Birkenstock (BIRK) is expected to price its IPO and start trading during the week. The German premium footwear brand is seeking a valuation of up to $9.2B in what will be a closely-watched public debut. A $9.2B valuation for Birkenstock would rank the company third in the footwear sector by market cap behind Nike (NKE) at $147.0B and Decker Outdoors (DECK) at $13.1B, but ahead of On Holding (ONON) at $7.9B, Skechers (SKX) at $7.5B, and Crocs (CROX) at $5.2B. Birkenstock (BIRK) is selling about 32.3M shares, with a target price range of $44 to $49 per share.
The 250-year-old brand saw a spike in interest during the summer after Mattel\’s (MAT) Barbie movie featured actress Margot Robbie wearing the Arizona Big Buckle Nubuck Leather Sandal in rose. The footwear company said it skews female generally, with women comprising 72% of its customers. However, recently Birkenstock has broadened its product range to include clogs and boots in an effort to increase its customer base. Of note, Birkenstock (BIRK) is going public amid heighted concerns on consumer spending on discretionary categories such as footwear. The last significant IPO in the footwear was Allbirds (BIRD), which has shrunk to a market cap of $159M.
In its IPO filings, Birkenstock said it would use the proceeds to pay down debt, although some analysts expect some of the funds to be invested in growth initiatives as well. Birkenstock has about 6K wholesale partners and a small network of about 45 of its own small stores. Birkenstock has a loose connection to LVMH (OTCPK:LVMHF). Alexandre Arnault, the son of billionaire LVMH Chairman Bernard Arnault, will sit on the Birkenstock (BIRK) board and LVMH-backed private equity firm L Catterton will still own about 83% of the footweer company after the IPO.
Birkenstock by the numbers: In the nine months to the end of June this year, revenue grew 21% compared to a year ago to reach €1.12 billion ($1.16B). The firm made a pre-tax profit of €154.2 million ($161.7M) during that period. Revenue increased from €727.9M in FY20 to €1.24B in FY22 to mark a 31% two-year CAGR. Number of units sold increased at a 12% CAGR between FY20 and FY22. Average selling prices increased at a 16% CAGR between the period and DTC penetration increased to 38% of revenue. Gross profit margin expanded to 60% of sales from 55%. Adjusted gross profit margin grew to 62% of sales from 55%.
S-1 nuggets: “Our core opportunity lies in deploying our iconic footbed across the broader footwear market globally, including in our largest markets of North America and Europe, as well as newer markets in Asia and the Middle East. Beyond geographical expansion, significant market share opportunity exists in our established and new product categories… Based on our current market penetration of less than 1%, we believe there is ample whitespace to continue growing the Birkenstock brand. We expect to capture market share globally, particularly in Asia Pacific, which is expected to be one of the fastest growing regions in the world at a CAGR of 5.9% between 2022 and 2027 and where we are meaningfully underpenetrated… We estimate our share of the massive €340 billion global footwear industry to be less than one percent, presenting substantial opportunity 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 been executing over the past decade.”