Rules updated in Midwest 🔐

Hello hello! I missed you all last Sunday. I really did.

“You only appreciate what you have after you don’t”

Some of you messaged me asking if everything was okay and I appreciate that. The platform was down, not me. I apologize for not being more communicative. Didn’t realize some of y’all reallyyy loved sales tax.

Thankfully, we’ll cover that junk today and more. But first, I want to talk about a major IPO - Birkenstock. They’ve been crushing it.

Then, we’ll cover some legislation changes in major product categories. Let’s jump right in:

• Birkenstock wants to go public 🩴 

• Food, Baby and Feminine product rules changing 🔄

• Twizzlers are not candies, they’re cookies 🍪 

• Meme of the week 😆 

• “What happens if I exchange an item after a sales tax holiday?” 🙋‍♀️

DON’T UNDERSTAND SALES TAX? 🤔 

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You can also check out a Free Sales Tax Guide here.

BIRKENSTOCK READY TO IPO  🩴 

Birkenstock has filed for IPO, up to $9 billion value.

In 2021, it was valued at $4.4 billion. Here’s how they 2x’ed:

💼 From 1774 Family Business to PE Owned:

• Birkenstock is a German footwear brand that dates back to 1774

• In 2008, Oliver Reichert took over as CEO and is responsible for key growth

• Oliver settled family squabbles, restructured company, dialed up innovation and personally closed L Catterton deal

• In 2021, L Catterton acquired majority stake (family made $1.7 billion)

📈 2022 Financials:

• Reported revenue was $1.34 billion (+70% growth vs. 2020)

• Net profit was $201 million (62% profit margin)

• 20% annual growth rate from 2014-22 (32% in US only)

• Extra Boost not included from “Barbie” movie (+110% in searches)

📦 Rise in DTC but nixed Amazon:

• DTC is 38% of 2022 revenue (vs. 30% in 2020)

• E-commerce site available in 30 countries

• E-commerce was 89% of DTC channel in 2022

• Stopped directly selling to Amazon in 2017 due to counterfeit concerns

🛍️ Retail and wholesale presence:

• Building its own store fleet with 45 stores now (20 in Germany)

• Over 6,000 wholesale partners in 75+ countries

🏭 Int’l expansion with emphasis on vertical manufacturing:

• 53% customers in America (regional focus is DTC)

• 36% customers in Europe

• 10% customers in APAC (L Catterton has active connections in region)

• Produces all footrest in Germany due to vertically integrated model

• Strict control over supply chain with 95% products assembled in Germany

• Opening a new factory in Germany + expansion plans for facility in Portugal

❤️ Product & customer loyalty:

• Top 5 SKUs accounts for 76% of 2022 revenue (4 are open-toed SKUs)

• 70% of US customers had 2+ pairs of Birkenstock’s

• 90% of purchasers desired to purchase again

• Sandal sales have slowed but comfort sandals outperformed with demand for comfortable footwear following pandemic

Birkenstock has safeguarded their brand.

The team has managed to resonate with shoppers by being very deliberate about the way it introduces, distributes and promotes product. It has given up opportunities like Amazon even at the expense of sales.

It's interesting to see how a company pre-dating the USA has been able to endure the test of time. Brand has played a big role.

MIDWEST UPDATING PRODUCT TAX RULES 🔄  

For all those selling food, and I know there’s a lot of you… Michigan is setting a threshold for when sales tax applies for certain prepared food.

Selling feminine hygiene products?

Arkansas AG is revising a recent bill exempting products, calling it “too ambiguous” so your product may or may not be taxed. Look closely.

More good news for those selling in baby aisle… Ohio will exempt some baby products beginning October 1.

HAVE A SWEET TOOTH? 🍫

Is a Kit Kat a cookie or a candy? What about Twizzlers?

22 US states are saying BOTH are closer to cookies 🍪... than candy🍬

But why?

Treats that contain flour are excluded from candy-specific sales tax regulations in many states.

States do this to differentiate between cookies and candies.

And yes, Twizzlers have flour! 😳

Candy gets taxed at different rates than other kinds of food in many states.

That said... even the states that share a definition of candy have different candy tax laws.

Learn how your product is taxed in the US → 

MEME OF THE WEEK 😆 

PARTNER SPOTLIGHT 🌟

Bookskeep is a small business partner that enables growing businesses to scale to the next level and move from startup to sustaining and thriving.

Bookskeep provides the complete package for planning, building and maintaining financial stability and growth.

Interested in chatting? Just reply to this email and I can make a direct intro.

YOUR QUESTIONS, ANSWERED 🙋‍♂️

Q (Catherine): What happens if I exchange an item after a sales tax holiday?

A: No tax is due even if the exchange is made after the holiday. You will not be subject to tax retroactively.

Thank you for reading along. I’ll be back next Sunday with more sales tax shenanigans.

If you enjoyed this one, please share it with your network. 🤝

If you caught a laugh, reply back and let me know. I live for the people.

If you have any feedback, suggestions or questions, please let me know by responding to this email or DM me on Twitter or LinkedIn.

Until next week’s 🗑 …

Rohit