Birkenstock warns in IPO filing that knock-offs on Facebook are a top risk

Miami, Florida, Coral Gables Shops at Merrick Park, Nordstrom Department Store retail show of Birkenstock sandals. 

Jeff Greenberg | Universal Images Group | Getty Images

Birkenstock, the enduring sandal maker based in 1774, filed its paperwork for an IPO on Tuesday, and warned traders of the dangers posed by counterfeit manufacturers who use social media to advertise their merchandise.

The footwear firm, which was began in Germany and is now based mostly in London, plans to go public on the New York Stock Exchange, underneath ticker image “BIRK.”

Birkenstock has lengthy struggled to guard its mental property, as copycats have taken benefit of the model’s reputation and premium costs to try to undercut the corporate with cheaper options. In its prospectus, Birkenstock says that a few of the competitors comes from “personal label choices” from retailers, however there are additionally “knock-off merchandise” that are stealing its IP and making an attempt to persuade individuals on Facebook and elsewhere on the net that the objects are genuine.

“In the previous, third events have established web sites to focus on customers on Facebook or different social media platforms with ‘look alike’ web sites supposed to trick customers into believing that they had been buying Birkenstock merchandise at a steep low cost,” the filing stated. “Should counterfeit merchandise be efficiently offered on e-commerce platforms managed by third events, our manufacturers and repute could possibly be broken.”

Birkenstock does not title Amazon wherever in the 206-page (plus footnotes) filing, nevertheless it does say that it has “refrained, and we could in the longer term chorus, from utilizing sure third-party web sites to distribute our merchandise as a result of promoting of counterfeit merchandise on such platforms.”

Seven years in the past, Birkenstock publicly quit Amazon in the U.S. as a result of an eruption of counterfeit and unauthorized gross sales on the location. The firm additionally stated on the time that it might now not permit licensed Birkenstock retailers to promote on Amazon.

“The Amazon market, which operates as an ‘open market,’ creates an surroundings the place we expertise unacceptable enterprise practices which we consider jeopardize our model,” then-Birkenstock USA CEO David Kahan wrote in a memo on July 5, 2016, addressed to “our valued Birkenstock companions.”

Kahan, whose title is now President Americas, went onto say that “policing this exercise internally and in partnership with has confirmed inconceivable.”

Prior to its departure from Amazon, legions of Chinese sellers had been selling Birkenstock’s flagship Arizona sandal for $79.99, or $20 beneath the retail worth, in line with CNBC’s reporting at the time.

Since 2016, in line with the prospectus, Birkenstock has “considerably expanded” its direct-to-consumer efforts in e-commerce in the U.S. For the fiscal yr ended Sept. 30, 2022, that channel represented 38% of income, the corporate stated, including that “one in all our methods is to proceed to extend the proportion of our revenues from e-commerce.”

Subsequent to the Amazon conflict, Birkenstock sold a majority stake in the corporate to LVMH-backed personal fairness agency L Catterton in February 2021. After the IPO, L Catterton will proceed to personal a majority of Birkenstock, in line with the filing.

“We see ourselves because the oldest start-up on earth,” the corporate stated in the filing. “We are a model backed by a household custom of a quarter of a millennium with the resilience, timeless relevance, and credibility of a multigenerational enterprise.”

Facebook guardian Meta is effectively conscious of the efforts taken by counterfeiters on its platform. In 2021, Facebook and luxurious model Gucci filed a joint lawsuit in California, alleging that a consumer of Facebook’s U.S. websites was utilizing the platform to promote faux Gucci merchandise.

The firms stated in a assertion that over a million “items of content material had been faraway from Facebook and Instagram in the primary half of 2020, based mostly on 1000’s of experiences of counterfeit content material from model homeowners, together with Gucci.”

In the six months ended March 31, Birkenstock’s income climbed 19% to 644.2 million euros ($693.2 million). Net earnings over that stretched dropped 45%, largely as a result of a international trade loss.

WATCH: Birkenstock files for U.S. IPO on NYSE

Birkenstock files for U.S. IPO on NYSE under 'BIRK'

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