Birkenstock UK, the renowned sandal maker, will be hoping a fall in its full-year profits will not dent IPO prospects drastically, especially as sales continue to soar.
High inflation, causing input costs and staff wages to rise, triggered a 24% drop in pre-tax profits, which overall reached £727,000 for the 12 months to September 2022, a trading update revealed.
Property costs and advertising also contributed to falling profits, yet sales in the period boomed, growing by 49% to reach £34.5 million.
A spokesperson for Birkenstock Group, the parent company of Birkenstock UK, added: "In the UK alone, revenues alone have increased from 2021 to 2022 by 48.8%, which is a huge success under difficult market circumstances."
During the current financial year operations have improved at the UK division of the German clothing group and sales are currently “above initial expectations”, with the company now forecasting a year-on-year revenue increase.
Morningstar analyst Jelena Sokolova said she's been impressed by Birkenstock's global performance.
She said: “Recent growth for the brand has been strong… it has affordable price points and universal appeal among both fashion-forward and non-fashion-forward consumers.”
Birken-stock?
L Catterton, which bought Birkenstock two years ago, was formed in 2016 as a joint venture between Catterton, one the world’s largest consumer-focused private equity firms, LVMH, the luxury clothing company, and Groupe Arnault, Bernard Arnault’s holding company.
Looking to spin out the Birkenstock brand as a separate listing, the company is considering an IPO in the US as early as September and is hoping to receive around an US$8 billion valuation.
Birkenstock's moment of stardom Source: British Vogue
Falling profits are unlikely to dampen valuations too much, especially when considering the resilience of sales and the additional recognition it is receiving for its involvement with the Barbie film.
Appearing in two scenes as a symbolic prop, sales of the sandals have reportedly experienced a 340% surge following the movie's release.