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When Karl Birkenstock took the contoured “footbed” insoles invented by his grandfather Konrad in 1963 and turned them into health sandals, there was no immediate buzz. But 60 years later, the unique German brand could be valued at $8 billion in an initial public offering.
The Birkenstock feels very comfortable, fresh from its walk-on role. Barbie. “Business is great. Always. We’ve been sold out for ten years,” said ebullient CEO Oliver Reichert in an interview with HTSI magazine last year.He added in the IPO Archive This week, “The Birkenstock is more than just a shoe. It’s a way of thinking, a way of life.”
This is not always the case.Cork latex sandals have attracted many fans, including Steve Jobs, who wore a pair of well-worn Birkenstocks fetched Last year they sold for $219,000 at auction, but they take time to become fashionable. Just follow designer Phoebe Philo lining A pair of Céline’s 2012 Birkenstock-style mink sandals merged anti-fashion with high fashion.
Now, Birkenstock’s 1774 series (the year the shoemaking dynasty originated), in collaboration with Dior, Manolo Blahnik and others, retails for up to 1,600 euros.Meanwhile, a pair of Arizona shearlings lined with lambswool are selling for 150 euros In Germany, a pair of grey-blue synthetic Barbados sandals to the beach will only cost you 45 euros.
So there’s a Birkenstock for every wallet and purpose, in keeping with Alfred Sloan’s slogan for General Motors cars in 1925. Not only is the brand selling about three times more shoes than it did in 2013, when Reichert became CEO, but it’s also deftly aligning itself with a variety of consumer trends. It is real, healthy and casual, freeing Barbie’s feet from high heels.
What could possibly go wrong? Well, that’s enough. Shares in Dr Martens, another fashion brand based on German orthopedic soles, have been falling steadily since its initial public offering two years ago. Crocs, the ugly shoe brand, has been on a roller coaster since it went public in 2006: it almost collapsed in 2009, thrived during the epidemic, and has faced a sell-off since April.
Shoes rarely escape the vagaries of taste: a shoe that looks clunky at one moment becomes fashionable at another, depending on who is wearing it. Some luxury brands try to maintain a sense of mystery by selling small quantities at high prices, but fashion cycles can be cruel to the middle class.
German sociologist Georg Simmel wrote in his book: “From the ugly and repulsive things that are sometimes popular, fashion seems to aspire to show off by making us adopt[them]Its power.” prose “Fashion” in 1904, just after Conrad made his first shoe insole. Birkenstocks have been mocked before and will one day be mocked again.
Simmel also noted that once a style is widely adopted, it suddenly becomes obsolete among society’s elite. So far, Birkenstock has escaped that trap: Its average selling price has been rising, and 45% of its revenue comes from people making more than $100,000 a year.
However, while family owners like Birkenstock remain wary of growth, public investors who get the chance to buy shares soon tend to be hungry for more. The latest drop in Crocs’ market valuation isn’t because sales are down, but because it’s growing a little slower than expected: In the stock market, moderation is a dirty word.
Birkenstock benefits from its inherent limitations: It cannot sell enough shoes to meet demand because nearly all of its shoes are produced at its five factories in Germany, some of which are produced in Portugal. That’s where its cork latex footbed anchors “silhouettes” like the double-strap Arizona and Boston clogs.
Made in Germany (and some other EU countries) is a smart policy. Not only does it limit the temptation to overproduce, it also keeps the company connected to tradition. Although it makes premium rather than luxury shoes, in addition to the 1774 collaboration, it was acquired in 2021 by L Catterton, the private equity firm backed by Bernard Arnault’s LVMH.
I imagine that when growth slows in a few years, Reichert or his successor will be under pressure. Investors will be antsy that its sales aren’t increasing in the Asia-Pacific region, and a consultant will propose an obvious solution: Birkenstock should make some shoes, like Crocs and Dr Martens, in China or Vietnam and take the pressure off Germany.
It’s tempting, but wrong, because that’s just the way fashion cycles work. If Birkenstock sandals can be made anywhere, there’s nothing stopping the company from pursuing growth until its brand falls out of fashion again. Then comes the recession, then a shakeup with another CEO, then a resurgence, and so on.
My advice is to save yourself the trouble. The average American consumer owns 3.6 pairs of Birkenstocks, and I own more, so it must have been doing something right since 1963. Why not keep doing this?
john.gapper@ft.com
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