By Dominique Jacquet

By breaking numerous box office records and appearing on the feet of the heroine, the film Barbie strongly influenced the stock market and certainly ensured effective promotion for the listing of Birkenstock shoes.

The “glamorous” nature of those shoes may have escaped some, but all investors noted that the market was, ultimately, moderately sensitive to the famous sandal.

A valuation of $10 billion was, for a time, mentioned by Bloomberg, then enthusiasm dropped to $8 billion.

Finally, on October 10, the last prospectus indicates an offered price of $46, which values the firm’s 188 million shares at approximately 8.5 billion US dollars, or 10 billion USD when adding 1.5 billion in debt. net (excluding leasing).

At the opening, on the 11th, the stock traded at $41 to close at $40.2. Two days later, the price is equal to $36.4 and the market capitalization has fallen to $6.8 billion.

This still represents a significant added value (40%) for the owners of the firm, LVMH and the family of Bernard Arnault via L Catterton (private equity fund), who entered the capital in 2021 at the price of $4.85 billion.

“Comparison is not reason”, but we can seek to establish correlations with shoe icons like Crocs. Over the last 12 months, the price has risen from $78 to $83, an increase of just over 6%. The company is listed on the Nasdaq, like all high-tech firms(…), whose index increased by more than 30% over the period. In addition, the price of Crocs reached a high of over $150 in April and, therefore, lost almost half of its value in 6 months. Difficult stock market situation for “trendy” shoes…

Then, Birkenstock goes public with proactive metrics.

Certainly, turnover for the last 9 months is up 21% compared to the previous period, with a gross margin up 2%, but marketing expenses are also up 2%.

According to the company’s communication (issue prospectus), Adjusted EBITDA represents 35% of revenues. The company is not a large consumer of capex, with industrial investments representing only a fifth of sales and marketing expenses. “Adjusted” EBITDA and growth rate are therefore two good metrics for evaluating the company.

Even at $36.4 USD per share, the enterprise value is valued at 6 years of revenue and 17 years of (adjusted) EBITDA.

This is only justified if the positioning of the brand and the enthusiasm of customers are lasting. However, Crocs, in the subprime years, saw its stock price drop to $1.2 per share, becoming a penny stock.

The risk is therefore obvious that the Birkenstock brand may suffer significant commercial risks. It is also interesting to note that the firm has not joined the LVMH Maisons. From a brand consistency point of view, it was perhaps difficult to bring together Dior and Birkenstock, but above all the longevity of Clos des Lambrays (the Grand Cru 2018 is sold for €460 per bottle, or 2.5 pairs of Bryson Sabots). …), jewel of the Côte de Nuit created in 1365, is probably more assured.

Since the Tarpeian Rock is close to the Capitoline Hill in volatile sectors, it’s best to sell “high” while the customer still believes.

The brand is very “trendy”, but, as Bernard Arnault himself says, only a dead fish sails in the direction of the current.