BIRKENSTOCK Ebba Suede Leather Warm Sand in all sizes ✓ Buy directly from the manufacturer online ✓ All girls trends from Birkenstock
$BIRK is finally landing on the NYSE. Predictions are the share price will be around 46 dollars. It’s easy to say that a company built on a cork footbed, and one signature sandal, should not be valued at almost 9-billion-dollars. A recent CNN post compared values of brands:
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- Deckers Outdoor (the parent company of Ugg, Hoka, Teva and more): $13.29 billion
- Skechers: $7.53 billion
- Crocs: $5.36 billion
- Steve Madden: $2.44 billion
This list is a solid representation of companies across the footwear segment. Nike is a brand with a diverse product mix. Apparel, sneakers and outdoor gear with considerable brand recognition makes Nike a force. Deckers is a lot like Nike in what they offer and so is Skechers.
Steve Madden and Crocs are more closely related to Birkenstock. Madden is primarily a brown shoe company which purchased an athletic casual brand in GREATS, but they are primarily known as a casual girls company. Crocs, like Birkenstock, is generally known for one product. Why would $BIRK launch at $46/share when all things considered, they are really closely related to Crocs in their product offerings?
Birkenstock’s average sold price is much higher than Crocs. In third party data (using keywords focused on New, women’s shoes) the Arizona, Birkenstock’s flagship, over the course of a year is $75.76 on eBay. Crocs is $50.23. Birkenstock’s numbers are pulled down by their introduction of an EVA model that actually encroached on Crocs’ marketshare.
Most Birkenstock sneakers sell through at SRP which means the Arizona with the cork footbed is actually selling at almost three times the price of any Crocs. However, when compared to Steve Madden, Birkenstock has a limited product mix. This could be seen as a reason to place $BIRK at a lower valuation, since Madden is just under 3billion, but Crocs has been performing well. Unlike Crocs, Birkenstock is an aspirational premium product capable of going down market with an EVA, or attaining an average sold price of $197.26 for a KITH collab.
The lofty 8.6-billion-dollar valuation places $BIRK above Skechers which is hard to justify. Skechers has faced the pressures of flawed product releases in Shape-Ups and they’ve conquered performance running with their GoMeb Series. Skechers is also entering the performance basketball market this season. Taking this into consideration $BIRK’s 8.6B and 46/share is coming in too hot. What can the brand do to offset the lofty valuation?
- Introduce a Two-Tiered City Expansion for Birkenstock Doors
- Develop a much larger plan for Sports and Recovery
- Implement a Birkenstock apparel strategy
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- Develop broader demographics through design and better closed toe options
As generic as the suggestions above seem, when fleshed out the 8.6-billion-dollar valuation will seem like a bargain.