Birkenstock’s Unveils Underwhelming Public Debut Despite Raising USD1.5 Billion in IPO

The German label raises eyebrows after Stock Exchange debut highlighting the precarious state of the luxury sector.

Oct 16, 2023 | By Sanjeeva Suresh

Despite raising USD1.5 Billion in IPO, Birkenstock shares went down by 12.6 percent on the New York Stock Exchange on its first day of trading and could potentially be a bad sign for other brands that are thinking about going public. While going public allows companies to access more capital, they may also bring on scrutiny from shareholders as can be expected from the brand. Alexander Arnault, son to chairman and CEO of LVMH, Bernard Arnault, made an appearance at Birkenstock’s IPO. Earlier this month, the Securities and Exchange Commission revealed the nomination of the 31-year-old to Birkenstock’s board of directors.

While the German shoe brand has successfully captured the attention (and spending power) of a younger generation, Birkenstock also universally changed its perception as a polarising “orthoepic-looking shoe”, to a symbol of casual-chic footwear alongside other anti-fashion, fashion shoes the likes of Uggs and the Crocs — something Vogue Business attributes to Birkenstock’s attention to quality, innovation and creativity through their control of production. The brand’s Autumn/Winter 2022 campaign for instance, featured a bevy of fashion stylists and artists including the likes of Bernard Koomson, Masha Schubbach and Nehjat Ramoth, highlighting Birkenstock’s efforts to move to a younger demographic. However, Vogue Business also reports that since private equity firm L Catterton acquired Birkenstock in a USD4.35 billion deal in 2021, “revenues have boomed”.

Founded in 1774 in the German village of Langen-Bergheim, the company was run by the Birkenstock family for six generations until they sold a majority stake to L Catterton. Birkenstock has partnership deals with luxury fashion brands, including Dior, Stüssy, Manolo Blahnik and Rick Owens.

Read More: Why Does Fashion Love Collaboration? 

Credit: Google Finance

Birkenstock’s lukewarm public debut is a discouraging sign for other reported IPO hopefuls, including Arc-teryx-owner Amer Sports, Skims and Shein.

LVMH, the key backer of L Catterton which acquired Birkenstock in 2021, saw shares fall to their lowest level of the fiscal year after results yielded financial disappointment. In the response, the company said revenue growth was normalising following a COVID pandemic boom and flagged a “uncertain economic and geopolitical environment”. High valuations are not a rare occurrence in the fashion and technology industries. When L Catterton-backed tech platform Oddity went public, the company reached a valuation of USD1.5 billion.

Read More: Luxury Powerhouses: Kering Buys 30 Percent of Valentino, LVMH Pays US $166 Million To Sponsor The Paris 2024 Summer Olympics

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