NEW YORK — Wednesday marked the début of Birkenstock on the stock market; on that day, Wall Street exchanged wingtips for sandals.
Several New York Stock Exchange floor traders adorned the renowned open-toed footwear, and as Birkenstock CEO Oliver Reichert sounded the opening bell, individuals in his vicinity waved sandals in the air.
Investors, however, needed to be more impressed with the exorbitant asking price for a stake in the 249-year-old German firm, as their enthusiasm failed to match it.
Late Tuesday, the manufacturer of upscale sandals priced its initial public stock offering at $46 per share, valuing the company at $8.64 billion. Wednesday’s opening price for the stock was $41, lower than the $44 to $49 price range anticipated a week prior. At $40.20, it closed the day down 12.6%.
Birkenstock Holding Ltd. sold approximately 10.8 million shares in the offering, generating approximately $495 million. The company’s shareholders divested an extra 21.5 million shares. According to IPO research firm Renaissance Capital, the average first-day return for the twenty-four additional IPOs that have raised at least $100 million this year has been 20%.
Birkenstock Stumbles On Wall Street As Investors Find Sandal Maker’s Shares Too Pricey.
Johann Adam Birkenstock attempted to cobble together the organization’s footwear in Germany in 1774. Although the sandals have been reviled for years as the antithesis of high fashion, they have developed a cult following and were featured in the summer blockbuster “Barbie.”
Birkenstock said in a recent regulatory filing with the Securities and Exchange Commission, “By leveraging the robust reputation and widespread appeal of our brand, which has generated substantial earned media value and extensive word-of-mouth, we have effectively established an expanding international following of millions of consumers that transcends geographical, gender, age, and income barriers.”
Birkenstock Stumbles On Wall Street As Investors Find Sandal Maker’s Shares Too Pricey.
The foundation of Birkenstock’s success formula was the conviction that humans were designed to walk barefoot. The filing stated that the company’s footbed, created in 1902, “promotes proper foot health by distributing weight evenly and reducing pressure points and friction; it is the best alternative to walking barefoot.”
Birkenstock manufactures and assembles over 95% of its products in Germany, where it also produces all of its footbeds. The remaining products are manufactured in other European Union member states.
From fiscal 2020 to fiscal 2022, the company’s revenue has increased from 727.9 million euros ($771.7 million) to 1.24 billion euros ($1.32 billion).
The initial public offering of Birkenstock will rank fourth among those that have occurred in the United States within the previous month, following Arm Holdings, Klaviyo, and Instacart. Seventy-one initial public offerings (IPOs) occurred in the United States in 2010, the fewest number since 2009, per Renaissance Capital.
SOURCE – (AP)
