Golden Goose IPO to test its Super-Star status

Douglas AG

11/06/2024 10:51

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Karen Kwok
       LONDON, June 11 (Reuters Breakingviews) - Golden Goose's
imminent Milan listing will test the resilience of both the
initial public offering (IPO) market and the luxury sector. The
Permira-owned company, which sells $550-a-pair Super-Star
sneakers popular with celebrities like Taylor Swift, on Tuesday
picked a relatively conservative price range for its float.
There are good reasons that explain why it may be struggling to
attract the same buzz as its best-selling fashion item.
    The Italian brand declared its intention to float last
month. It will use some proceeds to repay debt while private
equity firm Permira plans to remain a major shareholder. 
    Golden Goose looks healthy. Last year, revenue grew 18% to
587 million euros and EBITDA jumped 19% to 200 million euros.
Its chunky 34% EBITDA margin and heavy reliance on selling one
chief luxury item draw similarities to Italian top brand Moncler
 MONC.MI , which reported a roughly 40% EBITDA margin in 2023.
If valued on Moncler’s 14 times EBITDA multiple for last year,
Golden Goose would in theory be worth 2.8 billion euros ($3
billion) including net debt. That’s double the price Permira
paid for the company in 2020. 
    But the buyout group has picked a more modest mark. On
Tuesday, the group set a price range giving a 1.8 billion euro
market value at the midpoint, or 2.2 billion euros including
debt – equivalent to 11 times 2023 EBITDA.
   The question for investors is whether Golden Goose will rise
above that level. The optimistic case is that some other
European IPOs have had a good run. Apart from heavily indebted
beauty company Douglas  DOU1.DE , three other big listings this
year — Puig  PUIGb.MC , Galderma  GALD.S , CVC Capital Partners
 CVC.AS  — are on average trading 22% above their listing price.
    On the other hand, investors may question whether Golden
Goose’s growth will hold up. The group run by Silvio Campara
expects to expand sales by nearly 10% annually in the next six
years and surpass 1 billion euros in revenue by 2029, according
to a person familiar with the matter. That’s slightly above
Moncler’s 8% expected revenue growth this year, per LSEG data,
but lower than Golden Goose’s past expansion rate. To keep
luring customers, Golden Goose could diversify beyond sneakers
to bags or expand its store networks. But such steps require
heavy investments and could threaten its profit margins. 
    The luxury sector is also experiencing a slowdown. Shares in
Moncler and industry leader LVMH  LVMH.PA  are down 2% and 11%
respectively in the past 12 months. Another Permira-owned foot
brand, Dr Martens  DOCS.L , has also struggled and its shares
are down 77% from its IPO price in London in 2021. Those factors
suggest that Golden Goose’s less ebullient valuation target is
appropriate.
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    CONTEXT NEWS
    Golden Goose, owned by private equity firm Permira, on June
11 set a price range for its initial public offering of between
9.50 euros and 10.50 euros, implying a market value of 1.7
billion euros to 1.9 billion euros.
   Permira will sell between 408 million euros and 458 million
euros worth of its shares, equivalent to about one-quarter of
the company. Golden Goose itself will raise 100 million euros
from issuing new stock.
    Funds advised by Invesco Advisers will act as cornerstone
investors and acquire 100 million euros of shares in the
offering, the company added.
    The first day of trading is expected on June 21. 

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 (Editing by Lisa Jucca, Liam Proud and Streisand Neto)
 ((For previous columns by the author, Reuters customers can
click on  KWOK/ 
karen.kwok@thomsonreuters.com; Reuters Messaging:
karen.kwok.thomsonreuters.com@reuters.net))