Barbie movie, fashion influence
Running Point and its chief investment officer, Michael Ashley Schulman, CFA were quoted by Reuters— in an article by Manya Saini and Niket Nishant, “Birkenstock set for New York listing after $1.5 bln IPO” —regarding the LVMH-backed company’s much publicized initial public offering (IPO) this morning.
IPO markets in 2023
The IPO market’s revival still looks tenuous after strong initial investor appetite for Cava Group, Arm, and Instacart has waned and shares prices have slipped towards or below issue levels amidst global macro concerns of multiple wars, high interest rates, high oil prices, high inflation, and slow growth. In 2023, both the average and median IPO is down approximately -19% to -20%.
Nevertheless, pre-market/roadshow demand for Birkenstock seems strong with possibly large demand from some notable investors including Barron Funds, T. Rowe Price, and Norwegian sovereign fund.
If the shoe fits
The last time I recall this much excitement around a shoe company IPO was in 2006 when Crocs Inc. (CROX) went public. In this summer’s Barbie movie, the heroine, played by Margot Robbie, wears Birkenstock sandals in several scenes symbolizing that Barbie is entering a less glamorous world where comfort can help her overcome challenges.
Renewed brand awareness, opportunity for market-share gains, and increased focus on direct-to-consumer (DTC) sales could fuel stock price growth as long as the vertically integrated footwear company maintains its +30% adjusted EBITDA margins. Birkenstock has room to grow globally with its sandals, slip-ons, clogs, and new extensions challenging Crocs, Deckers UGG label, and other fashion lines; but a lot could go askew along the way.
NOTE: Supply of publicly available shares (aka, float) will be limited inititally because private equity firm L Catterton will continue to own more than 80% of the company after its IPO.
Article excerpt is below:
The brand gained widespread attention after Australian actress Margot Robbie wore a pair of pink Birkenstocks in the final scene of the hit movie, “Barbie”, which was released this summer.
“The movie fueled a spike in online searches for Birkenstock sandals. Similar investor excitement could reasonably fuel near-term demand for the stock,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
I bought a pair of Birkenstocks today – let’s be real. I wanted a chunky sandal that was functional. That should tell you where I am at as far as fashion.Chloë Stevens Sevigny, American actress, model and fashion designer
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-102