Birkenstock’s IPO filing warns of fraud at Facebook

  • Birkenstock, the 249-year-old shoe company, said Tuesday that it plans to go public on the New York Stock Exchange.
  • In the risk factors section of the prospectus, Birkenstock warned that it faces competition from “counterfeit products.”
  • Birkenstock has long struggled to protect its intellectual property, as imitators have exploited the brand’s popularity and premium prices to try to undercut the company with cheaper alternatives.

Nordstrom stores Birkenstock sandals in stores in Merrick Park, Miami.

Jeff Greenberg | Global Photo Collection | Getty Images

Birkenstock, the famous sandal maker founded in 1774, placed his order worksheet For its initial public offering on Tuesday, it warned investors of the risks posed by copycat brands that use social media to promote their products.

The shoe company, which started in Germany and is now headquartered in London, plans to go public on the New York Stock Exchange, under the ticker symbol “BIRK.”

Birkenstock has long struggled to protect its intellectual property, as imitators have exploited the brand’s popularity and premium prices to try to undercut the company with cheaper alternatives. Some of the competition comes from “private brand offerings” from retailers, but there are also “knockoffs” that steal their intellectual property and try to convince people on Facebook and elsewhere on the web that the items are authentic, Birkenstock says in the prospectus.

“In the past, third parties created websites to target users on Facebook or other social media platforms with ‘look-alike’ websites intended to trick users into believing they were purchasing Birkenstock products at a deep discount,” the filing said. “If counterfeit products are successfully sold on e-commerce platforms operated by third parties, our brands and reputation could be harmed.”

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Birkenstock does not name Amazon anywhere in the 206-page filing — beyond footnotes — but says it “has refrained, and may refrain in the future, from using certain third-party websites to distribute our products due to the sale of counterfeit products on such platforms.” “

Seven years ago, Birkenstock publicly left Amazon in the US due to an outburst of counterfeit and unauthorized sales on the site. The company also said at the time that it would no longer allow authorized Birkenstock dealers to sell on Amazon.

“Amazon’s marketplace, operating as an open marketplace, creates an environment in which we encounter unacceptable business practices that we believe jeopardize our brand,” David Kahan, Birkenstock’s then-U.S. CEO, wrote in a July 5, 2016, memo to Amazon.com. “Our valued partners at Birkenstock.”

Kahan, whose title is now President of the Americas, went on to say that “monitoring this activity internally and in partnership with Amazon.com has proven impossible.”

Before it left Amazon, hordes of Chinese sellers were promoting Birkenstock’s flagship Arizona sandal for $79.99, or $20 less than the retail price, CNBC reported at the time.

Since 2016, according to the prospectus, Birkenstock has “significantly expanded” its direct-to-consumer e-commerce efforts in the United States. For the fiscal year ending Sept. 30, 2022, this channel represented 38% of revenue, the company said. Adding, “One of our strategies is to continue to increase the proportion of our revenues from e-commerce.”

After Amazon’s struggle, Birkenstock sold a majority stake in the company to LVMH-backed private equity firm L Catterton in February 2021. After the IPO, L Catterton will continue to own a majority of Birkenstock, according to the filing.

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“We consider ourselves the oldest startup on Earth,” the company said in the filing. “We are a brand powered by a family tradition dating back a quarter of a millennium with the resilience, timeless relevance and credibility of a multi-generational company.”

Meta, Facebook’s parent company, is well aware of the efforts of counterfeiters on its platform. In 2021, Facebook and luxury brand Gucci filed a joint lawsuit in California, alleging that a Facebook user in the United States was using the platform to sell counterfeit Gucci products.

The two companies said in a statement that more than one million “pieces of content were removed from Facebook and Instagram in the first half of 2020, based on thousands of reports of inauthentic content from brand owners, including Gucci.”

In the six months ended March 31, Birkenstock’s revenue rose 19% to 644.2 million euros, or $693.2 million. Net income during this stretch declined by 45%, largely due to a foreign exchange loss.

He watches: Birkenstock files for a US IPO on the New York Stock Exchange

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