It was a disappointing initial public offering (IPO) day on Wall Street for Birkenstock, but a retail analyst says the brand is still well-positioned in the footwear category.

Shares of the shoemaker opened 11 per cent lower than its initial offer price on Tuesday.

Jessica Ramirez, a senior analyst at Jane Hali & Associates, told BNN Bloomberg that the nearly 250-year old German sandal company is entering a volatile macroeconomic environment, where consumers are tightening discretionary spending, and the IPO results should be considered in that light.

“If you look to the consumer discretionary category, we've obviously seen some decline with the consumer being very cautious in the way that they're spending and in which categories are spending, so I'm not surprised at that reaction,” Ramirez said in a television interview on Wednesday.

“However, we do still see that Birkenstock is a very good story. We're happy with the way it sits in the footwear category, in the category of comfort, which the consumer has continued to spend on.”

Ramirez said that what separates Birkenstock sandals from other short-lived footwear trends like Heelys is the focus on comfort, which has seen strong consumer demand before, during and after the pandemic.

She also said the company has elevated itself through partnerships with well-established luxury brands like Dior.

“When you do that as a brand, what you do is you create a halo effect,” Ramirez said, pointing to other major footwear players like Nike and Crocs that have implemented similar strategies in the past.

A HERITAGE COMPANY

Ramirez said she believes consumers will continue to back Birkenstock because of its long history and reputation for quality.

“It's a heritage company, so usually, even at a time when a consumer is watching what they're spending, they're going to go to a brand that they trust and Birkenstock is really bringing that to light,” she said.

Ramirez added that conversely, the high price point for Birkenstock sandals puts them squarely in the luxury category – an area where investors will continue to be cautious given the economic pressures consumers are facing.

“There are questions of how does the consumer spend on luxury at the low end for the second half of the year going into the holiday, and also what does that look like for 2024,” she said.