Birkenstock, the German sandal brand that generated $1.22 billion in revenue last year, is going public after more than 240 years in business.
It filed for an IPO with the Securities and Exchange Commission (September 26, 2023), and it plans to list itself on the New York Stock Exchange in September. Its market valuation is currently at a whopping $8 billion. This is taking place two years after L Catterton, the private equity firm backed by the luxury conglomerate LVMH, purchased Birkenstock for $4.3 billion.
Birkenstock has had a fascinating rise over the last two decades. The company was founded in 1774, and it has churned out the same orthopedic sandals for dozens of years. While the shoes themselves haven’t changed considerably in their aesthetics and design, consumer preferences have transformed radically over time.
Birkenstocks first landed in the USA in the mid-1960s. For decades, they were seen as functional shoes favored by the elderly and granola-crunching hippies. But in the 1990s, the sandals suddenly became cool again, when people in the fashion world started styling them in a grunge-inspired way, including designer Marc Jacobs and model Kate Moss. This exposed the shoe to new customers.
Then about a decade ago, the normcore aesthetic became fashionable, and everyone from Gwyneth Paltrow to Ashley Olson started wearing them. This time, the popularity stuck, leading to massive increases in sales, and collaborations with Dior, Rick Owens, Manolo Blahnik, and other fashion designers. This has coincided with consumers’ increasing desire for comfort—from yoga pants to sneakers—which peaked during the pandemic. Birkenstock is perfectly suited to this moment.
Every time I speak with David Kahan, Birkenstock’s US President, he says that the key to the brand’s success is that it doesn’t change its design or branding drastically to accommodate new trends. It hasn’t tried to capitalize on demand by coming up with radically different silhouettes, or expanding into new product categories. (Although it did launch a skincare line, which continues to puzzle me.) Even when Birkenstock partners with other brands, the shoes stay largely the same, sometimes superficially bedazzled with gemstones or embroidery. Kahan argues that this consistency has allowed Birkenstock to hold on to its core, loyal customers even when trends have come and gone.
The question is whether Birkenstock will be able to stick to this approach when it is a publicly owned company, beholden to shareholders. Investors expect constant growth. Birkenstock has been on an upward trajectory for several years, but consumers are fickle and trends change. If Birkenstocks, with their distinctive, idiosyncratic look go out of fashion, will the company decide it has to chase whatever new style is in? Will the company feel the need to expand into new product categories, like normcore clothing? It’s unclear, but it would be a shame for an IPO to change a brand that has been true to itself for so long.
(5)
