Will Amer Sports Outpace Birkenstock’s IPO Misstep?
The upcoming initial public offering (IPO) of the owner of Arc’teryx, Salomon, and Wilson seeks to avoid the pitfalls encountered by the last major fashion listing.
Amer Sports, the proprietor of functional gear brands like Arc’teryx and Salomon, is set to debut on the New York Stock Exchange this week. Drawing comparisons with Birkenstock, which went public in October, both companies cater to a fashion-conscious audience with utilitarian yet stylish products. They have both witnessed remarkable growth in the surge of outdoor apparel and footwear post-pandemic. Birkenstock aimed for an $8.6 billion IPO valuation last year, while Amer Sports is eyeing $8.7 billion.
Investors should exercise caution, mindful not to rush ahead of themselves (much like Amer-owned Atomic brand). Birkenstock’s shares stumbled on their debut, indicating that its allure in fashion circles failed to translate into the market’s valuation, where long-term performance outweighs current trends. Although the stock has since rebounded, it has been an erratic journey. Last week, the company cautioned about reduced profits as it undertakes a costly global expansion, causing its market capitalization to dip below $8.6 billion once more.
However, the parallels have limitations. Amer Sports possesses a crucial advantage over Birkenstock, evident in its name. Activewear is currently thriving, representing a rapidly expanding market where even dominant players like Nike are vulnerable. This dynamic explains why the Swiss running shoe brand On is one of the few recent fashion IPOs trading above its debut price. Similarly, Deckers, the owner of Hoka and Ugg, has enjoyed consistent success, with its shares nearly tripling over the past three years (incidentally, Deckers will report quarterly results next week).
Amer has taken strategic steps to prolong its recent momentum, including reducing dependence on wholesale channels and investing in both its core technical offerings and trendier items. Nonetheless, before going public, Amer Sports must face the same scrutiny as Birkenstock: Does the $8.7 billion valuation only capture a fraction of the potential upside for Salomon and Arc’teryx? Or does the IPO symbolize the company’s Peak Performance (another ski brand in its portfolio; the puns are inevitable)?