(News Bulletin 247) – Birkenstock has formalized its plan to enter the New York Stock Exchange. The once unloved sandal manufacturer is set for a strong stock market run, like the Deckers and Crocs brands. On average, the ten largest shoe brands listed on the stock exchange generated performance six times higher than that of the CAC 40 over the last decade.
Birkenstock’s first steps on the stock market are taking shape. The sandal manufacturer, whose origins date back to 1774, has formalized its plan to go public. Its owner, the L Catterton fund, with which the world leader in luxury LVMH and its boss Bernard Arnault are associated, filed its application at the beginning of the week with a view to an listing on the New York Stock Exchange.
Already mentioned in the media at the beginning of July, the future on the stock market of the famous German brand of sandals is becoming a little more clear… According to the Wall Street Journalshareholders are counting on a valuation of more than seven billion dollars, a figure close to the 8 million dollars announced in the Financial Times this summer.
It must be said that the popularity of Birkenstocks is at its highest. Freed from their old-fashioned image, these sandals have found a new lease of life. The brand has indeed collaborated with big names in luxury such as Dior, Valentino and Givenchy. Last but not least marketing operation, Birkenstock appears in this summer’s hit film, Barbie. The outfits worn by actress Margot Robbie have become iconic fashion pieces, including the Arizona model in Light Rose suede leather from the Birkenstock brand.
+626% in 10 years for Crocs
Will the new popularity of Birkenstocks spread to the floors of the Stock Exchange? In any case, it is the bet of LVMH which hopes to take advantage of the craze for this winning return, like Crocs, a brand which had also suffered from a very outdated image before winning the hearts of fashion addicts. Here too, collaborations with renowned designers have greatly contributed to restoring the image of these plastic shoes.
On the stock market, the love rating of the white crocodile brand is at its highest. The share price of the company listed on the stock market in 2006 has soared by 425%* in just five years, and by 626% in ten years. “Unloved for years and considered old-fashioned by some, the popularity of Crocs has exploded in recent years” notes eToro in a study devoted to this sector.
“The stories of Birkenstock and Crocs are quite similar. Both brands have gone from fashion laughingstocks to the mainstream in recent years. So much so that actress Margot Robbie wore a pair of the famous shoe in the Barbie blockbuster “Birkenstock certainly hopes to be able to benefit from the same trajectory of the stock price”, indicates Antoine Fraysse-Soulier, head of market analysis for eToro.
Shoes rather than the CAC 40
Investing in the world’s biggest shoe brands can therefore “prove to be lucrative”, according to eToro, which reviews the performance of its “shoe” index which compiles the 10 biggest global shoe brands. Indeed, the 10 leading companies in this sector have seen their share prices increase by an average of 478% over the past decade (based on an equal-weighted index).
Above all, this is 6.2 times more than the CAC 40, the flagship Parisian index, which still displays a more than honorable performance of 77% over 10 years, despite the Covid-19 pandemic. It is also almost triple the increase achieved over the past decade by the S&P 500, the managers’ favorite index (+162%).
Only Deckers does better than Crocs, posting superior performance (+861%) over 10 years. This American company owns the flagship brands UGG, known for its foot-friendly fur boots in winter, or Hoka (sports shoes) with a high-end positioning and whose popularity is also at its peak.
But some companies in the eToro panel have experienced a stock market journey strewn with pitfalls since their IPO. In particular the latest companies in the shoe sector to enter the financial markets. The broker cites in particular Allbirds, an American brand of sustainable shoes whose price has fallen by 90% since its IPO in 2021. Dr Martens, an iconic brand and also IPO in 2021, is not doing any better and is falling by 65%. Since. Famous for its unbeatable 1460 model, the British shoe manufacturer is selling less than expected and is facing operational problems in the United States.
“Not everything is rosy in this sector and consumer behavior is often fluctuating. As our research shows, some popular brands such as Dr Martens and Allbirds have failed to meet expectations after their IPOs,” adds the specialist.
But fate has not befallen all the companies in the sector which took their first steps on the stock market in 2021. The Swiss shoe brand On Holding, listed on the stock market two years ago, fared better ( +25%). And since the start of the year, the shares of the Swiss company listed in New York have gained 82%, benefiting from the public’s enthusiasm for this well-known brand among runners.
But On Holdings is still far from dethroning the undisputed king Nike. The world’s best-known shoe manufacturer is on a roll with a share price that has appreciated by 224% over the last ten years, including 33% over the last five financial years. The comma brand, which also owns Converse and Air Jordan, has experienced unprecedented popularity by capitalizing on its iconic models such as the Air Force 1, the Dunk or the Air Jordan.
Adidas and Puma, the great rivals of the American Nike, are not left out. German footwear giants have also seen their share prices jump 112% and 185% respectively over the past decade. Among the ten largest shoe companies selected by eToro, only VF Corporation, whose brands include Timberland and Vans, saw its stock price fall over ten years, by 57%.
“There is a lot of excitement surrounding the potential IPO of Birkenstock, the iconic German sandal created 250 years ago. Our research suggests that this enthusiasm could in part be explained by the fact that the biggest brands in “The world’s shoes have historically rewarded investors’ portfolios. However, the data also supports long-term positioning and diversification, with some brands only generating significant returns several years after their IPO,” concludes Antoine Fraysse-Soulier, head of market analysis for eToro.
*Stock price data is taken from Refinitiv as of August 16, 2023. Footwear index stock selection was based on the 10 largest publicly traded stocks in the footwear industry by market capitalization, extracted from the following resource: https://companiesmarketcap.com/footwear/largest-companies-by-market-cap/. The shoe index is distributed equally among the ten stocks.
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