This can be a story concerning the rise of a German sandal model, however it’s not a simple style story.
In any case, for a big chunk of its 249-year historical past, Birkenstock was synonymous with extraordinarily untrendy stereotypes. The sandals had been usually worn by hippies and off-duty hikers, eccentric aunts and science lecturers with a penchant for pairing them with ankle socks.
Over time, these orthopedic-looking footwear drew a loyal following because of their comfy cork and latex molded footbeds and their sturdiness. They discovered explicit 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 sold for $218,750 at auction final yr.
Excessive style, nevertheless, Birkenstock positively 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 version of what appeared to be the double strap Arizona sandal at Paris Vogue Week, prompting trade 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 identified, 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 grew to become a precedence, Birkenstocks surfaced as winners of the “ugly shoe” trend. And at the moment, spurred additional by the affect of pandemic dressing and working from home, the sandals have grow to be the casual footwear of alternative for folks in every single place who as soon as wouldn’t have been caught useless in them.
“Bizarre and abnormal has grow to be deeply cool, as has wanting genuine and feeling wholesome,” mentioned Valerie Steele, the director of the Vogue Museum of Expertise 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 way in which we have now with Birkenstock.”
At present, 5 core types make up 76 % of the enterprise, the corporate mentioned, with costs that begin at 40 euros (about $42). For limited-edition luxurious types, that determine can be40 instances as a lot — as much as $1,700. The corporate mentioned that 30 million pairs of Birkenstock sandals had been bought in 2022, with gross sales of 1.24 billion euros ($1.3 billion at present alternate charges), up from 292 million euros ($307 million) in 2014.
In accordance with the buying platform Lyst, a clog model often known as Boston was probably the most looked for shoe of 2022, thanks partly to the superfan Kendall Jenner. After a cameo in a pivotal scene in “Barbie,” online searches appeared to spike.
Now, Birkenstock is betting large in a bid to capitalize on the momentum. On Wednesday morning, below the ticker image BIRK, the corporate started buying and selling on the New York Inventory Alternate at a valuation of more than $9 billion, promoting simply over 32 million shares at $46 every.
Birkenstock mentioned it raised $1.48 billion, which it should use to pay down money owed. It additionally needs to make the Birkenstock empire really international; at the moment, 90 % of gross sales are in Western Europe and the USA. L Catterton, a non-public fairness group with ties to the French luxurious magnate Bernard Arnault, grew to become 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 could possibly be discovered on surgical wards and style runways, in legislation companies, college — and in every single 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 trade observers who really feel optimistic concerning the firm’s long-term prospects, others are cautious. “Whereas Birkenstock is worthwhile, we predict it’s honest to say that the valuation mark is just too excessive, particularly for an organization 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 firms with bigger market capitalizations are Nike and Deckers (proprietor of Ugg and Hoka, amongst others).
Sleeping Big, Swimming Whale
A lot of Birkenstock’s latest success could be attributed to Oliver Reichert, 52, who was named chief government 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 had been the one footwear that match.
In 2008, Mr. Reichert’s curiosity within the model turned skilled, when he grew to become an adviser to Christian Birkenstock, a scion misplaced in a chapter of dysfunctional administration and infighting among the many household heirs.
The Birkenstock legend began back in 1774, when church data from the agricultural village of Langen-Bergheim, close to Frankfurt, registered Johannes Birkenstock as an area 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 grew to become an orthopedic authority, as did his son Carl.
It was Carl’s son Karl who furthered the know-how and created sandals that might evenly distribute weight and cut back sole friction, beginning with the traditional 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 cheerful one.
“It had grow to be a really difficult scenario,” Mr. Reichert, a former journalist and sports activities media government, mentioned lately in his workplace in Munich. “All three brothers had been controlling totally different points 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 government from outdoors the Birkenstock bloodline. (A co-chief government appointed on the time, Markus Bensberg, left to run the household workplace of Alex Birkenstock in 2021.) Mr. Reichert rapidly 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 remodel what he known as “this sleeping big” into a worldwide sandal sensation, albeit with foot well being at its core. Savvy collaborations, primarily by way of the Birkenstock premium line 1774, had been a part of the plan.
“Birkenstock clients had this longstanding popularity for being feminine, outdated and sick,” Mr. Reichert mentioned. “However we liked them as a result of they liked our merchandise for the correct causes — performance and objective.”
“These beliefs are why we exist,” he continued. “However I used to be additionally afraid we’d get up in our personal museum, surrounded by conventional items that had no relevance to at the moment. Which is why it is very important construct bridges to different folks’s creativity and vitality — to supply them a white canvas and the paint and say: ‘Go!’’’
Mr. Reichert avoids “faux” influencer advertising, as he describes it, and mentioned his favourite designer collaborations are the weirder ones through which “one plus one equals three.” Moderately than following elitist or whimsical tendencies, he needs Birkenstock to be perceived as a producer of regular, democratic items. “Barbie” might have given him the sort of blockbuster advertising that almost all firms would kill for (and without cost, on condition that it wasn’t paid placement), however he hadn’t but seen the film.
“I simply don’t like the concept that folks suppose Birkenstock is having ‘a second’ when in truth it’s the world that’s now coming in our path,” he mentioned. In his sunlit workplace, a toddler’s prepare set was set out in a single nook. The whitewashed partitions had 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, at all times swimming below the floor.
“With these high-end collaborations, we pop our head out of the water, after which some folks go, ‘Oh, there’s a whale!’” Mr. Reichert mentioned.
Even Our Haters Love Us
Birkenstock’s plan was specified by the initial public offering filings launched in September. At present, child boomers, millennials and Gen X all generate about 30 % of gross sales, the corporate mentioned. Virtually three-quarters of shoppers are girls, and 45 % of income comes from folks incomes greater than $100,000 a yr.
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 is also fueled by increasing distribution and a straight managed on-line retailer that presently reaches clients in additional than 75 international locations.
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 products and brazen rip-offs by rivals. (Birkenstock had a falling out with Amazon over its policing of copycat footwear and stopped promoting straight by way of Amazon in 2018.)
And for a footwear title lengthy related to household possession and social actions linked with critiques of capitalist techniques, going public at a time of world financial volatility might create reputational blowback. Particularly if pleasing buyers means compromising on high quality or shifting manufacturing away from Germany, the place 95 % of merchandise are assembled, then hand-checked in factories owned by the model.
Mr. Reichert was adamant that shifting 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 would possibly wrestle to drum up client want for one more pair of Birkenstocks, noting that the typical buyer owns three to 4 pairs. (For the document, 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. He mentioned {that a} vital enchantment for customers was “being perceived as actual.” Birkenstock doesn’t “simply have clients 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.”
