Birkenstock Shares Fall 12.5% In Wall Street Debut
Birkenstock took a step down when it hit Wall Street.
Shares of the German sandal-maker fell 11.5 percent to $40.71 in its first few minutes of trading on the New York Stock Exchange on Wednesday afternoon. By the time markets closed, shares were down 12.61 percent to $40.20
While that left the company with a still-hefty market capitalization of $7.6 billion, the early stock dip takes some momentum out of the IPO market where other companies, like Kim Kardashian’s Skims, are plotting their next steps.
Birkenstock priced at $46 Tuesday evening, within the $44 to $49 range targeted by the company for the initial sale to institutional investors, who then turned around and sold the stock into the open market.
Goldman Sachs & Co., JP Morgan and Morgan Stanley were joint lead book-running managers for the offering.
Watch on FN
Birkenstock’s initial bounce on Wall Street made it the fourth-largest footwear company trading in New York, by market capitalization. The company now sits behind Nike Inc. at nearly $150 billion, Deckers Outdoor Corp. at $13.2 billion and On Holding, which went public last year, at $7.9 billion.
Birkenstock — and its chief executive officer Oliver Reichert — are now going to have to get used to having the company’s value fluctuate moment-to-moment with the whims of investors.
And on Wall Street, both timing and adjacency can be important as a surprise from one player can depress whole sectors.
It turns out this was exactly the market that Birkenstock launched into as luxury stocks were in retreat in Europe on Wednesday after leader LVMH Moët Hennessy Louis Vuitton posted just a 1 percent gain in third-quarter revenues.
Shares of LVMH fell 6.5 percent to 686.10 euros while Burberry Group was off 3.2 percent to 17.77 pounds and Brunello Cucinelli slipped 3.2 percent to 71.40 euros.
Birkenstock does not operate at the peak of the luxury market, but the company’s sandals are a premium purchase and the brand has created a bigger profile in the high-fashion sphere, through collaborations with the likes of Dior, Rick Owens and Jerry Lorenzo’s Fear of God and ads featuring Manolo Blahnik in recent years.
Certainly, Birkenstock has plenty of friends in luxury.
Alexandre Arnault, who is the son of LVMH chief Bernard Arnault and executive vice president of products and communications at the company’s Tiffany & Co. business, sits on the Birkenstock board.
Arnault stood just to Reichert’s right and waved a sandal as the CEO rang the opening bell on the New York Stock Exchange. The two shook hands as the applause wore on and the trading day got under way. In a rare exception to the exchange’s very buttoned up dressing rule’s — “flip-flops, casual beach or boat shoes, and other extreme styles are not permitted” — traders were outfitted in Birkenstocks for the event.
The pairing of Arnault and Reichert was not surprising.
LVMH is a key backer of L Catterton, which acquired Birkenstock in 2021. The private equity giant — which bills itself as the largest investor in the consumer space in the world — sold off 21.5 million shares in the offering and now controls 82.8 percent of the company.
While this is just the beginning of L Catterton’s monetization of the investment, the deal is on its way to be a good one for the private equity player, which acquired Birkenstock for what was said at the time to be about 4 billion euros in the midst of the pandemic.
That ascent in valuation reflects, in part, Birkenstock’s dramatic growth — from revenues of 292 million euros in 2014 when Reichert took the helm to 1.2 billion euros last year.
For the nine months ended June 30, revenues advanced 21 percent to 1.1 billion euros as adjusted profits grew 47 percent to 182 million euros.
Birkenstock raised nearly $450 million in the offering and plans to use the proceeds to repay a vendor loan of about 100 million euros as well as 313 million euros due under a senior term facility.
This story was reported by WWD and originally appeared on WWD.com.
