private equity firm L Catterton to cash in $1.5 billion, the company plans to retain an 80% stake, indicating confidence in its future.
Customer Concerns: Quality vs. Growth Pressures
Some loyal customers express concerns about the IPO potentially affecting quality. New Yorker Bella Sheth fears, “I’m afraid of the IPO because I think the quality will definitely disintegrate.” Worries about growth pressures leading to compromises on quality loom large.
Fashion Landscape Risks: Birkenstock Lessons from the Past
In the world of luxury fashion, concerns about diluting the brand are real. Thomai Serdari, a professor at NYU’s Stern School of Business, acknowledges these worries. However, Birkenstock has managed to build desire through collaborations and innovative designs, avoiding pitfalls of rapid expansion seen in brands like Gap.
The Natural Step: Birkenstock Evolution
Professor Morten Bennedsen, studying family firms, notes that Birkenstock’s transformation began in 2013 when it shed family leadership and gained backing from L Catterton. Listing, he says, is a “completely natural step” in its evolution from a family-owned firm to a modern company responsive to investor pressures.
Walking the Footwear IPO Path: Success Stories and Pitfalls
Birkenstock joins the ranks of footwear and fashion companies on the IPO journey. Some, like Allbirds and Dr Martens, have faced challenges, while others like Crocs, a 2006 IPO, continue to thrive, now worth over $5.2 billion.
The Comfort Appeal: Looking Good and Feeling Good
Despite skepticism about high valuations, Birkenstock’s focus on the marriage of style and comfort might be its strength. Elizabeth Paton suggests that Birkenstock’s enduring appeal lies in the idea that “looking good and feeling good are one and the same.”
The Arch Support Factor: Beyond Trends
Customers like Lacey Crocker, who emphasizes the importance of arch support, believe Birkenstock’s appeal will outlast trends. “Even if they do go out of style, I’d still wear them,” says the 39-year-old physician’s assistant.