Photo credit: Shutterstock.
Each week, Just Style editors select an offering that illustrates the issues driving change in our industry. The deal doesn’t always have to be the greatest value or the most notorious. But we choose it for what it tells us about where the leading companies are focusing their efforts and why. We analyze the deal itself and the industry theme behind it. This new, thematic deal reporting is based on our base value disruptor data, All major deals, patents, corporate filings, hiring patterns and social media buzz in our sectors are tracked here.
As part of Birkenstock’s potential IPO
Birkenstock was founded in 1774 by the German shoe manufacturer Johann Adam Birkenstock with the aim of creating shoes that would support and contour the foot and provide comfort for the wearer.
Two years ago (February 2021), the German footwear brand completed an agreement to sell a majority stake to LVMH-backed private equity firm L Catterton and affiliated companies, including Financière Agache, the family investment firm of Bernard Arnault – chairman and CEO of the luxury conglomerate LVMH .
This acquisition came as the brand said it was “performing better than at any time in its 250-year history.” While the terms of the deal were not disclosed, a report published by the Financial Times said the deal would value the company at around €4 billion ($4.5 billion).
At the time, L Catterton shared his ambitions for the shoemaker’s growth in markets like China and India. The company also planned to expand production, logistics and sales activities in Europe and America.
Birkenstock’s direct-to-consumer (D2C) business and e-commerce platforms were also set to evolve when L. Catterton took a majority stake in the company.
GlobalData apparel analyst Louise Deglise-Favre exclusively tells Just Style that owning L Catterton has had a positive impact on the brand. She says, “It has completely transformed the brand image from an orthopedic shoe to a fashion staple for many consumers.”
Plus, she says the brand has significantly expanded its range to appeal to a wider audience while maintaining its core aesthetic.”
Why this potential deal matters
A report published by Bloomberg said L Catterton was working with advisors including Goldman Sachs Group Inc and JP Morgan Chase & Co on a “potential US listing”.
The report also suggests that the German shoe brand could be worth more than $6 billion in an initial public offering (IPO). However, Bloomberg notes that deliberations are ongoing and L. Catterton could potentially opt out of a deal.
L Catterton told Just Style that it doesn’t comment on speculation surrounding Birkenstock’s IPO.
However, Neil Saunders, managing director for retail at GlobalData, believes now is a good time to consider an IPO.
Saunders states, “Since acquiring the company, L Catterton has grown Birkenstock and added value to the company. They are probably pleased with the progress and see this as an opportune time to test the waters and see if there is interest in a public offering.”
He continues: “An IPO would give Birkenstock more flexibility. As an independent company, it could raise funds for expansion and growth.”
However, he’s quick to point out that the big question mark with an IPO is whether there’s enough demand to support a strong valuation.
He says, “Investors are very cautious about valuations as many have been hit by a slew of consumer brands that haven’t really lived up to their big promises.” Birkenstock is a far more established and much older brand than many of the new DTC upstarts, so this will likely work in his favour. The fact that L. Catterton is exploring options suggests they are cautious about the environment.”
Deglise-Favre agrees, saying Birkenstock has done well and an IPO could benefit L Catterton significantly as the German brand’s share price is likely to rise sharply after its IPO – as is the case for other brands listed on the IPO went stock exchange.
She emphasizes that an IPO is always a symbol of success and legitimacy within an industry.
However, she adds, “For fashion brands, going public often also means losing control, which can be damaging.” A fashion brand is often most successful when its vision and identity remain consistent, and opening up its ownership to a dilution of its brand identity can lead.”
As of press time, Birkenstock has not responded to Just Style’s request for comment.
Further research:
Mergers and acquisitions in the apparel industry by top themes in the first quarter of 2023 – Thematic intelligence
United Kingdom (UK) Apparel Market Size and Trends Analysis by Category (Apparel, Footwear, Accessories), Retail Channel, Supply Chain, Consumer Attitudes and Issues, Key Brands and Forecast, 2021-2026
Comments are closed.