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.
A Tesla Cybertruck sits on a lot at a Tesla dealership on April 15, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Tesla shares slid more than 2% Tuesday after a report that the electric vehicle maker was halting production of Cybertruck and Model Y models for a week in Austin, Texas.
The production stoppage begins June 30, Business Insider reported, citing a staff meeting where the announcement was made. The pause, which is for maintenance on production lines, would be the third such shutdown at the Austin facility in the past year, according to BI.
Tesla is tentatively launching the robotaxi in Austin on June 22, using Model Y vehicles equipped with a new version of the company’s “Full Self-Driving” technology.
CEO Elon Musk shared a video clip on X last week of a Model Y robotaxi on a road in Austin, adding to the buzz for the promised launch.
CNBC has reached out to Tesla for comment on the reported pause.
Read the full BI story here.
Tesla year-to-date stock chart.
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Reddit shares popped about 5% after the social media company debuted new artificial intelligence-powered advertising tools.
The two new features, announced Monday in a post during the Cannes Lions festival, will help brands better leverage discussions on the platform. The company said the tools are powered by an engine called Reddit Community Intelligence that turns “posts and comments into structured intelligence.”
Reddit announced a “listening tool” called Reddit Insights, which shares real-time insights with marketers to help them identify trends and launch campaigns. The other tool, called Conversation Summary Add-ons, allows brands to show “positive” user content under their ads.
“These are tools for a new era of community marketing, one where brands can tap into Reddit’s authenticity and connect meaningfully with high-intent communities around the world,” the company wrote.
The company said Publicis served as the exclusive alpha tester for Reddit Insights, while Lucid and Jackbox Games were among the early testers for Conversation Summary Add-Ons.
Companies across industries are betting on new ways to harness AI to improve advertising campaigns and better engage with users. These new tools are transforming the industry while also putting pressure on some advertising stalwarts.
The industry is also currently navigating a bumpy environment spurred by the trade war with China.
During the recent earnings season, many companies warned of sluggish advertising sales in certain regions due to a rocky macroeconomic environment. Recent developments, however, have suggested a cooling of tensions between the U.S. and China.
Last month, Reddit posted strong sales and upbeat guidance. The company has benefited from recent changes to Google search and internal site improvements, which include convincing logged-out users to open accounts. Logged-in accounts are more beneficial to advertisers.
WATCH: Outgoing WPP CEO says AI will ‘revolutionize’ advertising business
Helsing uses AI to analyze large amounts of sensor and weapons system data from the battlefield.
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images
European defense technology startup Helsing on Tuesday said that it’s raised 600 million euros ($693.6 million) in a bumper new round of funding.
The investment was led by Prima Materia, the venture capital firm founded by Spotify CEO Daniel Ek and by Shakil Khan, an early investor in the popular music streaming app. Ek is also chairman of Helsing.
Existing investors Lightspeed Venture Partners, Accel, Plural, General Catalyst and Saab also put money in, alongside new investors BDT & MSD Partners.
Defense and the technology behind it have become a hot area for investors lately, amid major global conflicts, including the Ukraine war to Israel-Gaza. Last week saw a further escalation of war in the Middle East as Israel launched a series of airstrikes against Iran.
In 2024, venture funding in Europe’s defense, security and resilience sector reached an all-time high of $5.2 billion, according to a recent report from the NATO Innovation Fund. The sector grew 30% in the past two years, outperforming the broader VC market, which saw a 45% decline over the same period.
Founded in 2021, Helsing sells software that uses artificial intelligence technology to analyze large amounts of sensor and weapons system data from the battlefield to inform military decisions in real time. Last year, the startup also began manufacturing its own line of military drones, called HX-2.
Helsing, which operates in the U.K., Germany and France, said it would use the fresh cash to invest in Europe’s “technological sovereignty” — which refers to attempts to onshore the development and production of critical technologies, such as AI.
“As Europe rapidly strengthens its defence capabilities in response to evolving geopolitical challenges, there is an urgent need for investments in advanced technologies that ensure its strategic autonomy and security readiness,” Ek said in a statement out Tuesday.
Helsing did not disclose its new valuation following the latest financing round, which is subject to “certain approvals,” according to a statement. The firm was previously valued at around 5 billion euros in a 450 million euro funding round led by General Catalyst last year.
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