Birkenstock (BIRK-N)

Will IPO soon. Current owners including LVMH have been aggressively promoting the brand with collaborations with Christian Dior. From 2020-2022, BIRK's average selling price grew 16% annually and another 15% in the first nine months this year. Great revenue growth, but unit growth is up only 5% YOY in the 9 months ending last June. So, this will make raising prices harder. Asia, the Middle East and Africa make up only 10% of overall sales, and he doesn't know where this is headed. But LVMH is good at growing in China. Have increased gross margins from 55% in 2020 to 61% now. Overall, earnings have grown in 2020-22, but net profits declined in the first 9 months of 2023. A private equity firm will 80% of shares--warning. That said, he expects a strong debut because the brand is so famous. It could hit the low-$60s, but most IPO's are inflated, so you should wait after the IPO before considering it. The PE will likely be high vs. peers.