Shares in German perfume and cosmetics retailer Douglas fell as much as 11% on their return to the Frankfurt stock market on Thursday, in a worrying sign for Europe's new issues market.
Tuesday's warning about weak sales from Gucci-owner Kering (LON:0IIH) has hit investor confidence in luxury and retail businesses, one banker involved in the transaction said.
Douglas priced its initial public offering (IPO), Germany's largest since Schott Pharma (ETR:1SXP)'s debut last September, at 26 euros ($28.38) per share on Tuesday. The stock opened at 25.50 euros on Thursday and traded as low as 23.2 euros.
The company, backed by CVC Capital Partners and the Kreke family, said it would use the IPO proceeds of 850 million euros to pay off debt. Its owners have also committed to injecting around 300 million euros to bolster the group's balance sheet.
Douglas had more than 3 billion euros of net debt at the end of December. That compared with its market value, based on the issue price, of 2.8 billion euros.
The listing marks a return to the stock market for the retailer, which operates 1,850 perfume stores in 22 countries, but now does almost a third of its business online.
It delisted in 2013 after a joint takeover by financial investor Advent and the Kreke family. In 2015, the majority went to CVC for almost three billion euros.
There have been signs that Europe's IPO market might be on the mend after two years of limited activity.
Shares in tank gear manufacturer Renk, the first German IPO this year, have almost doubled from their issue price.
Swiss skincare group Galderma plans to IPO in Zurich on Friday, in a deal that may value the business at around $17 billion.
($1 = 0.9177 euros)
