As Spanish beauty group Puig gears up for an IPO in Madrid, it is poised to become Europe’s biggest float this year with a valuation of nearly €14bn (£11.96bn). Retail Week takes a look at the recent surge in beauty IPOs, their valuations and what that might mean for Boots, widely rumoured to be exploring a listing in London.
Spanish group Puig, which owns luxury fragrance and beauty brands, including Charlotte Tilbury, Byredo and Rabanne, has set its final IPO price at the top of its announced range to €24.50 (£20.94) a share.
The IPO was oversubscribed across the price range, due to strong demand from international and domestic investors, bringing the overall market value of the group to €13.9bn (£11.88bn).
The 110-year-old family-owned business will be Spain’s biggest IPO in almost a decade and Europe’s biggest this year.
The last year has seen a raft of IPOs by beauty businesses that have reached a scale that’s viable for public companies. Most recent examples are German beauty retailer Douglas, and Swiss skincare company Galderma, owner of popular brands like Cetaphil.
Retail Week explores why the IPOs are happening now and what they may mean for Boots, which is widely understood to be pondering a flotation.
Beauty parade for investors
While consumers cut back as inflation hit their overall spending power, the health and beauty market continued to demonstrate remarkable resilience.
Retail Economics senior consultant Nicholas Found observes: “Consumers have shown a willingness to invest in beauty products whether that’s self-care or to maintain a sense of wellbeing during economic upheaval. The sector has been outperforming other non-food categories in recent months and has shown remarkable resilience, which is quite attractive to investors.”
As the ‘lipstick effect’ helps the beauty sector outshine the market, the other key factor making it attractive is its shift to ecommerce in recent years.
In the UK, 13% of health and beauty’s overall sales come from ecommerce, according to 2024 data from Retail Economics.
This is forecast to grow to 17% in the next five years as beauty players scale up their online operations.
Found says: “Health and beauty is relatively immature online compared with other categories, such as clothing, for example. In recent years, there’s been a significant shift towards ecommerce and direct-to-consumer models in the category and that’s really driving investor interest, since that market has huge potential for some of these beauty brands and it remains untapped at the moment.”
But might the rush to float by beauty specialists end up following the trend set by the tech-driven IPOs of the pandemic era when online revenues skyrocketed only to crash later on?
Found says it ultimately depends on whether beauty shows continued shopper appeal.
He said: “With any investment, it’s essential to exercise a bit of caution, and not simply follow the trend of tech because that is a very different market. I think where beauty has shown strength is in its resilience to tough economic times, which tech hasn’t necessarily shown.”
Should Boots IPO too?
As Europe embraces Puig’s IPO, is now the right time for Boots to make the leap and go public?
The UK’s largest health and beauty retailer has been the subject of speculation that it might seek a listing for some time after its American owner Walgreens Boots Alliance previously considered a sale. Speculation mounted in late 2023, after Boots offloaded its £4.8bn pension scheme liabilities – a move seen as helping pave the way for a potential sale or listing.
But in a cutthroat UK beauty market, Boots still has work to do to put distance between itself and rivals such as Sephora, Superdrug and Space NK.
Beth Bloomfield, senior retail analyst at Lumina Intelligence, says: “A London listing makes the most commercial sense for Boots given its present geographic reach. Yet it faces stiff competition in a crowded market in the UK, with US giant Sephora ramping up store openings in the UK, as well as Space NK upsizing its stores on the beauty front.
“Within pharmacy, Superdrug is also expanding its offer. Coupled with the rising number of successful direct-to-consumer brands it begs the question: what will be Boots’ key differentiator for success?”
The retailer’s Advantage card loyalty programme has been a strength for a number of years and has continued to evolve under cost-of-living pressures, but there is still space for ecommerce innovation for further long-term growth.
Bloomfield says: “Boots has been resizing its store estate in recent years as well as upping the ante by overhauling its Advantage card scheme. These moves have given it a solid ecommerce base [giving access to valuable consumer data], but there are improvements it should make to its ecommerce proposition if it is looking for long-term growth in the channel, such as AI and AR to help its shoppers.
“Its back-to-office mandate may also work against it by shedding talent, although it could be looking to shed employee numbers to make any offering more attractive. So, Boots probably still has some work to do before any potential listing.”
While Puig paints a rosy picture for the beauty IPO market, German beauty chain Douglas’ IPO in Frankfurt tells a very different story. The retailer’s share fell more than 12% to €22.7 (£19.41) a share on the issue price of €25.50 (£21.81) a share on the day it returned to the stock market as investor confidence in luxury and retail businesses dived after poor sales from Gucci-owner Kering.
The divergent reactions to Puig and Douglas tell two very different tales and Boots will need to work hard to provide a compelling IPO story to investors if if it ever decides to make a move on the LSE.
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