Golden Goose, dead duck —
Permira has pulled the IPO of shoe brand Golden Goose. Golden Goose make shoes that look they have been found in a rubbish bin. They cost upwards of 500 euro. If you are going to Ponsonby you will find them on the feet of ladies who eat at SPQR and shop at Scotties. They are “distressed”. They have a distressed grey star on them. Here is a picture:
Do you recognise them now? If you walk past Five Loaves you will probably see people wearing them. They’re derelicte!
Anyway — Permira pulled the plug on the IPO. The sneaker firm was set to price at €9.75 a share, toward the lower end of its its €9.50 to €10.50 range. What happened?
Permira’s already had one shoe-related IPO disaster — Dr. Martens. I was dumb enough to buy Dr. Martens shares once upon a time. Dr. Martens stock has sunken faster than a body at the bottom of the Thames. I doubt Permira would like to be in that situation again1. Also, most fashion companies are down or flat for the year (I like that — more LVMH, Richemont and Kering for me to buy — I am a happy man). Golden Goose would be listing in an environment that isn’t conducive to a newly listed fash company.
The other big reason — the elephant in the room — is that PE is finding exit options harder in this market. Cheap cash and low interest rates made investments in companies easy — buy a company, grow it/strip it of costs — sell it on. Harder to do in a high interest rate environment — especially with European markets subdued as it is.
It’s also the shoe thing. Ferragamo shoes are now being sold on TJMaxx — Docs have fallen in quality, by all accounts. AllBirds stock price is in the toilet. It’s not a good time to IPO a fashion brand — on the other hand, if you’re an Australian burrito chain…
Guzman y Gomez
Update — $30 per share — 3bn of market cap!!! (Outrageous)— I have never eaten one of their burritos and I never intend to. Listing on the ASX today, $22 Aussie buckaroos per share — valuation of $2.2bn (!) I don’t trust a fast food chain run by a former hedge fund trader (Steve Marks). Marks has claimed the chain is named after childhood friends, Louis Guzman and Mike Gomez, and more recently he has said the men on the chain’s logo was inspired by the fathers of friends he grew up with. Marks worked for Stevie Cohen at SAC (now Point 72). Now he hawks burritos at outrageous valuations.
Valuation of the co seems way off — see below, cribbed from the AFR/GyG prospectus— reminds me of the ‘pro-forma’ results of tech companies like Palantir … exec rem is a real cost …
My real doubting Thomas moment here really comes from expansion, though — I’ve no doubt GyG could sell some burritos to New Zealanders (but why bother with such a small market?) — but expansion to the US means dealing with mega-chains like Chipotle, and, closer to the border, authentic Mexican food that makes the Aussie idea of “Mexican” look a little ridiculous…
What’s GyG actually worth? Estimated NPAT for fy25f is $6mn. On a market cap of $2.2bn. Let that sink in. Grab yourself a burrito and think about it some more.
Also, think about the lease liabilities — per the AFR:
For a start, the earnings metric in the prospectus ignores Guzman y Gomez’s lease liabilities – its second-largest cost after employee expenses. They were worth about $210 million at December 31 and would be expected to tick higher as more stores open. Omitting the leases allows the fast-food chain to beat the drum on its impressive growth trajectory, and book a multiple on a much fatter 2025 earnings figure.
I don’t blame the Aussie brokers for this — they have had a field day — nor do I blame the bankers who have made fees on this. I suspect, strongly, that this is a function of low float and hype…