Prestige retailer Douglas Group shares drop after stock market return

Europe’s leading prestige beauty retailer, Douglas Group, suffered a disappointing stock market return on Thursday March 21 in Frankfurt. After ten years of absence, the group decided to come back to the stock exchange with the aim to reduce its debt.

Douglas priced its initial public offering (IPO) at 26 euros (US$28.3) per share on Tuesday. The stock opened at 25.50 euros on Thursday and cost 23.06 euros at the end of the day, a good eleven percent less than the issue price, which was already at the lower end of the issue range of up to 30 euros.

Based on this price of 23.06 euros, the Düsseldorf-headquartered company, would be priced at a valued of around 2.5 billion euros.

“The deleveraging associated with the IPO will increase our financial flexibility and provide additional support for our successful development,” Douglas Chief Executive Sander van der Laan said earlier this month.

Shares of the Douglas group were withdrawn from the Stock Exchange in 2013 by its co-owners at the time, the Advent fund and the Kreke family. In 2015, the group was sold to CVC Capital Partners, another private equity fund, which was holding 84% of the shares before the IPO. The free float now stands at around 32%, with CVC Capital Partners and the Kreke family holding 54.4% and 10.2% of the shares, respectively.

The two private owners have also committed to injecting around 300 million euros to bolster the group’s balance sheet.

The group, which sells perfumes, skincare and makeup products in around 1,850 stores in 22 European countries, through brands such as Douglas, Nocibé, parfumdreams and Niche Beauty, closed nearly 20% of its stores in 2021 to strengthen its online sales activity.

In the 2022/23 financial year, Douglas generated sales of 4.1 billion euros, an increase of 12.1%, and a net profit of 17 million euros after several years of heavy losses. The company’s goal is to reach the 5 billion sales mark by 2026. The group has launched a program to develop and expand its store network. By the end of the financial year 2025/26, Douglas plans to add more than 200 stores to its portfolio, and more than 400 stores are set to be upgraded or refurbished.