AS Watson, the Hong Kong-based owner of Superdrug, is reportedly contemplating a delay to its ambitious dual stock market listing, which includes London. The potential $30 billion IPO, which also targets Hong Kong, was initially projected for before the end of 2026. This consideration stems from current market uncertainties and volatility, as acknowledged by AS Watson CEO Malina Ngai, who emphasized the company's focus on agility and resilience in such economic climates. Despite these challenges, the UK remains a crucial market for AS Watson, which also owns The Perfume Shop and Savers here.
AS Watson had engaged advisers, including Goldman Sachs, UBS, and Latham & Watkins, for the proposed IPO, aiming to raise approximately $2 billion. The final decision on whether London or Hong Kong would serve as the primary listing venue had not been made. The potential postponement highlights the impact of broader market conditions on even well-performing businesses, as the company prioritizes flexibility and strategic investment over rushing into an unfavorable listing environment.
Superdrug itself has demonstrated robust financial performance, achieving an operating profit of £144 million in the 2024 calendar year, an 18% increase over 2023. Revenue also grew from £1.5 billion to £1.6 billion during the same period. The company's growth has outpaced rivals, with sales increasing nearly twice as fast as competitors over the past four years. Superdrug's success is attributed to its focus on affordable, TikTok-driven beauty trends, including "dupes" of luxury brands, and exclusive partnerships with popular brands like e.l.f Beauty. The health and beauty sector in the UK has shown remarkable growth, with an 18% year-on-year rise, significantly outperforming the overall retail sector's 1.3% growth. This strong individual performance would have valued Superdrug at close to £2.5 billion, representing a modest portion of AS Watson's total $30 billion IPO target.
Analyst reactions have indicated that a Superdrug IPO could have revitalized London's lagging IPO market, which has seen limited activity recently. The consideration of a delay underscores the caution of companies to proceed with major flotations when market sentiment is weak. This situation mirrors the broader challenges faced by the retail sector in 2024, where high prices and sustained interest rates squeezed consumer disposable income. The potential delay also comes amidst speculation surrounding Boots, a major competitor, which is reportedly exploring its own sale or stock market listing options in 2027.
