Birkenstock stumbles in a disappointing debut in the US market

Oct 11 (Reuters) – Birkenstock (BIRK.N) stock finished more than 12% below its initial public offering price on Wednesday in a disappointing Wall Street debut that suggested investors remain cautious about new listings.

Shares of the 250-year-old German sandal maker began trading at $41 after its IPO price was $46. That offering raised $1.48 billion, at the midpoint of the $44 and $49 range set on Tuesday. The stock closed at $40.20, down 12.61%.

The 11% drop from Birkenstock’s initial public offering price on Tuesday to its opening price on Wednesday marks the worst debut for a company worth more than $1 billion in nearly two years, according to LSEG data.

Birkenstock’s weak performance comes weeks after the market debuts of chip designer Arm Holdings, grocery delivery app Instacart (CART.O) and marketing automation platform Klaviyo (KVYO.N). Most of these companies’ shares have fallen since their listing, indicating weak demand from investors.

“What this shows is that the valuations they put on these companies make absolutely no sense, especially when you’re in a bear market when there are a lot of other deal opportunities available,” said Thomas Hayes, chairman of Great Hill Capital. in New York.

“If you’re pitching a new paper that no one is going to pay to existing companies, what you’ll see is that after the initial spike, you’ll see a decline,” Hayes added.

At its closing stock price on Wednesday, Birkenstock’s market value was more than $8 billion. That’s still double the $4.35 billion that L Catterton, the US private equity firm backed by French billionaire Bernard Arnault and his luxury goods empire Louis Vuitton Moet Hennessy (LVMH.PA), paid for a majority stake in the shoemaker in 2021.

L Catteron will continue to own approximately 83% of Birkenstock following its market debut, which coincides with a sharp decline in LVMH shares on Wednesday after sales growth slowed in the third quarter. Arnault’s son Alexander will join Birkenstock’s board of directors.

The company was founded in 1774 in the German village of Langen-Bergheim, and was run by the Birkenstock family for six generations until they sold a majority stake to L. Catterton.

Birkenstock has partnership deals with luxury fashion brands, including Dior, Stussy, Manolo Blahnik and Rick Owens.

The company had revealed a 21% jump in revenue to 1.12 billion euros ($1.19 billion) for the nine-month period ending June 30. However, its net profit for the same period fell by 20% to €103.3 million.

Birkenstocks gained widespread attention after Australian actress Margot Robbie wore a pair of pink Birkenstocks in the final scene of the hit film “Barbie,” released this summer.

($1 = 0.9431 euros)

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