We find it interesting that Birkenstock, an authentic and iconic brand of casual shoes made in Germany, with a 247-year heritage, has been taken over by two equity funds, L Catterton and Financière Agache, that are related to Bernard Arnault, the controlling shareholder of LVMH. We are wondering about the very high price apparently paid for the brand, which could not be confirmed.
Bloomberg cited an astronomical valuation of €4 billion for the family-owned company. This would indicate a multiple of 25 times Ebit, which could be justified with the potential that the brand can achieve by boosting its e-commerce and enlarging its presence in big markets like China and India.
According to Bloomberg, Birkenstock’s sales rose by 11 percent to €722 million in the financial year ended in September 2019, generating an operating profit of €161 million. The branded casual footwear market grew at about the same pace than the much bigger athletic footwear market in 2019, according to Shoe Intelligence, and Birkenstock continued to outperform with a growth of 10.5 percent to €865 million, according to Statista. It reportedly grew further in the past year, in spite of Covid-19.
Birkenstock’s recent progress has undoubtedly been partly due to a clever positioning of the brand in the market under the management of Oliver Reichert. He has been running the company since 2012 and will continue to be in charge. As reported a couple of months ago, another iconic family-owned casual shoe brand, Clarks, is being taken over by funds related to Li Ning, the former Chinese Olympic champion, for a valuation of just about £100 million (€115,67m-$139,38m). Clarks is much bigger than Birkenstock, but it has been losing money and market shares. Its Italian CEO, Giorgio Presca, has just been dismissed.