The Spanish multinational perfumery and cosmetics have fallen sharply on the stock market after the announcement made yesterday afternoon by the company. Specifically, the shares of the Catalan group, which debuted on the stock market last May, have lost 3.5% of their value after learning this Thursday that the company has initiated one by identifying “an isolated quality problem in a limited number of lots.” .
The product in question is a makeup fixative that is sold at a price close to 40 euros per 100 milliliter bottle. In the communication sent to the CNMV, Puig explains that, after a “routine analysis”, it has “identified an isolated quality problem in a limited number of batches that, in any case, does not make the product unsafe. There are no other Charlotte Tilbury products affected,” he adds. These are some lots of the 34 and 100 milliliter formats, while those of 200 and those sold through gift lots remain on the market.
According to the company itself, the withdrawal of the product will have an impact on the performance of the makeup business – which represents 16.7% of 2024 sales and 8.3% of ebitda (profit before taxes, interest and amortization) – not quantified, and is not expected to have a material impact on the company’s annual results.
Therefore, Puig maintains its medium-term forecasts, consisting of high single-digit sales growth and a stable EBITDA margin in 2024 compared to 2023.
The investment bank Citi, which has a buy recommendation for Puig’s shares, sees single-digit reductions in the earnings per share estimate for 2024. According to the firm’s analysts, they point out that “this is due to a reduction of 40 basis points in organic sales growth in 2024 and 30 basis points in 2025.”
For its part, the American investment bank JP Morgan – which has an overweight advice for the value – foresees an impact of up to single digits on the growth of the makeup business in the fourth quarter, which could extend to the first quarter of 2025 in depending on the speed of product replacement, collects Bloomberg.
Shares are down about 25% since going public in May. Recently, Bestinver began coverage of the stock with a buy recommendation with a target price of 23 euros, which represents a potential of 21% compared to current listing prices.
With a stock market value of 10,681 million euros, the company has good recommendations from analysts. 93% of those who follow the value recommend buying, while 7% consider that it is time to keep these shares in their portfolio. There is no analyst who recommends selling Puig securities. Regarding the company’s potential on the stock market, the consensus of analysts Bloomberg believes its shares can rise 36% from current trading prices. In the first nine months of the year, the makeup business had generated sales of 535 million euros, a figure that represented an increase of 1.4% compared to the previous year. In the third quarter alone, sales were 201 million, 7.3% more. The company highlighted in its results presentation the “solid” performance of Charlotte Tilbury, its main brand in this segment, with increases in the Middle East and United States markets. The outlook for the fourth quarter was that the “positive development” would continue.
As Puig reflected in the IPO brochure, Charlotte Tilbury has the ambition of becoming a brand that reaches 1,000 million euros in turnover. This is the leading brand in the makeup market in the United Kingdom, and is among the top five in the United States.
This same year, the Catalan family group reached 100% of the capital of Charlotte Tilbury, in which it entered for the first time in 2020 with a majority stake, in an investment that has exceeded 1,000 million euros.
