The marriage has yet to be approved. Photo John MACDOUGALL and Martin BUREAU / AFP
Once a symbol of outdatedness, the famous German Birkenstock sandals will come under the control of funds linked to the luxury giant LVMH, seduced by this brand become cult, popular among campers, hipsters and major designers.
No financial details were revealed on Friday by the various parties but according to several media, the transaction values the entire group at around 4 billion euros, whose turnover amounted to 720 million euros in 2019.
The acquisition of a majority stake in the manufacturer by L Catterton, associated with LVHM, and the Financière Agache fund of the Arnault family, is “the next logical step to achieve strong growth also in markets of the future such as China and France. ‘India,’ the German family group said in a statement. It is not specified how much this majority share amounts to.
From “ugliest sandal in the world” to fashion star!
Initially a producer of orthopedic soles dressing sandals with a rustic look, the shoemaker has gradually gained its place in fashion shows and on the feet of stars.
The entry into the LVHM fold, which remains subject to the approval of the competition authorities, marks its landing on the luxury planet.
But why does the cool sandal go to LVMH?
Birkenstock is “considered a heritage brand with strong German roots and know-how and this corresponds well to other heritage brands overseen by LVMH”, decrypts Fflur Roberts, head of luxury at Euromonitor.
The two owners, Christian and Alex Birkenstock, hire partners “with the same strategic and long-term vision as the family”. The boss of the manufacturer Oliver Reichert speaks for his part in an interview with the German business daily Handelsblatt “opportunities” because “the owner of LVMH Bernard Arnault plays a key role in L Catterton’s strategy”.
“We will help Birkenstock to realize its great growth potential” said Bernard Arnault, quoted in a press release. L Catterton and LVMH “collaborate” in particular on “brand strategy” and sales development, according to the fund’s website.
Different models. Photo Arno Burgi / dpa / AFP
In the 2000s, the “ugliest sandal in the world”, with its cork “foot bed” and chunky straps, shed its kitsch image, a vestige of hippie culture, and was adopted by trendy, with or without socks.
The group has dusted off its collections, launching models in more cheerful colors and partnering with designer labels such as Paco Rabanne, Valentino or Céline who recently revisited the Birkenstock in a fur version (the “Furkenstock”).
In February 2019, actress Frances McDormand even walked the Oscars red carpet wearing a pair of German slippers, to accompany a luxury Valentino designer dress.
“We are an extremely sexy brand”
This glamorous touch has made the sandal more popular, which is also based on the ecological credo, linked to the use of natural materials (leather, latex, cork), and “Made in Germany”.
Added to this is a Covid effect, which makes the comfortable Germanic sandal even more desirable. “The fashion industry was already going through a period of transition driven by sports recreation and a more relaxed approach to clothing,” says Ms. Roberts. “This trend has accelerated with the pandemic, with consumers choosing loungewear to wear while working from home and exercising at home.”
“We are an extremely sexy brand,” said the boss.
Birkenstock, a German success
Based in Linz am Rhein in the Land of Rhineland-Palatinate (southwest) and employing 4,300 people, Birkenstock claims to produce in Germany, on four sites, one of the most important of which is in Görlitz, ex-GDR, no. far from the Polish border.
“There will be no relocation of production to Asia or elsewhere,” said Mr. Reichert.
The Birkenstock heirs had made a first strategic shift in 2013, calling in the helm of the company two leaders chosen from outside the family circle – Oliver Reichert and Markus Bensberg -, who reorganized the company.
The group sold in 2019 more than 24 million pairs of shoes in more than 100 countries, for a turnover of some 720 million euros, according to the Bloomberg agency. He is also, according to his boss, a juicy financial business with “a profit margin stably hovering around 20% for years”.
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