Charlotte Tilbury’s owners bet: Brands such as Nina Ricci, Charlotte Tilbury, and Jean Paul Gaultier are part of Puig Brands SA’s Fragrance Index, which is preparing for an initial public offering (IPO) that might raise several billion euros. After three years of phenomenal development, the fragrance market may have already peaked, and the company has the difficulty of convincing investors to get in on the action.

As a result of a 19% rise in sales to €4.3 billion ($4.7 billion) in 2023, Puig was able to achieve an EBITDA of €863 million. The Puig family maintains a controlling stake, and the initial public offering (IPO) with a potential valuation of €2.5 billion is intended to fund future expansion plans.

Puig has a small footprint in the Asia-Pacific region compared to its main markets in Europe and the US, but there is room for growth there, especially in the rapidly developing Asian beauty industry, where perfume is becoming increasingly popular.

The fact that scent sales will account for 72% of Puig’s revenue in 2023 is problematic, though. Concerns regarding the sustainability of the fragrance demand rise during the pandemic have brought to mind the Lipstick Index, which was noticed during economic downturns. This surge was caused by consumers seeking consolation through scent.

Penhaligon’s, L’Artisan Parfumeur, Byredo, Dries Van Noten, and other niche and luxury fragrance names are part of Puig’s portfolio. Its popular labels, like as Rabanne and Carolina Herrera, bring in a lot of money, but they might have to change their ways to win over picky Gen Zers.

Puig has just acquired dermatological skincare brand Dr. Barbara Sturm as part of its strategy to diversify into cosmetics and skincare in order to reduce risk. A rising star on the rise, Charlotte Tilbury is showing the world how appealing skincare and cosmetics can be, especially in Asia. Her sales is getting close to €1 billion.

But, problems arise due to the beauty market’s cooling, as stated by the CEO of Ulta Beauty Inc. It is unclear if customers are redistributing their spending to other luxury items or cutting back on purchases as a result of increasing pricing, which complicates Puig’s plans for the initial public offering.

Puig has to show its diversification initiatives, durability, and future development potential in an ever-changing beauty industry to investors as it navigates these hurdles.