Two And a Half Centuries of Sandal-Making: Birkenstock is Going Public

Birkenstock, a name synonymous with comfortable and high quality sandals, has a rich history dating back over two and a half centuries. The brand's commitment to its heritage, innovative footbed technology, and comfortable footwear products have propelled it into a global powerhouse in its industry. Due to Birkenstocks upcoming IPO, and the fact that it’s a company well worth studying, we’ll delve into the fascinating history and business strategies that have made Birkenstock a beloved and enduring brand well poised to go public.

The Birkenstock story can be traced back to 1774, as records from a small church lists a Birkenstock family member as “subject and cobbler” in the parish. However, the modern story of the company is by some considered to have started in the late 1800’s when master cobbler Konrad Birkenstock began manufacturing insoles. But it was in 1902 that the brand's growth gained momentum with the invention of the revolutionary contoured arch support. This laid the foundation for what would become the "System Birkenstock," an orthopedic doctrine built around the concept of "Naturgewolltes Gehen" or natural walking, as the arches in the beds of the shoes mimics the experience of walking on dirt or porous ground. The philosophy has been at the heart of Birkenstock's approach to shoemaking ever since, emphasizing function and quality in every product they create.

Over a decade ago, Birkenstock underwent a significant transformation when the family for the first time in the company’s history brought in external management, starting a new era for the company. Under the leadership of Oliver Reichert, who became CEO in 2013, Birkenstock transitioned from a family-owned, production-oriented business into a global, professionally managed enterprise. This shift in strategy has been instrumental in driving growth, with revenues increasing at a remarkable 20% CAGR from FY2014 to FY2022.

Birkenstock's success can be attributed in part to its iconic silhouettes, with the top five styles representing a substantial amount of all shoes sold. These timeless classics are continuously celebrated through makeovers and adaptations, ensuring consistent growth with minimal risk. Furthermore, Birkenstock's commitment to innovation has resulted in the introduction of new styles, with nine of the top 20 products in fiscal 2022 being introduced after fiscal 2017.

Birkenstock has cultivated a universal appeal, attracting a diverse, global fan base. Their commitment to creating purpose-driven products with integrity has earned them the trust and loyalty of consumers worldwide. In a recent Consumer Survey, nearly 90% of recent purchasers expressed a desire to buy again, and over 40% did not consider any other brand when purchasing Birkenstock. The company also offers products in a wide price range, from €40 for entry-level styles to over €1,600 for high-end collaborations.

Demand for Birkenstock products has consistently outstripped supply, leading the company to refine its distribution model. By consolidating control over their brand globally and investing in their direct-to-consumer (DTC) business, Birkenstock has achieved significant growth. Their strongest regions are the Americas and Europe, representing 54% and 36% of revenues in fiscal 2022, respectively. The Asia-Pacific, Middle East, and Africa (APMA) region hold considerable growth potential, which has yet to be fully realized due to deliberate prioritization of the Americas and Europe.

Birkenstock's brand values, authenticity, and commitment to craftsmanship align well with evolving consumer trends. The company’s shoes promote a natural style of walking with good support for the feet, they’re produced only in Germany, and are made with meticulous care for the environment. As consumers increasingly prioritize functionality and quality consumption over fast fashion, Birkenstock is an appealing choice for many.

Join 100,000+ other business enthusiasts

Sign up for Edge, our free weekly newsletter.

• Sign up

LVMH does not own Birkenstock directly, although the luxury giant does have partial ownership through its stake in L Catterton who acquired the sandal maker in 2021 for $4.9 billion. The private equity joint venture was established in 2016 as Catterton, LVMH, and Bernard Arnault's family holding company Groupe Arnault joined forces. It is unknown exactly how big LVMH's stake in L Catterton is, but the combined ownership with Groupe Arnault amounts to 40%.

• The top five styles of shoes generated a substantial 76% of annual revenues in fiscal 2022

• The company generated €644 million in revenue during H1 2023

• The average Birkenstock consumer in the U.S. owns 3.6 pairs

• The number of units sold increased at a 12% CAGR between fiscal 2020 and fiscal 2022

The exact date for the Birkenstock IPO is yet to be communicated. The company submitted its F-1 filing to the SEC on September 12th 2023, with the IPO likely to take place before the end of the month.

Birkenstock went public on 11th of October, 2023, and shares started trading at $41 after the company priced its IPO at $46 per share. About $495 million was raised in total.