Birkenstock is taking a bold step forward. Fresh from publicity from the Barbie movie, the German sandals maker is targeting a valuation of up to $11 billion, including debt, in its New York stock listing next week. Hoping to build confidence among investors, owner L Catterton has secured the backing of anchor investors including Bernard Arnault’s investing vehicle Financière Agache and Norway’s wealth fund. Yet the share sale does not come cheap.
At $44 to $49 per stock, the offer values the group’s equity between $8.3 billion and $9.2 billion. Add $1.6 billion of net debt, and the German brand will trade at 18 to 20 times the $545 million of EBITDA the group may be able to generate in the fiscal year to September 2023, Breakingviews calculations show. That’s higher than bling conglomerate LVMH’s (LVMH.PA) 15 times multiple for the current year and well above the 6 to 7 times multiples of shoe brands Crocs (CROX.O) and Dr. Martens (DOCS.L). And it raises questions over the company’s market positioning. At 35%, Birkenstock’s EBITDA margin matches that of top luxury brands. But the company’s valuations seem to be more aligned with sports brands such as Nike (NKE.N), which trades at 18 times but has lower margins. As the Arm IPO teaches, too aggressive price expectations may backfire. (By Pamela Barbaglia)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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