The German company’s debut is the worst first-day showing for a US listing of $1 billion or more in over two years, according to data compiled by Bloomberg. Out of more than 300 US IPOs of that size in the past century, only 13 have fared worse, the last of those being AppLovin Corp., which closed 18.5% below its IPO price in April 2021, the data show.

In a fourth big test of the US market in a month, the German footwear maker’s shares opened trading Wednesday at $41 a share after selling for $46 in the IPO. The offering itself was priced below the midpoint of the marketed range of $44 to $49, with Birkenstock and its private equity owner, L Catterton, selling about 32 million shares on Tuesday.

The shares closed at $40.20 in New York trading, giving the company a market value of $7.55 billion. Including shares reserved for executives, directors and employees, the company has a diluted value of about $8.15 billion.

“Strong first-day pops earlier in the year probably attracted some ‘hot money’ into a number of recent IPOs, allowing them to price up,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. “But aftermarket buyers have now been burned by IPOs multiple times, so it’s no surprise they finally threw in the towel and refused to pay up this time.”

The company sold 10.8 million of the shares, while L Catterton offered 21.5 million. The buyout firm and its affiliates will continue to own about 83% of the stock and control the company, according to filings with the US Securities and Exchange Commission.

The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley. Birkenstock shares are trading on the New York Stock Exchange under the symbol BIRK.

Mixed Performances

The IPO comes after the biggest month for US listings since January 2022, according to data compiled by Bloomberg. UK chip designer Arm Holdings Plc, backed by SoftBank Group Corp., raised $5.23 billion including so-called greenshoe shares in September, followed by and grocery delivery startup Instacart at $660 million and marketing and data automation provider Klaviyo Inc. with a $576 million IPO.

Arm’s shares have gained a modest 7.2% from their IPO price, while Instacart is trading 17% below its offer price. Klaviyo has fared the best of the cadre but even after a 22.5% jump in its trading debut, its IPO investors have seen a return of 12%.

The mixed performance by those three and now Birkenstock sharpen the focus on whether dozens of startups that have been eying the public market will decide to move ahead or keep waiting. Those companies include an array of diverse businesses such as activewear brand Vuori Inc., weight-loss drugmaker Carmot Therapeutics and GameChange Solar, whose backers include a Koch Industries affiliate, among other candidates, Bloomberg News has reported.

Closer to home for Birkenstock, Triton last week postponed a planned share sale for German gearbox maker Renk AG after a global stock market rout. On Wednesday, French software company Planisware postponed its IPO on Euronext Paris, citing challenging market conditions.

Birkenstock Profitable

Unlike many of the potential IPO candidates, Birkenstock is profitable. The successor company had a net profit of €103 million ($109 million) on revenue of €1.12 billion for the nine months ended June 30, compared with €129 million on revenue of €925 million for the same period a year earlier, according to its filings.

Birkenstock plans to use proceeds from the offering to repay debt.

Billionaire LVMH Chairman Bernard Arnault’s family holding company, which has already invested in Birkenstock, was set to buy as much as $325 million of shares in the IPO. The Norwegian sovereign fund and T. Rowe Price Group Inc. veteran Henry Ellenbogen’s Durable Capital Partners LP had expressed interest in buying as much as $300 million of stock in aggregate, according to the filings.

As much as 8% of the shares in the listing have been set aside for employees at the IPO price, according to the filings.

Fashion Collaborations

Founded nearly 250 years ago, Birkenstock’s sandals have been sold in the US since 1966 and are today worn by preppies and hippies alike. The company has become a high-fashion brand, launching collaborations with luxury names such as Dior, Manolo Blahnik and Valentino, and spawning variants from labels including Celine and Givenchy. 

Birkenstock’s sales have been boosted of late by the blockbuster Barbie movie, which stars Margot Robbie in the title role donning a pair of pink Birkenstocks in one scene. That has added to the multi-generational appeal of the brand, with millennials accounting for 31% of its sales and baby boomers 30%.

The company’s IPO comes more than two years after L Catterton and Arnault’s family investment company acquired a majority stake in the business at a valuation of about €4 billion. Since then, Birkenstock has been investing heavily in building out its production sites in Germany, including a new €120 million factory in Pasewalk, a town north of Berlin.

Two other shoemakers haven’t fared well since going public in 2021. Shares of the Zurich-based company that makes On Running shoes, which didn’t become profitable until last year, has gained 2.8% since its IPO, while Allbirds Inc.’s shares that sold for $15 in its IPO now are trading for about 94 cents and its losses are forecast to keep growing.

Nikhil Thukral, managing partner at L Catterton, said in an interview before trading opened that the firm is in no hurry to exit Birkenstock. The footwear maker has done well through previous tumultuous periods, he said.

“Although the last two weekends have been incredibly unsettling, we have lived through similar periods in the last couple of years — a pandemic, the war in Ukraine — and business performance has been unaffected by those issues,” Thukral said. “What is a great brand? You find out in markets like this, if you have something extraordinary.”