Birkenstock IPO: Will the IPO Perform Better Than Recent Ones?

The much-awaited Birkenstock IPO is finally here with us as the sandal-maker prepares to list on the New York Stock Exchange (NYSE) next week. The company is expected to sell 32 million shares priced between $44 and $49 apiece, which would raise approximately $1.58 billion at the top end of analysts estimates.

The IPO comes amid a tough time for companies that IPO with recently-IPO’d companies such as Instacart, Arm and Kellanova all having their stock price trading lower than their opening prices on the IPO day. The same is likely to happen to Birkenstock shares, given that the company does not have a significant competitive advantage. 

Analysts have pointed out that Birkenstock’s main products, its world-renowned sandals, are seasonal products, with demand highest during the summer months, with the winter months experiencing much lower demand due to the harsh weather. 

The 250-year-old company was founded by Johann Adam Birkenstock in 1774. It has grown into a famous and iconic brand due to the unique nature of its comfortable sandals, which are not necessarily considered beautiful. The sandals have been equated to crocs, also known for their comfort instead of beauty. 

Birkenstocks have gained popularity recently, especially after the COVID-19 pandemic, which caused demand for comfortable sandals to skyrocket as people spent more time at home and embraced casual wear. The sandals also remain popular among celebrities such as actors and models. 

The company is expected to do well this year despite the minimal growth expected from the global footwear industry, which is expected to expand by a mere 2.9%. Many footwear retailers have pointed out that the back-to-school shopping period was less robust than in previous years. 

Most consumers are facing a cost of living crisis that has made them cut discretionary spending in favour of buying essential items, with clothing and footwear being some of the hardest hit industries by the changes in consumer behaviour. 

Mamta Valechha, a consumer discretionary analyst at Quilter Cheviot in London, said: “The question is, how do you create desirability for people to buy another pair of Birkenstocks?”

Still, the brand has found a way to remain popular with consumers over decades, which will likely stay the same. 

Investors will be keen to see how the Birkenstock IPO goes, with a particular focus on whether the price shall rise or fall after the IPO. The IPO has attracted significant interest from large cornerstone investors, which should bode well for the company.