After weeks of speculation, the German sandals maker Birkenstock has filed an initial public offering with the U.S. Securities and Exchange Commission.
The company says it will list its shares on the New York Stock Exchange under the ticker BIRK. Birkenstock did not reveal how many shares it will list, nor the share price range it will target. L Catterton, which owns a majority stake in Birkenstock, is listed on the company’s F-1, alongside a number of prominent financial firms including Goldman Sachs, J.P. Morgan and Morgan Stanley.
Birkenstock’s IPO comes at a time of growth for the company, especially as shoppers maintain an interest in comfortable footwear in the wake of the pandemic. In 2021, Birkenstock was valued at $4.35 billion. Today, it could be worth some $8 billion, Bloomberg reports. The brand has benefited from a rising interest in so-called gorpcore, as well as buzzy collaborations with the likes of Dior and Manolo Blahnik and a prominent callout in the “Barbie” movie.
Birkenstock is one of the first major consumer brands to go public since a wave of offerings in 2021. Here’s what to know from Birkenstock’s filing.
1. The numbers: $1.34 billion in fiscal 2022 revenue
Birkenstock has had an especially strong past two years. According to its F-1 filing, Birkenstock’s fiscal 2022 revenue totaled €1.2428 billion ($1.34 billion) — a 70% increase from the €727.9 million ($782.46 million) in revenue it made in the 2020 fiscal year. Birkenstock reported a net profit of €187.1 million ($201.12 million) for fiscal 2022, as well as an adjusted gross profit margin of 62%.
Birkenstock’s performance especially ramped up this past fall and spring. Birkenstock’s revenue for the six months ending March 31, 2023 was €644.173 million ($691.62 million), up from €542.558 million ($582.52 million) a year earlier.
Going back further, Birkenstock’s revenue grew at a 20% compound annual growth rate (CAGR) from fiscal 2014 to fiscal 2022. In the U.S., this stat was even higher, at 32% CAGR.
More recently, Birkenstock got a boost from a scene in the “Barbie” movie — the fashion app Lyst says it saw a 110% increase in searches for Birkenstock Arizonas following its release — but that film didn’t debut until July, and Birkenstock’s next set of numbers is likely to be even stronger, Jason Goldberg, chief commerce strategy officer at Publicis Groupe, told Modern Retail.
“Any bump they get from the movie is going to be incremental to all the numbers in their current filing, and the numbers in their current filing are pretty solid,” Goldberg said.
2. Birkenstock is increasingly relying on DTC
Birkenstock has traditionally focused more on wholesale, and as of 2022, it had 6,000 partners in more than 75 countries. However, Birkenstock is increasingly looking to direct-to-consumer avenues like e-commerce and owned retail stores. DTC accounted for 38% of Birkenstock’s revenue in fiscal 2022, up 30% from fiscal 2020.
Since 2016, Birkenstock has “invested significantly” in its online platform, it says, and it now has e-commerce sites in more than 30 countries. E-commerce represented 89% of Birkenstock’s DTC channel in fiscal 2022. This is especially commendable, considering Birkenstock’s origins as a 1774 company, Goldberg said.
Birkenstock is also building its store fleet. As of June 30, it had 45 owned retail stores, including in major markets such as New York and Los Angeles. Most of its stores are in Germany, where Birkenstock has 20 locations. The company is now expanding into “attractive markets globally,” it says, including Tokyo, London and Delhi.
Birkenstock can be found on resale marketplaces, including StockX and eBay. But, Birkenstock’s Americas division stopped selling directly to Amazon in 2017, citing counterfeit concerns. Its product is still available on Amazon, albeit through third-party sellers.
Birkenstock’s Amazon-less IPO has major implications for the platform, Goldberg pointed out. “I think a lot of other brands have been watching Birkenstock to see how that would work out for them,” he said. “And if they now successfully go public, that’s an interesting example for other brands that are on the fence about whether Amazon needs to be an important part of their future or not.”
While Birkenstock is hoping to grow its DTC business even more, it did acknowledge that channel as a “risk factor” in its F-1, especially considering “factors over which we have limited control, including changing consumer preferences and buying trends.”
“If we are unable to effectively execute our DTC growth strategy, or if we encounter certain risks and uncertainties associated with our e-commerce platforms, our business may be harmed,” it said.
3. Birkenstock is growing more in the Americas — but it still relies on its German roots
While Birkenstock is a German company, it’s built a strong following in the United States. Fifty-four percent of Birkenstock’s customers resided in the Americas in 2022, compared to 36% in Europe. Its DTC channel has been a major driver of U.S. sales, it says.
At the same time, Birkenstock still holds true to its history as a German brand. It produces all of its footbeds in Germany, due to its vertically-integrated manufacturing model. The company assembles more than 95% of products in Germany and the remainder in the E.U. “We maintain strict control over our entire supply chain,” the company wrote in its filing.
The company continues to grow its manufacturing footprint. It will open a new factory in Pasewalk, Germany in late 2023, “expanding our popular EVA and PU product capacity while freeing up incremental capacity in our other factories to further meet the strong demand for our brand,” according to its F-1. Birkenstock also plans to expand its newly-acquired component manufacturing facility in Arouca, Portugal in the next two years.
Birkenstock acknowledges that there’s further room for growth in terms of its international presence. “Our APMA region has demonstrated considerable growth potential, which historically has not been fully realized because of deliberate decisions to prioritize the Americas and Europe due to finite supply,” it said.
4. Birkenstock banks its success on strong product expansion
Birkenstock sells several products, including sandals, closed-toe silhouettes and skincare and accessories. It’s that first category where Birkenstock sees the most momentum. Four of its top five silhouettes are open-toed shoes, and together, these five accounted for nearly 76% of Birkenstock’s annual revenue in fiscal 2022.
While sandal sales have slightly slowed, “comfort sandals did outperform the rest of the market, and Birkenstock was a key driver of that,” Beth Goldstein, footwear industry analyst at Circana, told Modern Retail.
That’s not to say that Birkenstock isn’t dedicated to growing its other assortments. Closed-toe shoes represented 20% of the company’s revenue in fiscal 2022, and “we consistently build our extensive archive by innovating new silhouettes,” the company said. In fact, silhouettes introduced since fiscal 2017 were nine of the top 20 best-selling products in fiscal 2022. Today, Birkenstock sells many shoes besides sandals, including slip-on sneakers, lace-up sneakers, leather boots and ankle boots.
In its F-1, Birkenstock acknowledged that customers have “high levels of loyalty” to the brand, based on its products. Approximately 70% of its U.S. consumers indicated they had at least two pairs of Birkenstock’s, according to a recent consumer survey. Nearly 90% of recent purchasers indicated a desire to purchase again, as well.
Going forward, “we will continue to expand our product archive through our ‘celebrate and build’ approach to innovation, entering into new usage occasions while investing in categories we serve today through new and innovative offerings,” the company said.
Goldstein believes that Birkenstock has managed to resonate with shoppers “by being very deliberate” about the way it introduces, distributes and promotes products. “It hasn’t flooded the market with product, and it has given up some distribution opportunities to protect the brand, even at the expense of sales,” she said.
Likewise, Jessica Ramírez, senior research analyst at Jane Hali & Associates, says there’s a reason “consumers are still stocking up on Birkenstocks.” “I think they’ve been able to stay relevant, make their product relevant and update it properly,” she said. “It’s been trendy for some time, and I think it’s only gotten more relevant.”