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The shares of German orthopaedic footwear manufacturer, Birkenstock, fell by 13% following its initial public offering (IPO) in New York on Thursday. This occurred despite the company’s collaborations with high-profile fashion brands such as Dior and Barbie movie producers, and a revenue increase from $770.9 million in fiscal 2020 to $1.3 billion in fiscal 2022.
The company’s CEO, Oliver Reichert, who was introduced to Christian Birkenstock via an art dealer and previously led German sports TV channel Sport1, now faces the challenge of running a publicly-traded company. The market’s reaction to Birkenstock’s IPO highlights the potential challenges for rapidly growing public companies with high growth potential, such as OpenAI.
Investors showed concerns due to Reichert’s lack of experience with U.S.-listed companies and the underperformance of similar companies like AllBirds, Dr. Martens, and On Holding post-IPO. Despite a post-IPO market capitalization of $8.6 billion, retail analyst Neil Saunders remains optimistic about Birkenstock’s potential, while David Trainer of New Constructs and Jon Keidan of Torch Capital are skeptical.
Birkenstock, founded in 1774 and family-run until 2021 when it sold a majority stake to L Catterton and Financiere Agache for $4.3 billion, is known for its Arizona, Madrid, and Gizeh sandals. These products have evolved from counter-culture symbols to high-fashion items endorsed by celebrities like Margot Robbie and Kate Moss.
In addition to its footwear line, Birkenstock has expanded into skin care products and bed production. The company collaborates with fashion houses for customized designs and insists on manufacturing 95% of its products in Germany as part of its sustainability commitment. Its skin care line incorporates cork oak extract, and some of its products can cost up to 230 euros.
The IPO performance could impact the broader market, which has seen mixed results from recent offerings by Arm, Klaviyo (NYSE:), and Instacart (NASDAQ:). Despite the initial stumble, Birkenstock continues production at its new factory in Pasewalk, Germany, as it seeks to maintain its global presence and commitment to quality.
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