Golden Goose SpA is an Italian maker of distressed-looking sneakers that may set you again $2,000 for a crystal-studded pair. The greater than €2.5 billion ($2.9 billion) worth its personal fairness proprietor simply snagged for the enterprise is extra opulent than shabby, too.
Permira’s sale to HSG, identified previously as Sequoia Capital China, with Singapore’s Temasek as a minority investor, is without doubt one of the few landmark exits from a troubled classic of buyout offers struck because the world was rising from the pandemic, simply earlier than rates of interest spiked. The transaction — twice the dimensions of Prada SpA’s buy of Versace earlier this yr — additionally comes at a time of depressed demand for luxurious items. The valuation could also be much less extravagant than what was mooted in an deserted preliminary public providing 18 months in the past, however the PE agency has roughly doubled the corporate’s worth in 5 years.
It acquired most of Golden Goose from Carlyle for €1.3 billion in 2020. Investors balked at a €3 billion enterprise worth in that doomed Milan IPO effort final yr, pointing to the troubles of Dr Martens, one other footwear firm beforehand owned by Permira. A slowing market for top-end items didn’t assist after three years of blockbuster progress.
And but, the worst luxurious downturn because the monetary disaster (excluding the pandemic) has been good for Golden Goose. As comfortably off however not superrich customers reined of their spending, megabrands akin to Louis Vuitton and Gucci went upmarket to observe the cash.
As they targeting the 1 p.c, they deserted entry degree merchandise akin to designer sneakers, leaving that market to Golden Goose. They additionally raised costs on sneakers, purses and different core items. The common value of a basket of iconic luxurious gadgets in Europe rose by 54 p.c between 2019 and the top of 2024, in line with analysts at HSBC Holdings Plc.
For comparability, Golden Goose has lifted costs by simply 4 p.c over the previous 5 years. That makes its sneakers, hardly a snip at a median worth of €550 together with customisation, look higher worth for cash. The firm elevated gross sales from €266 million in 2020 to €655 million in 2024. Growth has continued this yr, with gross sales up 13 p.c within the first 9 months and earnings earlier than curiosity, tax, depreciation and amortization up 7 p.c. Assuming related momentum for the total yr and a steady Ebitda margin, Golden Goose might generate about €740 million of gross sales in 2025 and near €250 million of Ebitda.
The worth equates to about 10 occasions Ebitda, a low cost to Moncler SpA’s 13 occasions and Birkenstock Holding Plc’s 11 occasions, however nonetheless a minimum of a doubling of Permira’s fairness worth. The agency will keep as a minority investor.
HSG beforehand backed Labubu maker Pop Mart International Group Ltd., TikTok proprietor ByteDance Co Ltd. and Chinese social media platform Red Note, so growth will seemingly be targeted on Asia. Golden Goose makes solely 12 p.c of its gross sales within the area, with simply 7 p.c in China, far lower than most luxurious manufacturers. About half its gross sales are within the Americas; the remainder in Europe and the Middle East.
There is clearly extra to go for in China. With Gucci purses and Chanel pumps not so prized, there may be urge for food for quirky gadgets that join emotionally with younger customers. Take Crocs Inc.’s clogs, which may be customised with charms. They have change into a hit with the nation’s Gen Z customers. That bodes nicely for Golden Goose.
Sneakers account for 90 p.c of the corporate’s gross sales, so there’s room to diversify. Bags and clothes, which may also be personalised, are different alternatives within the US in addition to China. Temasek’s expertise as an investor in Stone Island, Ermenegildo Zegna NV and Moncler chairman Remo Ruffini’s holding firm ought to assist. Ex-Gucci boss Marco Bizzarri will change into chairman.
But hitting Golden Goose’s long-term goal of lifting yearly gross sales to €1 billion received’t be straightforward. Although there are hopes that China’s luxurious market is previous the worst, any restoration will take time. And customers there are extra targeted on sneakers that assist them run quicker or sort out more difficult hikes. Nike Inc. mentioned just lately that it was seen extra as a informal trend shoe model, somewhat than a efficiency one, holding again gross sales and forcing it to low cost costs.
Meanwhile, massive luxurious has determined it desires its middle-class prospects again. Sneakers and related items shall be key, bringing extra competitors.
If Golden Goose can efficiently increase in China and change into a broader way of life model like Ralph Lauren Corp., its future shall be removed from scruffy. But given the travails of PE house owners over the previous couple of years, it’s not a unhealthy time to take some cash off the desk.
By Andrea Felsted