Birkenstock valued at $9.2bn

Despite recent weakness in US equity markets and the fact that both ARM Holdings and Instacart are both trading close to or below their IPO price, Birkenstock has taken the decision to go ahead and pursue its own listing of 32.26m shares at between $44 and $49 a share targeting a valuation of about $9.2bn.

The German based shoemaker is looking to raise up to $1.6bn and has been in business since 1774 making what can be best described as leisure shoes, namely sandals or clogs.

Since 2010 the company has diversified into sleep systems, as well as natural cosmetics however that remains a small part of the overall revenue stream, which is primarily derived from the sale of high value sandals and clogs. The proceeds of the IPO will be used to pay down debt.

In 2021 private equity company L. Catterton and Financière Agache bought a majority stake in Birkenstock with a view to expanding into the Chinese market. Both Financière Agache and L Catterton are backed by LVMH owner Bernard Arnault valuing the business at the time at $4.3bn.

Curiously the deal came in the aftermath of the Dr. Martens IPO which took place two months previously in February 2021, although both companies have undergone rather differing fortunes since then. At the time Dr Martens had a valuation of £4.5bn which has slid to £1.3bn, raising the question as to whether Birkenstock is worth such a hefty price tag.

On the actual numbers themselves Birkenstock total revenues have risen from $728m in 2020 to $1.3bn in fiscal year 2022. Over the same period net income has doubled from $101.3m to $202.8m.

In its most recent financial statement Birkenstock reported that revenues were 21% higher in the 9-months to June 30th at $1.2bn, putting the business on course for a record year for both revenues as well as profits.

Of course, that doesn’t necessarily justify a valuation that is four times bigger than sector peer Dr. Martens, however investors may have other ideas given that valuations in the US tend to be higher anyway.