Birkenstock's Strategic Move into Bond Issuance
Renowned German footwear manufacturer Birkenstock is set to embark on its first bond issuance in over five years, aiming to refinance existing debt and facilitate new share buybacks. The company plans to raise €900 million through the sale of seven-year bonds, which will be callable after three years, according to a source familiar with the matter who requested anonymity. Birkenstock is scheduled to hold a conference call with investors regarding this operation on Monday and will continue meetings until Tuesday.
Market Context and Financial Performance
This bond issuance marks the first of its kind for Birkenstock since 2021, when the company successfully raised €430 million through bonds maturing in 2029. That same year, Birkenstock was acquired by L Catterton, a private equity firm backed by LVMH, and subsequently went public on Wall Street in 2023. Despite its iconic status and the popularity of its anatomical sandals and shoes, Birkenstock disappointed investors last month by maintaining its annual profit forecasts, attributing challenges to U.S. tariffs and currency fluctuations that impacted its financial results. For the quarter ending in March, the company reported a 14% increase in revenue at constant exchange rates, totaling €618 million, yet its operating profit fell more than analysts had anticipated.
In response to the perceived disconnect between its stock price and fundamental values, Birkenstock announced a $250 million accelerated share buyback program shortly thereafter. Following this announcement, the stock has rebounded significantly, with an approximate year-to-date increase of 19%. In a filing on Monday, the company indicated that it could allocate up to $500 million for additional share buybacks, contingent on market conditions. If share buybacks are not feasible, the funds may be redirected to refinance other existing debts or for general corporate purposes.
BNP Paribas SA and JPMorgan Chase & Co. are acting as bookrunners for the bond issuance, which will be made by Birkenstock Group BV & Co KG.
As reported by ma.fashionnetwork.com.
