S&P Global Ratings affirmed Golden Goose SpA ‘s debt ratings and removed the ratings from CreditWatch Positive as the Italy-based luxury footwear company has suspended its plans to undergo an initial public offering (IPO).
On June 7, S&P placed its ‘B+’ ratings on Golden Goose SpA and its debt on CreditWatch with positive implications in view of the company’s planned IPO, announced May 30. Golden Goose suspended the IPO process on June 18 in light of unfavorable market conditions. S&P said it understands the IPO has not been canceled, but no visibility is available on when or if it will be finalized.
As a result, S&P affirmed its ‘B+’ ratings on Golden Goose and its €480 million first-lien senior secured notes due in 2027 and removed them from CreditWatch positive.
The stable outlook reflects S&P’s expectation that Golden Goose will continue to generate solid revenue growth outperforming its addressable market, with adjusted EBITDA margins of 32 percent to 34 percent in 2024, adjusted debt-to-EBITDA ratios of 3.0x ot 3.5x, and free operating cash flow (FOCF) after leases of €40 million to €60 million over 2024 and 2025, enabling the company to self-fund its expansion strategy.
S&P said in its analysis, “We expect Golden Goose’s operating performance to remain solid over the next 12-18 months supported by volume growth and its direct-to-customer (DTC) channel. In the first half of 2024 (ended June 30), the company reported year-on-year sales growth of about 11 percent (about 12 percent on a constant currency basis). This strong performance was particularly supported by the DTC channel (up 18 percent year on year on a constant currency basis), boosted by a higher customer conversion rate, positive contribution from new store openings, and ongoing momentum in the digital channel. The Americas (accounting for 38 percent of sales in first-half 2024) and Europe, the Middle East, and Africa (EMEA; 48 percent) contributed to the positive growth, while there were temporary negative market dynamics in Asia-Pacific (14 percent) due to a decline in customer traffic. Over the same period, adjusted EBITDA (according to the company’s calculations) grew by about 12 percent year on year to almost €110 million as of June 30, 2024, primarily thanks to the positive effects of the internalization of certain suppliers. We expect S&P Global Ratings-adjusted EBITDA margins to remain stable at 32 percent-34 percent, supported by expansion of the company’s DTC business, which now represents about 73 percent of sales, up from 46 percent in 2019. Excluding the planned IPO transaction, we now expect S&P Global Ratings-adjusted debt to EBITDA to remain in the 3.0x-3.5x range over the next 12 months. Moreover, we think the company maintains a good liquidity cushion to continue to support its expansion, with total cash of about €184 million as of June 30, 2024, and a fully undrawn €65 million revolving credit facility.
“The stable outlook reflects our expectation that Golden Goose will continue to generate solid revenue growth outperforming peers in its addressable market, while achieving an adjusted EBITDA margin of 32 percent-34 percent in 2024, compared with 33.2 percent the previous year. We forecast the company will maintain an adjusted debt-to-EBITDA ratio of 3.0x-3.5x and generate FOCF after leases of €40 million-€60 million annually over 2024 and 2025, which would enable it to self-fund its expansion strategy.”
