Birkenstock IPO: Will Investors Find the Price Uncomfortable?

Even Barbie may be wearing its sandals these days, but will investors try on a Birkenstock initial public offering for size?

The 250-year-old company is preparing to list on New York Stock Exchange, having filed for an IPO on July 7, according to PitchBook. Reports say the IPO is expected in the United States as early as September.

Birkenstock, established in 1774, was in the hands of its founding family for a quarter of a millennium. Six generations later in 2021, Christian and Alexander Birkenstock sold the company to private equity firm L. Catterton, which is backed by luxury brand LVMH Moet Hennessy Louis Vuitton SE LVMHF. PitchBook data records the transaction’s value at $4.9 billion. After only two and a half years, the French-American private equity house is looking to cash out. Goldman Sachs and JPMorgan reportedly will facilitate the IPO with a target valuation of over $8 billion.

But that might be a bit too ambitious, according to Morningstar analyst Jelena Sokolova. “Recent growth for the brand has been strong,” she says, “and it has affordable price points and universal appeal among both fashion-forward and non-fashion-forward consumers, and will likely benefit from additional popularity thanks to featuring in the Barbie movie.” But she says an IPO price over $8 billion “seems steep, especially compared with a somewhat similar footwear player like Dr. Martens DOCMF, which now has a market cap of $1.9 billion on a comparable revenue … with a share price decline of 65% since the IPO.”

According to PitchBook, Birkenstock’s revenue grew to $1.26 billion in 2022, compared with $843 million in 2020. The company more than doubled its adjusted earnings to $414.3 million, compared with $194 million in 2020.

One driver behind this success has been a forceful sales campaign in the U.S. and Asia—including the successful product placement in a major Hollywood movie—which ramped up after L. Catterton took the reins. Meanwhile, the sandals are still produced exclusively in Germany. A new plant in Eastern Germany is being built at record speed. The total investment volume of almost 120 million euros makes it the largest single investment in Birkenstock’s history, according to company sources.

While Birkenstock makes its footwear in Europe, New York was preferred for the listing. In general, companies are valued higher on the U.S. market than in Europe, which drives European companies to the other side of the Atlantic for public listings. In this case, the U.S. is also the home market of the owner, L. Catterton.

German companies shunning the Frankfurt stock exchange is not a new phenomenon. Pharmaceutical firms BioNTech BNTX and CureVac CVAC preferred New York, and former DAX company Linde (LIN) delisting from the German exchange earlier this year sent shockwaves.