This can be a story in regards to the rise of a German sandal model, however it’s not an easy style story.
In any case, for a big chunk of its 249-year historical past, Birkenstock was synonymous with extraordinarily unmodern stereotypes. The sandals have been usually worn by hippies and off-duty hikers, eccentric aunts and science academics with a penchant for pairing them with ankle socks.
Over time, these orthopedic-looking footwear drew a loyal following due to their comfy cork and latex molded footbeds and their sturdiness. They discovered specific favor with German well being care professionals and a handful of high-profile anti-establishment, anti-conformist varieties just like the Apple founder Steve Jobs, the onetime proprietor of a battered brown pair that offered for $218,750 at public sale final 12 months.
Excessive style, nevertheless, Birkenstock undoubtedly was not.
However then a bizarre factor occurred. Beerken-schtock, as it’s pronounced in its homeland, began to grow to be cool. In 2012, Phoebe Philo, then the style maestro of the French luxurious home Céline, confirmed a fur-lined model of what seemed to be the double strap Arizona sandal at Paris Style Week, prompting business pleasure and gushing articles.
Birkenstock, which went public in New York on Wednesday morning, might not initially have been prepared for this consideration — the Furkenstock, because it was recognized, was not even an official collaboration — however the firm quickly realized that customers needed consolation co-signed by style’s most revered designers. Different partnerships adopted, with manufacturers like Dior, Valentino, Manolo Blahnik and Rick Owens, which proceed to this present day.
Within the 2010s, as workplaces grew extra informal and luxury turned a precedence, Birkenstocks surfaced as winners of the “ugly shoe” development. And at this time, spurred additional by the impression of pandemic dressing and dealing from house, the sandals have grow to be the casual footwear of alternative for individuals all over the place who as soon as wouldn’t have been caught lifeless in them.
“Bizarre and strange has grow to be deeply cool, as has trying genuine and feeling wholesome,” mentioned Valerie Steele, the director of the Style Museum of Know-how in New York.
“Their reputation these days is fairly wild,” Ms. Steele added. “It’s not usually that you simply see a complete turnaround in public model notion in the best way now we have with Birkenstock.”
At the moment, 5 core types make up 76 p.c of the enterprise, the corporate mentioned, with costs that begin at 40 euros (about $42). For limited-edition luxurious types, that determine will be 40 occasions as a lot — as much as $1,700. The corporate mentioned that 30 million pairs of Birkenstock sandals have been offered in 2022, with gross sales of 1.24 billion euros ($1.3 billion at present trade charges), up from 292 million euros ($307 million) in 2014.
In accordance with the buying platform Lyst, a clog model referred to as Boston was probably the most looked for shoe of 2022, thanks partially to the superfan Kendall Jenner. After a cameo in a pivotal scene in “Barbie,” on-line searches appeared to spike.
Now, Birkenstock is betting huge in a bid to capitalize on the momentum. On Wednesday, beneath the ticker image BIRK, the corporate started buying and selling on the New York Inventory Change at a valuation of greater than $9 billion, after promoting simply over 32 million shares at $46 every. Although Birkenstock pulled off the inventory sale, its share worth fell 11 p.c as soon as buying and selling started.
Birkenstock mentioned it raised $1.48 billion, which it can use to pay down money owed. It additionally desires to make the Birkenstock empire really world; at this time, 90 p.c of gross sales are in Western Europe and the US. L Catterton, a non-public fairness group with ties to the French luxurious magnate Bernard Arnault, turned the bulk proprietor of Birkenstock in 2021 and can retain possession after the I.P.O.
In a lofty pitch to buyers in its prospectus, Birkenstock mentioned that it was “undeterred by style tendencies and proudly German, with footwear that might be discovered on surgical wards and style runways, in legislation corporations, faculty — and all over the place in between.”
“Birkenstock is greater than a shoe,” the prospectus learn. “It’s a mind-set, a way of life.” The corporate isn’t the primary footwear model to go public. AllBirds and Doc Martens had I.P.O.s in recent times, with blended outcomes.
And though there are many business observers who really feel optimistic in regards to the firm’s long-term prospects, others are cautious. “Whereas Birkenstock is worthwhile, we expect it’s honest to say that the valuation mark is just too excessive, particularly for a corporation that was valued at simply $4.3 billion in early 2021,” David Coach of the funding analysis agency New Constructs wrote to buyers. He added that the one footwear corporations with bigger market capitalizations are Nike and Deckers (proprietor of Ugg and Hoka, amongst others).
Sleeping Large, Swimming Whale
A lot of Birkenstock’s current success will be attributed to Oliver Reichert, 52, who was named chief govt in 2013. A 6-foot-6 mountain of a person with a booming voice and a reddish-gold beard, he grew up within the Bavarian countryside sporting Birkenstocks. From an early age, he wore a U.S. shoe dimension 12.5; Birkenstocks have been the one footwear that match.
In 2008, Mr. Reichert’s curiosity within the model turned skilled, when he turned an adviser to Christian Birkenstock, a scion misplaced in a chapter of dysfunctional administration and infighting among the many household heirs.
