Deal focus: Carlyle sells its golden goose

Five of Golden Goose’s 100 stores globally are designated labs where customers can book appointments with craftsmen – trained in Venice, home of the Italian luxury footwear brand – who customize their pre-distressed style sneakers to order. “It’s only really limited by your imagination. I’ve seen ladies who lost one of a pair of earnings come in and have the remaining one attached to a sneaker,” says Patrick Siewert, a managing director with The Carlyle Group.

This is one example of how the GP sought to place user experience at the heart of its strategy on buying Golden Goose in 2017. Alongside a concerted Asian expansion plan, these efforts put the company on course to boost its annual revenue by more than 150% to EUR260 million ($282 million) in 2019, culminating in the sale of the business to Permira for an enterprise valuation of EUR1.3 billion ($1.4 billion). Carlyle stands to generate a multiple of more than 3x on the investment, according to industry sources.

Three of those labs are in Asia – Hong Kong, Seoul and Tokyo – and the region now accounts for 58 stores overall and 30% of revenue, up from 18% in 2017. Carlyle acquired Golden Goose through its latest Asian growth and European mid-market buyout funds, reflecting the role Asia was expected to play in the company’s growth story.

“From my discussions with the founder before we did the deal, Asia was always a little bit of a mystery to them. They would sell stuff to a distributor, but they didn’t really understand where the product went,” says Siewert. Carlyle was convinced the brand would sell well in the region because it tapped into demand for high-quality, customized products and had a following that cut across different demographic groups, from teens to parents.

Steps were taken to cut back on wholesale and reclaim the relationship with end-consumers by focusing on high-end direct retail. Golden Goose also transitioned away from wholesalers who were offloading merchandise through online channels, instead creating its own digital platform that now accounts for about 7% of sales.

Siewert acknowledges this is not a huge percentage but observes that luxury brands have a love-hate relationship with online retail. At the same time, Carlyle didn’t want Golden Goose to go too far in the opposite direction, trying to reach out to every customer by opening an unsustainable number of stores. “Some of the global luxury brands have overexpanded in Asia, and that’s why you’re seeing them contract,” he adds.

Korea and China are the largest markets globally by store numbers. While Korea took an early lead in terms of contribution to Asian sales, China is now catching up – and Chinese tourists are thought to make up more than 10% of Korea sales. However, Siewert tips Japan as the market to watch. “The retail landscape in Japan is a bit different, but we’ve opened a true flagship store there with a lab,” he says. “I think in time Japan could become the second or third-largest market.”

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• Topics
• Europe
• Greater China
• North Asia
• Consumer
• Trade sale
• The Carlyle Group
• China
• South Korea
• Permira Advisers
• Japan