The health shoe manufacturer Birkenstock is going public today – in the United States. There are several reasons why the company did not choose Frankfurt, Paris or Amsterdam.
The economy is not doing well. Consumers are holding back and the consumer climate is deteriorating. In such an environment, Birkenstock is now daring to go public. The traditional sandal manufacturer from Linz am Rhein has blossomed and is now owned by financial investors and the French luxury group LVMH.
For that reason alone, the IPO is a good idea, says Frankfurt stock trader Atakan Sahin from ICF Bank: “Luxury is always in demand. The one advantage of luxury goods stocks is that they have little to do with the recession. When the economy gets worse “It doesn’t mean that less luxury is being consumed. Someone always has money and can buy these special brands.”
A cult brand in the USA
The slippers, which were once primarily seen among eco-friendly people and medical staff, have long since made their way onto the world’s catwalks. The Paris Stock Exchange could have been a good place, especially since the operating company Euronext is internationally positioned and operates the trading centers Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris.
But Birkenstock didn’t want to gain a foothold there, just as it did on its home stock exchange in Frankfurt – for several reasons: “Birkenstock has of course become a cult brand, especially in the USA. And if I have my market there, it of course makes sense to go public there “, says investor lawyer Klaus Nieding from the German Association for the Protection of Securities Ownership.
“Traditional more risk-taking”
The fashion hype surrounding Birkenstock is one thing, the attraction of Wall Street is another. The fact that prominent names like Birkenstock prefer the USA is seen as a blow to the stock culture in Germany. Even more as a sign of a lack of equity culture in this country, a lack of entrepreneurship, a lack of willingness to take risks – and: a lack of money.
“We have significantly less liquidity in the market than we had two years ago,” explains Nieding. “In addition, in the USA there are also government measures to promote such IPOs. And ultimately it is of course a traditional story: the American stock market is traditionally more risk-averse.” And so the Birkenstock owners are expecting a lot, i.e. a billion-dollar valuation for the company.
Is the eco-slip hype ending?
There is a danger that the hype will end; that Birkenstock could differentiate itself with new products from winter boots to mattresses. But at the moment the main thing that can be seen on the stock market is the appeal of a strong brand: “If you take Coca-Cola as an example – the brand alone is worth more than the entire company,” says stock market trader Sahin. “And so a traditional company like Birkenstock simply has it easier. The brand is already worth a lot, and when good sales figures come in, it’s all very easy.”
The sales figures are correct: the company has been growing by an average of 20 percent for years. Investors still have to swallow a few bucks; There will be no dividends for the foreseeable future, and the shares already have a similar image to that of shoes: they are considered solid but expensive.