Birkenstock May Struggle to Find Footing in Rocky IPO Market

Birkenstock may need a bigger toe-hold in the direct-to-consumer market before it goes public.

That’s according to a Thursday (Oct. 5) report by Reuters, citing comments from investors and analysts who say the sandal-maker needs to increase sales via its website and boutiques before its initial public offering (IPO) next week. 

As Reuters noted, Birkenstock is the latest in a string of high-profile listings following a long stretch of quiet IPO activity. However, many of the companies to go public recently — Instacart and Arm among them — have seen their prices fall.

At the same time, consumers around the world have been cutting back on purchases of shoes and clothing as they focus on essentials, something that could hinder the premium footwear brand. Worldwide shoe sales were expected to increase by just 2.9% due to recent price increases, Reuters said, citing market research firm Euromonitor International. 

Meanwhile, PYMNTS Intelligence has found that as many as 60% of consumers have reduced their spending on clothing and accessories. And four out of 10 shoppers say they have traded down to less expensive brands. 

“The question is, how do you create desirability for people to buy another pair of Birkenstocks?” Mamta Valechha, consumer discretionary analyst at asset manager Quilter Cheviot in London, told the news outlet.

Valechha added that sandals are a seasonal product, which makes the company’s sales volatile throughout the year.

As PYMNTS reported last week, Birkenstock is aiming for a valuation of $10 billion when it goes public, a move that — if successful — would make the German company the third-largest footwear company in terms of market capitalization, trailing only industry giants Nike and Deckers Outdoor Group.

The company was due to begin its investors’ roadshow this week, with the offering price expected to be established on Oct. 10 and trading beginning the following day.

Meanwhile, this week also saw reports that venture capitalists (VC) are telling startups to put plans to go public on hold following the Arm and Instacart listings.

“In our portfolio we would advise: unless you really need to, hold back,” Mike Volpi, a general partner at VC firm Index Ventures, told the Financial Times. “The market has been rough in the past few weeks. … Unless you need to go out, I’d wait until the second half of next year.”