Sean Gallup
Birkenstock (BIRK) is expected to price its IPO and begin trading later this week. The premium German footwear brand is seeking a valuation of up to $9.2 billion in what will be a high-profile public debut. A $9.2 billion valuation of Birkenstock would be the best The company ranks third in the footwear sector by market capitalization behind Nike (FROM) at $147.0 billion and Decker Outdoors (DECK) at $13.1 billion, but ahead of On Holding (ONON) at $7.9 billion, Skechers (SKX) at $7.5 billion and Crocs (CROX) that $5.2 billion. Birkenstock (BIRK) is selling approximately 32.3 million shares with a target price range of $44 to $49 per share.
The 250-year-old brand saw a surge in interest over the summer after actress Margot Robbie wore the pink Arizona Big Buckle Nubuck Leather Sandal in Mattel’s (MAT) Barbie film. The shoe company said it generally favors women, with 72% of its customers being women. However, Birkenstock has recently expanded its product range to include clogs and boots to increase its customer base. Notably, Birkenstock (BIRK) is going public amid deep concerns about consumer spending on discretionary categories like shoes. The last significant footwear IPO was Allbirds (BIRD), which shrunk to a market cap of $159 million.
In its IPO filings, Birkenstock said it would use the proceeds to pay down debt, although some analysts expect some of the funds will also be invested in growth initiatives. Birkenstock has around 6,000 wholesale partners and a small network of around 45 of its own small branches. Birkenstock has a loose connection to LVMH (OTCPK:LVMHF). Alexandre Arnault, the son of billionaire LVMH chairman Bernard Arnault, will sit on the board of Birkenstock (BIRK) and LVMH-backed private equity firm L Catterton will continue to own about 83% of the footwear company after the IPO.
Birkenstock in numbers: In the nine months to the end of June this year, sales rose 21% year-on-year to 1.12 billion euros ($1.16 billion). The company posted pre-tax profits of 154.2 million euros ($161.7 million) in the period. Revenue increased from €727.9 million in FY20 to €1.24 billion in FY22, representing a two-year CAGR of 31%. The number of units sold increased at a compound annual growth rate of 12% between FY20 and FY22. Average selling prices increased 16% during the period and DTC penetration increased to 38% of sales. Gross profit margin increased from 55% to 60% of sales. Adjusted gross profit margin increased from 55% to 62% of sales.
S-1 nuggets: “Our greatest opportunity is to bring our iconic footbed to the broader footwear market worldwide, including our largest markets in North America and Europe, as well as newer markets in Asia and the Middle East. Beyond geographic expansion, there are significant market share opportunities in our established and new product categories… Based on our current market penetration of less than 1%, we believe there is sufficient scope to continue the growth of the Birkenstock brand. We expect to gain market share globally, particularly in Asia Pacific, which is expected to be one of the fastest growing regions in the world with a compound annual growth rate of 5.9% between 2022 and 2027 and is significantly underserved. .. We estimate our share of the huge global shoe industry worth 340 billion euros to be less than one percent. This represents significant opportunities for further growth. We believe we are well positioned to significantly expand our market share and drive sustainable growth and profitability through the following pillars, each of which represents a continuation of the proven strategies we have implemented over the last decade have. “
Comments are closed.