The Birkenstock legend started again in 1774, when church data from the agricultural village of Langen-Bergheim, close to Frankfurt, registered Johannes Birkenstock as a neighborhood cobbler. Within the early twentieth century, the corporate specialised not in footwear however of their versatile rubber and cork insoles, developed by Konrad Birkenstock, who turned an orthopedic authority, as did his son Carl.
It was Carl’s son Karl who furthered the expertise and created sandals that would evenly distribute weight and cut back sole friction, beginning with the basic single strap 410 model in 1963 (known as the Madrid after 1979, when most types got geographical names). His sons — Stephan, Alex and Christian — had taken over the corporate in 2002. The established order was not a contented one.
“It had grow to be a really sophisticated state of affairs,” Mr. Reichert, a former journalist and sports activities media govt, mentioned just lately in his workplace in Munich. “All three brothers had been controlling completely different features of the corporate and taking them in numerous instructions, with one dominant father nonetheless watching from the sidelines.” The Birkenstock household, who stepped away from the day-to-day oversight of the enterprise in 2013, declined to remark for this text.
Mr. Reichert was the primary chief govt from outdoors the Birkenstock bloodline. (A co-chief govt appointed on the time, Markus Bensberg, left to run the household workplace of Alex Birkenstock in 2021.) Mr. Reichert shortly set about reorganizing the 38 subsidiaries into a gaggle with cohesive gross sales and distribution channels.
He additionally invested closely within the firm’s German factories. His purpose was to rework what he known as “this sleeping big” into a world sandal sensation, albeit with foot well being at its core. Savvy collaborations, primarily by way of the Birkenstock premium line 1774, have been a part of the plan.
“Birkenstock prospects had this longstanding repute for being feminine, previous and sick,” Mr. Reichert mentioned. “However we liked them as a result of they liked our merchandise for the correct causes — performance and function.”
“These beliefs are why we exist,” he continued. “However I used to be additionally afraid we might get up in our personal museum, surrounded by conventional items that had no relevance to at this time. Which is why it is very important construct bridges to different individuals’s creativity and power — to supply them a white canvas and the paint and say: ‘Go!’’’
Mr. Reichert avoids “pretend” influencer advertising and marketing, as he describes it, and mentioned his favourite designer collaborations are the weirder ones by which “one plus one equals three.” Fairly than following elitist or whimsical tendencies, he desires Birkenstock to be perceived as a producer of regular, democratic items. “Barbie” might have given him the form of blockbuster advertising and marketing that almost all corporations would kill for (and totally free, on condition that it wasn’t paid placement), however he hadn’t but seen the film.
“I simply don’t like the concept that individuals suppose Birkenstock is having ‘a second’ when the truth is it’s the world that’s now coming in our path,” he mentioned. In his sunlit workplace, a toddler’s practice set was set out in a single nook. The whitewashed partitions have been lined with a number of electrical bikes, a Louis Vuitton steamer trunk and pictures of the artists Joseph Beuys and Ai Wei Wei. A fan of metaphors, he in contrast the corporate to a deep-sea whale, all the time swimming beneath the floor.
“With these high-end collaborations, we pop our head out of the water, after which some individuals go, ‘Oh, there’s a whale!’” Mr. Reichert mentioned.
Even Our Haters Love Us
Birkenstock’s plan was specified by the preliminary public providing filings launched in September. At the moment, child boomers, millennials and Gen X all generate about 30 p.c of gross sales, the corporate mentioned. Virtually three-quarters of consumers are girls, and 45 p.c of income comes from individuals incomes greater than $100,000 a 12 months.
Somewhat greater than half of Birkenstock’s gross sales comes from North, South and Central America. The corporate’s progress could also be tied to new markets like India and China, and may be fueled by increasing distribution and a instantly managed on-line retailer that at present reaches prospects in additional than 75 nations.
The affect of LVMH, the world’s largest luxurious style group by gross sales, can also be getting stronger. Alexandre Arnault, the son of Bernard Arnault, will sit on Birkenstock’s board after the I.P.O.
Gross sales progress has slowed for the reason that pandemic, and there’s no scarcity of counterfeit merchandise and brazen rip-offs by rivals. (Birkenstock had a falling out with Amazon over its policing of copycat footwear and stopped promoting instantly by means of Amazon in 2018.)
And for a footwear identify lengthy related to household possession and social actions linked with critiques of capitalist methods, going public at a time of worldwide financial volatility may create reputational blowback. Particularly if pleasing buyers means compromising on high quality or shifting manufacturing away from Germany, the place 95 p.c of merchandise are assembled, then hand-checked in factories owned by the model.
Mr. Reichert was adamant that transferring manufacturing out of Germany wouldn’t occur “in 1,000,000 years.” He pointed to Birkenstock’s revenue margins in contrast with many rivals and scoffed on the suggestion that the corporate may wrestle to drum up client need for one more pair of Birkenstocks, noting that the common buyer owns three to 4 pairs. (For the report, he owns greater than 500.)
“Whether or not you want style or not, sporting Birkenstocks exhibits that you simply care about your self and your sense of well-being,” he mentioned. A big attraction for shoppers was “being perceived as actual.” Birkenstock doesn’t “simply have prospects however followers,” he mentioned. Then, with a chuckle, he went one step additional.
“Even our haters nonetheless put on our footwear as a result of they know they’re good in your toes. Not many different companies can say that.”