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| Birkenstock Possesses a Unique Edge Unavailable to Its 2023 IPO Peers |
Birkenstock, an iconic brand with a history dating back almost 250 years, is poised to go public on Wednesday. Unlike many of its 2023 IPO counterparts, Birkenstock's story is deeply rooted in time and tradition.
The company plans to offer 10.75 million shares at $46 each on the New York Stock Exchange, symbolized as "BIRK." Positioned within the initial price range of $44 to $49 per share, this move is set to raise approximately $1.48 billion. When combined with the existing shares in circulation, Birkenstock's total valuation is projected at $8.6 billion.
For this German-based footwear brand, the IPO represents just another chapter in a remarkable journey that began in 1774. Over nearly two and a half centuries, Birkenstock has maintained its relevance, now taking the grand stage.
Sunny Bonnell, CEO and founder of branding agency Motto, likened Birkenstock to "rediscovering an old vinyl record and realizing it's a timeless hit." The brand proudly wears its history and values like a badge of honor.
In contrast to most of the companies going public in 2023, Birkenstock boasts a history that predates the founding of the United States. According to the company's records, its origin can be traced back to 1774 when Johann Adam Birkenstock was listed as a "subject and cobbler" in Langen-Bergheim, Germany.
In 1896, Konrad Birkenstock, the great-great-grandson of Johann, became known as the "master cobbler" and introduced the "flexible footbed insoles." In 1902, he pioneered the contoured arch support that defines Birkenstock footwear. The "blue footbed," which is still a part of their offerings, was produced in 1925. The 1960s saw the introduction of their first one-strap fitness sandal, the Madrid Model.
Birkenstocks made their way to the US market in 1966, particularly finding success in California among a new culture of young consumers who valued function, purpose, and individuality.
In 2021, the company took a significant step by selling a majority stake to private equity firm L Catterton and its affiliates, including Bernard Arnault's luxury goods investment company, Financière Agache. The decision was also accompanied by the appointment of Oliver Reichert as the sole CEO.
Despite its rich heritage, Birkenstock maintains a youthful energy level, akin to an inspired Silicon Valley startup. Reichert emphasized that they have upheld the original spirit of their founders, making them more relevant than ever before.
Today, Birkenstock is a multibillion-dollar enterprise, with fiscal year 2022 revenues of 1.24 billion euros, growing at an annual rate of 20% since 2014, and selling 30 million units in 2022. The company relies heavily on word-of-mouth marketing, appealing to a wide range of consumers in terms of age, gender, and socio-economic demographics.
This unique universality gives Birkenstock an edge over other brands and sets it apart from its 2023 IPO peers. "Imagine a band that doesn't advertise yet sells out concerts," says Bonnell. "That's Birkenstock. When a brand earns trust and love, it's like igniting a bonfire."
Though Birkenstock is in its seventh generation of leadership, it manages to connect with every age group. Its timeless appeal transcends generational boundaries.
As Birkenstock steps into the IPO market, it faces a significant test. Market experts like Ben Laidler from eToro and Jon Keidan, founder of Torch Capital, are cautious, considering the ongoing pullback in consumer spending and the discretionary nature of Birkenstock's products. Furthermore, Barrett Daniels, US IPO services co-leader at Deloitte, believes that while there is demand, it's crucial to assess who is truly ready to go public, as the IPO landscape may not be as ideal as initially anticipated.
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