In the end, Birkenstock Holding Plc couldn’t quite put its best foot forward.

The maker of clumpy shoes on Tuesday night priced its New York initial public offering at $46 a share, dashing hopes that it would price at the top of the $44 to $49 range. Even so, the valuation looks as pricey as its Dior collaboration clog.

At this level, Birkenstock will have an equity value of about $8.6 billion. That implies hipsters will keep buying its Boston clogs and Arizona sandals. It leaves no room for the kind of wardrobe malfunction that has befallen British rival Dr Martens Plc.

Birkenstock was founded in 1774 but made its name in 1896, when it developed the footbed giving its shoes their characteristic support. It wasn’t until the 1990s that the shoes became a hit, after model Kate Moss sported them in an influential shoot for The Face magazine.

They have been in and out of vogue since then but have now become a fashion staple synonymous with laid-back luxe, worn by rich and poor, young and old alike. Add in a raft of collaborations with high-end brands, and that certainly implies some staying power.

Consequently, the company has been increasing sales, with revenue up about 21% in the first nine months of this year to €1.1 billion ($1.2 billion). Earnings before interest, tax, depreciation and amortization rose 16% to €387 million during the period. Assuming a similar level of expansion for the full year, revenue could be about €1.5 billion and Ebitda about €500 million.

There is also scope to expand further. Birkenstock is strongest in Europe and the US. But only 10% of its customers come from elsewhere. Increasing its sales in Asia could open up lucrative new revenue streams. Expansion won’t come cheap, though. Birkenstock is also investing in its production capabilities, spending €120 million on a new factory in Pasewalk, a town north of Berlin.

No wonder L Catterton, which acquired a majority stake almost three years ago in a deal valuing the company at $4.9 billion, wanted to raise funds for future growth and to pay down debt.

When the listing of Birkenstock was first reported by Bloomberg News in July, a valuation of more than $6 billion valuation was mooted. That wouldn’t have delivered such a stellar return to the private equity fund backed by LVMH Chief Executive Officer Bernard Arnault.

Assuming about $1 billion of net debt after listing would still mean an enterprise value approaching $10 billion, close to twice that implied by the 2021 deal.

A $9.6 billion enterprise value would equate to about 18 times estimated Ebitda for this year. That’s well ahead of Dr Martens and Crocs Inc. each on less than seven times. It’s even ahead of LVMH, the world’s biggest luxury group, on about 13 times, and closer to the ratings of Nike Inc. and Lululemon Athletica Inc.

That looks a stretch, and assumes that Birkenstock continues with its growth trajectory.

Yet, as we emerge from our homes to return to the office and socialize, we are smartening up. This is being accelerated by the trend for "quiet luxury," which prioritizes more formal dressing. The appetite for sneakers and streetwear is already cooling, particularly in the US, where the aspirational customer is under pressure.

Meanwhile, the C-shaped recovery that investors bet on as China reopened earlier this year hasn’t materialized. This could make expansion in Asia harder, while LVMH on Tuesday said spending in Europe had abruptly slowed in the past few months.

Birkenstock lacks the scale and diversification of Nike and Lululemon. But it’s worth noting that even these companies haven’t been immune from the fashion cycle. For example, over the past 10 years, Nike has vied with Adidas AG for the most hyped sneaker style. Right now, Adidas’s retro shoes are in the ascendance.

The situation is even more extreme when it comes to Dr Martens, which has issued three profit warnings in the last 12 months. When the company came to market in London almost three years ago, it too was marketed as a classic that had been around since the 1960s. But it has suffered a series of setbacks, including lackluster US demand and problems at a Los Angeles warehouse. Its shares have lost about two-thirds of their value since its IPO in early 2021.

Some of the issues at Dr Martens are operational, which Birkenstock, with its vertical integration and close ties to class act LVMH, has a good chance of avoiding. It will have to tread more carefully to swerve a fashion faux pas.

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