The expectations, aspiring to something better, is something intrinsic in luxury brands, and in Puig this is already expressed in white roses and the garden lavender that extends in front of the Puig Tower, in the European Plaza of L'Hospitalet de Llobregat (Barcelona). Among this exuberance of expectations he jumped on May 3, 2024, this company founded in 1914. It had everything to convince the market: solid and large tour, business growth perspectives, family control (which remained after the placement of shares with more than 70% of economic rights and more than 90% of the vote), support of institutional investors and a demand that covered several times the supply of actions. In addition, I was going to contribute fresh air to an Ibex 35 – who entered two months later – in which there is too much weight of banks and energy. But all that euphoria has not moved to action: on the contrary, Puig's price in this first year has fallen 32%. Puig is still a machine to earn money, but for now he fails to seduce investors. The challenge is to achieve it in an environment, that of the commercial war, increasingly complicated. The explanation of the drop in the stock market must not be sought only in the results, although there is some clue. Puig achieved in 2024 record results: a net profit of 530.6 million euros, 14% more than the previous year, and sales of 4,790 million, 11.3% more. In the first quarter of this year sales have continued to grow, with an advance of 7.5%. The main segment, the fragrance and fashion, which contributes 74% of the billing, grew in the first quarter 10.4%, and there Puig has very powerful marks both in the prestige market – the one with the most wholesale sales, with teachings such as Carolina Herrera or Rabanne – as in the niche – more expensive product, more exclusive points of sale and more focused on collections Parfumeur or Christian Louboutin. Together, Puig has gone from having a market share in 3% perfume to reach 11.5%, and has three of the 10 brands that are located in the World Cup 10. With this performance of its first line of business, with a sanitized balance – the debt, at the end of 2024, was just over 1,000 million, once Ebitda – and a gross margin of 75%, Puig's results are solid. Except for the makeup segment, which contributes 14% of the company's sales, and that has somehow become the stone in Puig's shoe. In the presentation of results of the first semester of last year, the company's first event as quoted, this segment contracted its sales by 1.8%, which was a negative surprise for investors and penalized the value of the action. In the whole of last year, the billing was reduced by 1.3%, and in the first quarter of this year 6%fell. The emergence of cheap copies of makeup products, where consumer loyalty is less than in perfumery, and some own stroke – on the one hand, some lots of Charlotte Tilbury were removed that did not meet the quality standards, and on the other there was a mismatch in the stocks of the distributors, which to give way to their reservations bought less from Puig – explain this fall. The president and CEO, Marc Puig, explained at the end of last month in a meeting with analysts that in this segment had been touched, and that it is only possible to improve: «During the year, and already in the second quarter, we hope that the makeup category will gradually improve,» he said. To do this, they trust the product launches planned for the second half of this year, especially Charlotte Tilbury. The negative surprise in makeup disturbed investors, but the drop in stock market is explained by more global factors, in which the geopolitical context can also play a role. Beyond this, the moment in which the parquet went out to be the high point of the Premium beauty sector, in which Puig is framed. Opposite for the desire for consumption after the pandemic, the sector was growing in a trend that seemed to have no end, but for a year all companies have seen their value fall, which returns to more realistic levels. On average, companies have left approximately 36%of the value – there is more than 40%, L'Oréal 17%, Estee Lauder more than 50%, among others – and among other things, they also suffer in makeup. Analysts find in this general context an explanation for the fall of the value of Puig. Other market voices point out that the exit price of the action, for which the maximum of the fork (24.5 euros) was chosen, was too high. Puig had the demand covered several times, so the logic invited out with the highest price. Now the action is worth more than 16.5 euros, but of the 20 analysts who follow Puig regularly, 18 recommend buying and two advise waiting, and among all they see a stock market revaluation potential that would place the price of the action approximately in the output value. Banco Sabadell, for example, places the objective price at 26 euros per share and believes that Puig will comply with what was promised, although he has cut his estimates because of the global context: «We adjust estimates to collect a moderation scenario in the growth of the sector,» says the bank. Jefferies analysts continue to buy, although they place the target price at 22.9 euros, and highlight that the company can meet the planned growth. Santander points to an objective price of 27.8 euros, and speaks of the «strong start» this year, and JP Morgan believes that Puig is «positioned to grow above the beauty market.»
Tariff threat
Analysts trust Puig's forecast, which is to finish the year with an EBITDA similar to last year (969 million) and a sales growth of between 6% and 8%: less than the previous one, but still in line with what was promised. Here is the disruption of the US president, Donald Trump, in world trade. The company, which produces mainly in Europe, is preparing to suffer tariffs in the US, which is the market in which it saw more potential to grow (Puig does not break down sales by countries, but the Americas region represents 37%). The company has taken advantage of the moratorium of rates to send reservations to its US stores and thus dodge the greatest impact, which will be moderate since its gross margin is very high. There is no alternative, since Marc Puig himself moved away the possibility of producing on American soil: the company does not foresee strategic decisions such as this or how to acquire new companies, and plans to focus on the growth of its brands.
