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Birkenstock (BIRKEN; NR/B+ Pos/BB) S&P upgrade follow up

CONSUMER CYCLICALS
  • S&P largely playing catch-up here after earnings were strong & FY (12m to Sept.) guidance was bumped. Reminder the €430m 5.25% April 29s is its only bond and currently pricing to par call in ~2 years at 4.65%/Z+138.
  • We still don't see it cheap enough on single brand-risk. Success on deleveraging to eventual 1x level could see it move all the way into IG but fashion trends can quickly change and unlike VFC (in the case of Vans) we have single brand and few sandal models concentration risk here.
  • Alternatives for carry are New Coty 27s (20bp shaving, was a cheap view in primary, fair now) or Finnair29s (cheap view) - both composite BB+, Coty a rising star.
  • 2Q numbers from last month here.
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  • S&P largely playing catch-up here after earnings were strong & FY (12m to Sept.) guidance was bumped. Reminder the €430m 5.25% April 29s is its only bond and currently pricing to par call in ~2 years at 4.65%/Z+138.
  • We still don't see it cheap enough on single brand-risk. Success on deleveraging to eventual 1x level could see it move all the way into IG but fashion trends can quickly change and unlike VFC (in the case of Vans) we have single brand and few sandal models concentration risk here.
  • Alternatives for carry are New Coty 27s (20bp shaving, was a cheap view in primary, fair now) or Finnair29s (cheap view) - both composite BB+, Coty a rising star.
  • 2Q numbers from last month here.