Shares in Birkenstock fell 12.6% after landing on the US stock market, valuing the German shoemaker at $7.5bn as investors bet there was less mileage in consumer demand for its cork-soled sandals, which have become an unlikely fashion success story.
On Tuesday evening the footwear firm priced its shares at $46 ahead of the first day of trading in New York, where it is using the symbol “BIRK”. That figure was in the middle of the $44 to $49 guidance provided last week and valued the company at $8.6bn (£7bn).
The shares promptly fell as trading commented on the New York Stock Exchange, however, and closed at $40.20 on Wednesday.
Birkenstock executives, including its chief executive, Oliver Reichert, waved the shoes aloft as they launched the stock market float on Wall Street earlier on Wednesday.
After plodding away successfully for decades the Birkenstock brand hit the big time during the pandemic when the shift to working from home saw shoppers seek out companies that offered both comfort and heritage. With workers now back in the office, more relaxed dress codes mean there has been no need to switch back to traditional work attire.
This relaxed mood helped Birkenstock shift 30m pairs last year, with sales up almost 30% to £1.1bn, resulting in a bottom line of £162m.
With a customer base that is 72% female, Birkenstock is also benefiting from a change in mindset among young women who no longer subscribe to high heels and delicate footwear as a feminine ideal.
The initial public offering is raising about $1.5bn for the 250-year-old orthopaedic shoe brand. A third of it will be used to repay debt with the rest going to the private equity owner L Catterton, which acquired a majority stake in 2021.
As part of the company’s sales pitch to investors, Birkenstock’s chief executive, Oliver Reichert – who became the first non-family member to run it when he took the helm in 2013 – set out plans to sell other types of shoes, including clogs, trainers, shoes and boots, as it looks to end its reliance on sandals.
However, analysts have warned that the shoemaker is making its debut as a public company in difficult market conditions. Investors are worried about the gloomy economic backdrop and declining consumer confidence, as well as the poor performance of initial public offerings by other footwear brands such as Dr Martens, which has suffered a collapse in value since its 2021 listing.
“It’s clear there is some caution among investors about the path ahead for the brand,” said Susanna Streeter, analyst at Hargreaves Lansdown, who pointed to the “disappointing trajectories” of Dr Martens and Allbirds since their respective arrivals on the market.
“Investors who want to buy may have to buckle up for a potentially volatile ride ahead,” Streeter added, as “a spurt of uncertainty often follows high-profile listings.”
It comes after a handful of highly-anticipated arrivals on the market tested demand after a prolonged slump in activity. While the chip designer Arm Holdings and grocery delivery app Instacart initially enjoyed robust debuts, they both came under pressure on Wednesday.
