Three Months After its IPO, the Sandal Brand’s Growth has Begun to Slow
Birkenstock Holding Plc experienced a decline in its stock value as its growth targets failed to meet the expectations of traders anticipating more from the German sandal giant.
Before U.S. exchanges opened, the stock saw a 12 percent slide. If this downward trend continues during trading hours, it could potentially negate the gains achieved since the company’s initial public offering in October.
While Birkenstock projected revenue growth of up to 18 percent to €1.76 billion ($1.92 billion) for the year, surpassing analysts’ expectations, it fell short of satisfying investors who had grown increasingly optimistic about the brand.
CEO Oliver Reichert asserted that Birkenstock still has significant growth potential, particularly in previously untapped markets like China and India. The company, with roots dating back to 1774, aims to expand beyond traditional markets, addressing concerns about inflation and economic constraints.
Although Birkenstock’s peak revenue target for 2024 surpasses the average analyst estimate at €1.69 billion, and the company reported revenue that exceeded fourth-quarter estimates, investors were anticipating a more substantial earnings beat and forecast. This desire for a “meaningful” increase in shares comes at a time when casual footwear makers, such as Nike Inc., are expressing caution about demand.
The stock faces potential volatility as investors reassess whether the initial negative reaction to the IPO was excessive. Approximately a third of Birkenstock’s available shares are sold short, adding pressure to the situation, according to data from S3 Partners.
Traditionally known for its no-frills sandals, Birkenstock has expanded its product offerings in recent years, introducing higher-end footwear and closed-toe products like the Bend sneaker, Highwood boots, and shearling clogs. This expansion has developed in tandem with the brand’s push into the world of high fashion through collaborations with names such as Dior, Manolo Blahnik, and Rick Owens.
