This can be a story concerning the rise of a German sandal model, however it isn’t 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 typically 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 positively was not.
However then a bizarre factor occurred. Beerken-schtock, as it’s pronounced in its homeland, began to change into 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 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 recognized, was not even an official collaboration — however the firm quickly realized that buyers wished 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 today.
Within the 2010s, as workplaces grew extra informal and luxury grew to become a precedence, Birkenstocks surfaced as winners of the “ugly shoe” development. And right this moment, spurred additional by the influence of pandemic dressing and dealing from residence, the sandals have change into the casual footwear of selection for folks in every single place who as soon as wouldn’t have been caught lifeless in them.
“Bizarre and unusual has change into deeply cool, as has wanting genuine and feeling wholesome,” mentioned Valerie Steele, the director of the Vogue Museum of Know-how in New York.
“Their reputation these days is fairly wild,” Ms. Steele added. “It’s not typically that you simply see a complete turnaround in public model notion in the way in which we now have with Birkenstock.”
Right this moment, 5 core kinds make up 76 % of the enterprise, the corporate mentioned, with costs that begin at 40 euros (about $42). For limited-edition luxurious kinds, 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 offered 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 response to the buying platform Lyst, a clog model generally 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,” on-line searches appeared to spike.
Now, Birkenstock is betting massive 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 Trade at a valuation of greater than $9 billion, promoting simply over 32 million shares at $46 every.
Birkenstock mentioned it raised $1.48 billion, which it can use to pay down money owed. It additionally needs to make the Birkenstock empire really world; right this moment, 90 % of gross sales are in Western Europe and the USA. L Catterton, a personal 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 traders in its prospectus, Birkenstock mentioned that it was “undeterred by style traits and proudly German, with footwear that could possibly be discovered on surgical wards and style runways, in regulation 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 expect it’s truthful 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 traders. 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 current success will 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 carrying 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 started again in 1774, when church information 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 grew to become an orthopedic authority, as did his son Carl.
It was Carl’s son Karl who furthered the expertise 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 kinds 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 change into a really difficult scenario,” Mr. Reichert, a former journalist and sports activities media government, mentioned just lately in his workplace in Munich. “All three brothers had been controlling completely different facets of the corporate and taking them in several 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 exterior 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 bunch with cohesive gross sales and distribution channels.
He additionally invested closely within the firm’s German factories. His goal was to rework what he known as “this sleeping large” into a world 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 prospects had this longstanding fame for being feminine, outdated and sick,” Mr. Reichert mentioned. “However we beloved them as a result of they beloved our merchandise for the best 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 right this 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 wherein “one plus one equals three.” Reasonably than following elitist or whimsical traits, he needs Birkenstock to be perceived as a producer of regular, democratic items. “Barbie” might have given him the form of blockbuster advertising that almost all firms 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 folks assume Birkenstock is having ‘a second’ when in actual fact it’s the world that’s now coming in our route,” 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 preliminary public providing filings launched in September. Right this moment, child boomers, millennials and Gen X all generate about 30 % of gross sales, the corporate mentioned. Nearly three-quarters of shoppers are girls, and 45 % of income comes from folks incomes greater than $100,000 a 12 months.
Just a little 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 instantly managed on-line retailer that presently reaches prospects in additional than 75 nations.
The affect of LVMH, the world’s largest luxurious style group by gross sales, can 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 because the 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 way of Amazon in 2018.)
And for a footwear title lengthy related to household possession and social actions linked with critiques of capitalist programs, going public at a time of worldwide financial volatility may create reputational blowback. Particularly if pleasing traders 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 one million 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 shopper need for one more pair of Birkenstocks, noting that the common buyer owns three to 4 pairs. (For the document, he owns greater than 500.)
“Whether or not you want style or not, carrying Birkenstocks reveals 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 ft. Not many different companies can say that.”