CONCLUSION FOR TODAY'S PRE-IPO BLACK BOOK: If you can get your hands on allocated shares of the IPO, knock yourself out. The stock probably trades well on day 1. But then sell it all, book the gain, and short what you can. Aside from the fact that Catterton has an astounding track record of selling at the top (RH is the one exception), the proposed $9.2bn equity value is selling at a peak multiple on peak earnings. Catterton just bought BIRK in 2021, and is already selling at over 100% profit. The brand -- to its credit -- is nearly 250 years old. Will it be here in another 20? Absolutely. You can't say that for all new footwear brands that hit the market. Score 1 for terminal value in your DCF. But the reality is that sales will almost certainly slow in its first full year as a public company, and take gross margins with it. The best comp here is Ugg -- when it was earlier in its lifecycle. When growth stalled after booms in fashion appeal it troughed at less that 10x earnings. BIRK has a broader demographic appeal than early cycle Ugg, but the fashion trends and revenue trajectory should be just as volatile. And Catterton knows this. It's selling while the brand is white hot. Tread very carefully on this one. Equity value should settle closer to $6bn once the dust settles.
Call Details:
Wednesday October 4th at 12:30PM ET
Live Video Link CLICK HERE
