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Selling luxury requires creating the illusion of desirability. Flagship stores keep customers queueing outside their doors even when the interior is sparsely populated. Velvet ropes hint at crowds while wares are gathering dust in the shop. Unless real demand comes through, however, such gimmicks have a limited shelf life.
That is one lesson from the shock postponement of Golden Goose’s highly touted IPO. Other listing candidates should take note.
The Italian maker of distressed-looking trainers used every tool in the box to create a buzz around its listing. Its investor calls featured discussions on the scarcity of happiness and the importance of “youniqueness”. Its initial pricing expectations — in keeping with its €500 trainers — seemed breathtakingly high: early suggestions were that Golden Goose was eyeing a €3bn valuation, a substantial premium to luxury peers. Bankers, as always, talked up investor interest in the stock.
The dawning of reality and a target valuation set at about €2.2bn did not manage to create a sense of scarcity. Golden Goose tested the market by pricing its float a little above the bottom of its range. And, like luxury customers, investors typically don’t like to feel that they have put in a bid for unloved wares.
The result was the embarrassment of an IPO pulled amid fears that it would perform poorly. Owner Permira, which had already scorched investors with the 2021 listing of Dr Martens in London, couldn’t let another shoe drop.
Partly this was unlucky timing. The luxury sector has been shaken by concerns over slowing demand. Moncler — relative to which Golden Goose is often valued — is down 7 per cent since the group announced its intention to float. Spanish retailer Tendam has also reportedly postponed a flotation.
Luxury may be a tough sell at the moment. But Golden Goose’s variant — which it inexplicably dubbed “lovexury” — is tougher still. Its trainers and celebrity following may appeal to aspirational shoppers, who tend to be the first to pull the purse strings when spending declines. The group’s reliance on footwear stretches the limits of what might be considered a well-rounded luxury brand.
Despite its fumble, Golden Goose is unlikely to have grounded an incipient recovery in IPOs, at least for quality specimens. But the market is in an unforgiving mood — suitably sceptical of sellers who have fed them duds in the past and unwilling to let overhyped equity stories fly.
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