Birkenstock follows Arnault’s model and buys back shares as their price falls. The German company, famous for its sandals, is controlled by L Catterton (firm backed by LVMH and the Arnault family). Birkenstock has in fact announced an “accelerated” buyback of $250 million in its own shares. After all, as Birkenstock CEO Oliver Reichert points out, there is no better investment. “Using our substantial cash reserves for a share buyback represents the most proper use of capital in the current environment”, Reichert stated.
Birkenstock follows Arnault’s model
Birkenstock shares surged nearly 17% on Thursday, May 21, after the German sandal manufacturer announced a $250 million share buyback. CEO Reichert stated that this decision stems from the belief that the stock price does not reflect the company’s fundamentals. “Short-term market dynamics have created what we believe to be a significant discrepancy between our share price and the strength of our fundamentals”, Reichert said in the company’s press release.
Birkenstock’s strategy, a brand controlled by L Catterton, mirrors that of the Arnaults at LVMH: buying the stock when its price drops. This demonstrates to the financial market the owners’ confidence in the company and, at the same time, aims to support the stock price during a period of weakness. This is precisely what Birkenstock’s stock is currently experiencing, as investors are rethinking the possibility that the brand could join the exclusive circle of luxury brands.
Betting on the future
Finally, buying back shares also means betting on a future rise in the stock price, and thus speculating on the stock market. On May 21, the stock jumped from $33 to $39, but it’s still well below its all-time high of $64.70 reached in August 2024. The German brand continues to invest in retail and in Italy. After opening stores in Milan, Venice, and Rome, the German brand has now opened a store in Bologna.
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