European political turmoil thwarts golden goose IPOs

It’s no wonder that investors are pinning their hopes on London creating a more welcoming listing environment for fashion retailer Shein than previously hostile New York.

Europe has yet to offer a decent IPO, and a slumping market got a further boost this week when Golden Goose, an Italian second-hand sneaker retailer that counts Taylor Swift among its fans, abruptly called off plans to list on Italy’s Milan stock exchange.

The trendy Italian shoe brand, which sells sneakers starting at around $500, has been preparing for an IPO for more than 10 months, hoping to raise more than $600 million. Financial TimesSeven banks were listed in the IPO, which was oversubscribed.

Asset management giant Invesco had agreed to become a cornerstone investor with $100 million, but Golden Goose’s private equity owner Permira voiced opposition, concerned about growing political uncertainty in Europe, where far-right groups won shock victories in EU elections.

These results prompted French President Emmanuel Macron to call surprise parliamentary elections, raising the possibility of a far-right government leading the eurozone’s second-largest economy after Germany, sending shares in luxury goods giant LVMH and luxury fashion brand Moncler continuing to fall and sounding a warning bell in Europe’s luxury industry.

And that was enough for Permira to make the unexpected decision to call off Golden Goose’s IPO plans, at least for now.

Permira cancels Golden Goose IPO

“The current market environment is not the right environment for the company to go public,” the company said in a statement on Tuesday, adding that the IPO decision would be reconsidered in the future.The holding of the European Parliament elections and the general election in France has had an impact on European markets as well as the luxury goods industry in particular, Golden Goose noted.

The company stressed that the brand’s IPO process has been “extensively discussed” with investors, with the first day of trading expected to be this Friday.

The last-minute decision may also be due to the underperformance of many of Permira’s recent listings, including the listing of iconic British bootmaker Dr. Martens in 2021. The company had performed well before its IPO thanks to its ties to its traditional roots, but since then it has issued five profit warnings and its shares have plummeted by more than 80%. At one point in April this year, they were well below that level.

Golden Goose was co-founded 25 years ago by husband-and-wife team Alessandro Gallo and Francesca Rinaldo, and Permira acquired the Venice-based shoe brand for just under $1.4 billion just before the pandemic.

The IPO price was expected to be around $10 per share, near the low end of the expected range, valuing the company at around $2 billion, significantly lower than the previously advertised valuation of around $3 billion.

But there was no shortage of people interested in buying it, and at that price, the book reportedly received pre-orders at roughly four times the retail price.

Golden Goose Youth Connection

Part of Golden Goose’s appeal is the ability to customise its sneakers at any of its roughly 190 stores, attracting young, individualistic shoppers with whom the brand has proven popular.

This approach has resulted in impressive growth in revenue, up 18% to just under $630 million, and adjusted earnings before interest, taxes, depreciation and amortization, up 19% to $214 million in 2023. Expansion continued in the first quarter of this year, although revenue growth slowed slightly to 12% and EBITDA increased 17%.

Currently, the Americas and Europe each account for 41% of Golden Goose’s sales, with significant room for expansion in Asia and the Middle East.

But at least for now, new IPOs in Europe have been halted.