Opinion: What to make of Birkenstock’s billion-dollar next step

Opinion by Jeff Yang

(CNN) — The hottest company getting ready to leap into the chaotic mosh pit of global stock investing isn’t an AI startup (so tired, ChatGP-zzzzz), a pharma company (we’re sick of ‘em) or an electric vehicle manufacturer (those have run out of juice). It’s two-and-a-half-century-old German sandal maker Birkenstock — yes, the company behind those strappy monstrosities your mom wears in the garden with white ankle socks — and the company’s coming $1.6 billion IPO prices the business at up to $10 billion.

That propels it ahead of PUMA ($8.4 billion), sends it soaring over Skechers ($7.5 billion), aces out ASICS ($5.8 billion) and crushes Crocs ($5.23 billion), which could make it the fifth most valuable footwear company in the world, right behind China’s biggest shoe and athletic gear company Li Ning ($10.5 billion) — and that’s if it doesn’t bounce after its public offering, which many investors are expecting it to do, like toes off of a springy cork cushion.

Then again, the numbers the company’s been putting up may warrant the hype. Birkenstock sells 30 million pairs of shoes a year, and generated a staggering $1.3 billion in revenues in 2022 — and is poised to top that in 2023, with adjusted earnings up 16% year over year in the first nine months of 2023. Their sales are now almost five times what they were in 2014, driven first by Covid (Birks were reportedly the favorite “indoor-outdoor shoe” of the global lockdown, though I’d like to remind you once again not to wear your outdoor shoes in the house) and most recently by “Barbie,” where lead doll Margot Robbie sports a signature-pink pair of the company’s “Arizona”-style sandals. (CNN and the distributor of “Barbie” share a parent company, Warner Bros. Discovery.)

That’s quite a journey for a vintage shoemaker that still boasts of being family-owned, though the fact is, in 2021 the Birkenstock brothers Alex and Christian sold a majority of the company to L Catterton, a private equity firm controlled by LVMH CEO Bernard Arnault, at a valuation of around $5 billion. That turned these great-great-great-great grandsons of village cobbler Johann Adam Birkenstock into billionaires, and the forthcoming IPO will pump their pockets up — and those of luxe king Arnault — even further.

For long-time enthusiasts of Birks, the ride has been head-spinning — and perhaps, stomach-turning. After all, their first adherents were, as the company itself brags in its IPO presentation, the flower children: “In the 1960s and 1970s, the global peace movement and hippies adopted BIRKENSTOCK … as part of their celebration of freedom and free-spiritedness.” In the wake of the beatniks came the greenies: “In the 1980s, the green movement adopted BIRKENSTOCK … for our ethical approaches to production and consumption.” And then, in the 1990s, feminists followed suit: “In the 1990s, inspired by the feminism movement, more women wore BIRKENSTOCKs to free themselves from long-standing fashion norms that required wearing painful high heels and other constricting footwear.”

So you might excuse some fans if they think that a brand that made its bones by selling shoes to, uh, anti-capitalists, skeptics of globalism and rejecters of the torturous standards of femininity think this giga Goldman Sachs / JP Morgan / Morgan Stanley-backed IPO, destined to further supercharge Birkenstock’s export presence and to enrich the guy who became an uncountabillionaire from “long-standing fashion norms,” represents the brand selling its soul, not just its soles.

But that’s the way of the world. Like every other culture, the counterculture is being strip-mined, commodified and securitized, and there are throngs of zoomers and boomers alike willing to line up to pay for it — and buy shares in it.

Apple turned its paeans to the “crazy ones” and its dictum to “Think Different” and became the world’s most valuable company. (Trivia: Steve Jobs was a Birkenstock true believer — his well-worn brown suede Birkenstock Arizonas were sold at auction last year for over $218,000.) Whole Foods turned cultural commodification — eg repackaging and up-pricing indigenous and ethnic fare like kombucha, kimchi, quinoa and lassi — into a billion-dollar business, and then repackaged and up-priced itself into an Amazon subsidiary, selling to Bezos’s behemoth for just under $14 billion. Gwyneth Paltrow’s hilarious and horrifying hipster health and wellness empire Goop is venture-backed to the tune of $82 million.

So maybe it’s not exactly a shock that you’ll soon be able to buy Birken-stock. There’s a mountain of money in gentrifying bohemia for the well-heeled, and old-guard critics will be told to put a white ankle sock in it.

But before you throw your funds at this Frankfurt-founded functional footwear float, consider this: The last shiny shoemaker to IPO, the Silicon Valley-beloved woolen-sneaker start-up Allbirds, spiked 91% on its first day of trading, briefly valuing the company at over $4 billion, and has since gone flat, collapsing by nearly 96% to less than $175 million. Sometimes betting on shoes gives you the thrill of victory, and other times, the agony of de feet.

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