Birkenstock has just moved into the US stock market. Following this, it immediately had a 12.6% drop in the value of its shares. Analysts in the US valued the German firm at $7.5 billion in its total value. The main reason for the drop is that investors did not believe in the long-term viability of the company. They seemed to hold the belief that cork-soled Birkenstock sandals are unfashionable and have no room for growth.
Birkenstock put the value of its shares at $46 upon entering the market for its first day under the name “BIRK”. The stock fell rapidly down upon entering the NYSE, though. By the end of Wednesday, it reached $40.20 in price.
This seems at odds with Birkenstock’s original expectations. Oliver Reichert, the CEO of the shoemaking firm, had waved the shoes proudly on the grand opening. While the company had been doing well for decades, the Pandemic brought a great shift for the company’s fortunes. Workers spent less time in offices and therefore were happier spending on shoes that were comfortable rather than fashionable. As more workers move back to offices, Birkenstock’s success may prove to have been temporary.
Birkenstock‘s past sales
The company had managed to sell 30 million pairs of their product in 2022, up 30% on their sales to £1.1 billion. It is understandable, then, why they felt so confident. Their main clientele were women, 72% of them, in fact. As attitudes changed and the lack of the necessity of using high heels became apparent, their sales jolted up for a while. However, declining consumer confidence and the general poor mood in the economy could be bad for the shoemaker’s future. It is possible that the Pandemic made a permanent change in trends, but we cannot say for sure.
Any investors that decide to take a chance on the stock must expect some volatility for a while at least.
