Mispriced IPO explains Birkenstock blisters
The author is a Reuters Breakingviews columnist. The opinions expressed are their own.
LONDON, Jan 19 (Reuters Breakingviews) -Birkenstock BIRK.N investors’ feet are beginning to hurt three months after the sandal maker’s $8.6 billion IPO. The New-York listed German group announced that its adjusted EBITDA margin shrank to 32.4% for the year ended Sept. 30 – the first drop in four years. The stock fell nearly 8% on Thursday, reflecting the disappointment of investors who had assumed that margins would remain in line with the luxury sector.
Birkenstock shares are now trading around their $46 debut price, after having sunk to as low as $37 in the weeks following its listing. The margin contraction announced this week is modest, but the group still needs to win back investors’ trust. The fundamentals look robust. The group is now forecasting a 30% EBITDA margin – compare this to LVMH’s LVMH.PA 33%, or sports brand Lululemon Athletica’s LULU.O 27%. Revenue climbed 20% in 2023, with strong growth across Asia Pacific. All Birkenstock has to do is overcome the bad impression left by the excessive hubris it thought would help it defy last year’s choppy capital markets. To avoid further blisters, it needs to keep a fast pace. (By Pamela Barbaglia)
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Editing by Pierre Briancon and Oliver Taslic
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