Birkenstock warns in IPO filing that knock-offs on Facebook are a top risk
Nordstrom department store display of Birkenstock sandals at the Shops at Merrick Park, Miami.
Jeff Greenberg | Universal Images Group | Getty Images
Birkenstock, the iconic sandal maker founded in 1774, filed its paperwork for an initial public offering on Tuesday, and warned investors of the risks posed by counterfeit brands that use social media to promote their products.
The footwear company, which was started in Germany and is now based in London, plans to go public on the New York Stock Exchange, under ticker symbol “BIRK.”
Birkenstock has long struggled to protect its intellectual property, as copycats have taken advantage of the brand’s popularity and premium prices to try and undercut the company with cheaper alternatives. In its prospectus, Birkenstock says that some of the competition comes from “private label offerings” from retailers, but there are also “knock-off products” that are stealing its IP and trying to convince people on Facebook and elsewhere on the web that the items are authentic.
“In the past, third parties have established websites to target users on Facebook or other social media platforms with ‘look alike’ websites intended to trick users into believing that they were purchasing Birkenstock products at a steep discount,” the filing said. “Should counterfeit products be successfully sold on e-commerce platforms managed by third parties, our brands and reputation could be damaged.”
Birkenstock doesn’t name Amazon anywhere in the 206-page — plus footnotes — filing, but it does say that it has “refrained, and we may in the future refrain, from using certain third-party websites to distribute our products due to the selling of counterfeit products on such platforms.”
Seven years ago, Birkenstock publicly quit Amazon in the U.S. due to an eruption of counterfeit and unauthorized sales on the site. The company also said at the time that it would no longer allow authorized Birkenstock merchants to sell on Amazon.
“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” then-Birkenstock USA CEO David Kahan wrote in a memo on July 5, 2016, addressed to “our valued Birkenstock partners.”
Kahan, whose title is now President Americas, went on to say that “policing this activity internally and in partnership with Amazon.com has proven impossible.”
Prior to its departure from Amazon, legions of Chinese sellers had been promoting Birkenstock’s flagship Arizona sandal for $79.99, or $20 below the retail price, according to CNBC’s reporting at the time.
Since 2016, according to the prospectus, Birkenstock has “significantly expanded” its direct-to-consumer efforts in e-commerce in the U.S. For the fiscal year ending Sept. 30, 2022, that channel represented 38% of revenue, the company said, adding that “one of our strategies is to continue to increase the proportion of our revenues from e-commerce.”
Subsequent to the Amazon clash, 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.
“We see ourselves as the oldest start-up on earth,” the company said in the filing. “We are a brand backed by a family tradition of a quarter of a millennium with the resilience, timeless relevance, and credibility of a multigenerational business.”
Facebook parent Meta is well aware of the efforts taken by counterfeiters on its platform. In 2021, Facebook and luxury brand Gucci filed a joint lawsuit in California, alleging that a user of Facebook’s U.S. sites was using the platform to sell fake Gucci products.
The companies said in a statement that over a million “pieces of content were removed from Facebook and Instagram in the first half of 2020, based on thousands of reports of counterfeit content from brand owners, including Gucci.”
In the six months ending March 31, Birkenstock’s revenue climbed 19% to 644.2 million euros, or $693.2 million. Net income over that stretch dropped 45%, largely due to a foreign exchange loss.
Davide Bonaldo | Lightrocket | Getty Images
The New York Times on Friday filed a lawsuit against Perplexity, alleging the artificial intelligence startup has illegally copied and distributed its copyrighted content.
The suit, filed in the Southern District of New York, accuses Perplexity of unlawfully scraping The Times’ stories, videos, podcasts and other content to formulate responses to user queries. The startup also generates outputs that are “identical or substantially similar to” The Times’ content, according to the complaint.
“While we believe in the ethical and responsible use and development of AI, we firmly object to Perplexity’s unlicensed use of our content to develop and promote their products,” Graham James, a spokesperson for The Times, said in a statement. “We will continue to work to hold companies accountable that refuse to recognize the value of our work.”
Perplexity did not immediately respond to CNBC’s request for comment.
Founded in 2022, Perplexity is best known for its AI-powered search engine that gives users simple answers to questions. The startup has raised more than $1.5 billion in funding from investors including IVP, New Enterprise Associates and Nvidia, according to PitchBook.
The lawsuit from The Times on Friday serves as the latest example of how media companies and publishers are working to protect their intellectual property during the AI boom.
The Times is already involved in another ongoing copyright suit against Microsoft and OpenAI, which alleges the companies improperly used The Times’ content to train their AI models. That suit was filed in the Southern District of New York in 2023.
In September, AI startup Anthropic agreed to pay $1.5 billion to settle a class action lawsuit with a group of authors who claimed that the company had illegally downloaded their books and others from pirated databases.
That settlement makes up the largest publicly reported copyright recovery.
WATCH: Amazon sends Perplexity cease-and-desist over AI browser agents making purchases
Antonio Neri, President and CEO of Hewlett Packard Enterprise.
Anjali Sundaram | CNBC
Hewlett Packard Enterprise shares fell 5% Friday after the company reported fourth-quarter revenue that missed analyst expectations.
The company reported earnings after the bell on Thursday, posting revenue of $9.68 billion, which was up 14% over the year prior but fell short of the $9.94 billion in revenue expected by analysts polled by LSEG.
Revenue for HPE’s server segment came in at $4.46 billion, down 5% from the $4.68 billion a year ago. The fourth-quarter number missed StreetAccount analyst expectations of $4.58 billion.
CFO Marie Myers addressed the shortfall on the analyst call Thursday, attributing it to the timing of artificial intelligence service shipments and lower-than-expected government spending.
“Despite these headwinds, we were encouraged by robust server order growth across both traditional server and AI offerings, with demand significantly outpacing revenue in this period,” she said.
Server revenue declined 10% from the third quarter.
HPE beat earnings expectations with adjusted earnings of 62 cents per share, coming in above the 58 cents per share expected by LSEG.
The company expects fiscal 2026 first-quarter revenue in the range of $9 billion to $9.4 billion, which was short of the $9.87 billion expected by FactSet analysts.
HPE one-day stock chart.
Technology
Netflix to buy Warner Bros. Discovery, Ulta earnings, Meta’s rebound and more in Morning Squawk
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024