Once a niche sandal brand, LVMH-led Birkenstock now commands luxury-level margins by leveraging scarcity, collaborations, and its storied heritage.

“How did LVMH turn Birkenstock from boring to luxury?”

This question, posed on the social media platform Reddit, stirred significant debate.

Whether Birkenstock warrants the luxury tag can be subjective, but over the past three years, the shoe maker has undoubtedly been trendy. Last year, the brand experienced double-digit growth across all channels, regions, and categories, with revenue surpassing EUR 1 billion (USD 1.1 billion). Nearly half of its sales came from younger customers. It even managed slight price increases and launched a line of foot care products. In China, the brand name has become shorthand for a type of sandal, with e-commerce platforms offering countless similar products ranging in price from a few dozen to several hundred rMB—products that resemble the original in appearance but bear little connection to the brand.

Still, Birkenstock can largely be considered a luxury brand. Its nearly 60% gross margin rivals that of Dior and Louis Vuitton. The brand has minimal public exposure yet frequently launches high-priced, limited-edition collaborations. Most products are priced between RMB 1,000–2,000 (USD 140–280) and are never discounted. A single piece of the more expensive “1774” collection can exceed RMB 5,000 (USD 700) in price.

When the private equity firm L Catterton, linked to LVMH, fully acquired Birkenstock, some lauded Bernard Arnault for his unerring business acumen. Following the exit of its founding family, yet another century-old family enterprise successfully transitioned, with LVMH seemingly giving the world a business lesson on building a luxury brand from scratch.

When comfort meets ugly

The history of luxury brands often follows a familiar script, and Birkenstock possesses all the necessary elements: a long heritage, handcrafted production, and European origins.

Birkenstock’s history dates back to 1774, when Johann Adam Birkenstock, a German cobbler from Langen-Bergheim, founded the company. From the outset, it targeted wealthy spa-goers in Germany. Its iconic cork footbeds were reportedly inspired by footprints on the sand. Each shoe size comes in nine variations, ensuring comfort on various terrains.

The Birkenstock family never marketed the brand as fashionable. Instead, their products were more akin to tools for arch support. Although slow to expand globally, Birkenstock was already expensive by the 1990s, with prices around USD 100 per pair. Even in the most affluent and consumerist regions of the US, such prices were uncommon. Thus, the association between Birkenstock and affluence—if not outright wealth—has persisted for at least half a century.

Birkenstock’s resurgence in popularity owes much to the rise of comfort-focused styles during the pandemic. CEO Oliver Reichert explained: “Everyone was staying home. People didn’t care about desks, chairs, or sweatpants, but they cared about what they wore on their feet. Birkenstock became part of a self-reinvention. The pandemic also made workwear more casual, and this reflected in fashion.”

Reichert knew little about shoemaking. Before joining Birkenstock, he had worked at a German sports broadcasting network in Munich and eventually became chairman of a TV company. People often described him as a pure businessman. In 2012, the feuding Birkenstock family finally agreed to relinquish leadership, appointing Reichert, who had been serving as a consultant. Reichert believed Birkenstock could achieve global success—at the time, the brand sold only one-third as many shoes as it does now. Perhaps his atypically optimistic outlook for a German earned him the role.

What followed was a series of serendipitous events.

In 2012, designer Phoebe Philo featured a pair of fur-lined Birkenstocks on the runway for Celine, causing a global stir. Suddenly, everyone wanted a pair of Arizonas. Before that moment, fashion-approved footwear often meant stilettos like those from Jimmy Choo.

In the 1960s, American women wore Birkenstock’s rugged leather sandals as a rebellion against mainstream values. Today, their granddaughters have rediscovered the brand. The mere idea of wearing comfortable footwear publicly itself feels rebellious.

High fashion has also embraced the “ugly.” Balenciaga’s oversized rubber shoes, Schiaparelli’s lung-inspired dresses, and Comme des Garcons’ models stomping the runway with giant bows symbolize this avant-garde shift. Designer Rei Kawakubo summed it up: “This is about my present state of mind. I have anger against everything in the world, especially against myself.”

The “ugly” and the “comfortable”—once the antitheses of high fashion—are now its vanguard.

Today, 70% of Birkenstock’s customers are women. In its IPO prospectus, the brand cited the “breakthrough of modern feminism” as a business driver. The Barbie movie further bolstered its image with Kate McKinnon holding a Birkenstock in one hand and a stiletto in the other—a perfect ad for challenging high heels’ patriarchal connotations.

Learning from luxury

Birkenstock’s US journey began in California health food stores, as its appearance was too “ugly” for department store shoppers seeking high heels. A German businesswoman responsible for introducing the brand to America renamed its basic sandal style “Madrid,” making it more memorable and European. This attracted the first wave of female customers.

Today, the US remains Birkenstock’s largest market.

The Birkenstock family made minimal effort to expand. Reluctant to open stores, they established France’s first flagship only this year. Relationships with distributors were simple but effective: until 2013, a distributor could call the German headquarters during a stock shortage, and the shoes would be shipped—just like that.

Global companies cannot operate so informally. Here, LVMH likely imparted invaluable lessons.

Birkenstock doesn’t always meet distributors’ full demands. According to an Evercore report, it typically supplies only 75% of the requested quantity, allocating products based on geography and demographics. Due to this scarcity, Birkenstock products are rarely discounted. 90% of its products sell at full price—95% in the US. David Kahan, CEO of Birkenstock Americas, said in a September call that scarcity motivates customers to act quickly, instead of considering if cheaper options are available elsewhere.

For now, this strategy appears successful. According to Reichert, Birkenstock’s EBITDA is consistent across channels. The brand primarily relies on distribution and operates only 66 direct stores worldwide—38 in Europe. Interestingly, India has the most stores in Asia, followed by Japan.

While Birkenstock entered China via Tmall in 2017, it opened its first store only in 2024, in Chengdu’s Taikoo Li. The brand told 36Kr that expansion in China will focus on finding trustworthy partners.

Birkenstock’s 60% gross margin matches Dior and Louis Vuitton. A 2.2% drop last quarter, attributed to overexpansion, shook stock prices. Reichert reassured investors, emphasizing that profitability per shoe matters more than distribution methods.

Confidently, he pointed to diversification. While its bestsellers remain open toe sandals, closed toe styles grew by 30%, and high-priced models outpaced lower-priced ones twofold.

Birkenstock is even making strides in athletic and golf footwear, unveiling detachable footbed clogs for the Paris Olympics to help athletes recover post-activity. Some products have even made their way into high-end golf shops. Birkenstock shoes or insoles mitigate the discomfort of prolonged standing and walking.

To support its growth, Birkenstock opened a new factory in Germany this year. Most products remain handcrafted—a hallmark of luxury.

European luxury giants have historically thrived on Asia’s middle class, often embracing regional manufacturing, riding the “Made in America” and “Made in China” policies. Will Birkenstock follow suit in the future? Reichert denies this possibility, but the company’s chief administration officer Sean Harris is pragmatic, saying that, if managed well, anything is possible.

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