Consumer stocks are the flavour of the month in Europe in 2024, with several new names coming to market in a bumper year for the asset class.

This year already, Swiss skincare conglomerate Galderma [SWX:GALD] and German retailer Douglas [ETR:DOU] both carried out listings – although the latter has traded down significantly since IPO.

Puig, the Spanish perfume, fashion and cosmetics giant, is set to be priced next week in Madrid and other Spanish stock exchanges; its shares are expected to begin trading by next Friday.

The uptick comes after a dearth of activity last year where there were no consumer IPOs; in 2022, only Porsche [ETR:P911] successfully listed its shares, skewing the volume issuance tables that year due to the sheer size of the deal.

The flurry of consumer IPOs this year is comparable to activity seen in the peak period of 2021. So, are the good old days back for discretionary consumers? Not quite.

While it is true that there has been an uptick in activity, this is limited to a handful of mature businesses that have earnings visibility and are profitable, according to a banking source.

The IPO activity in the consumer industry is not sector-related, but instead speaks to a flight to quality by investors as they back firms that have demonstrated growth despite macro volatility.

This is reflected in the divergent performance of Galderma and Douglas.

But while consumer IPOs experience a revival, macro headwinds for the industry remain.

China, a major market for discretionary consumer goods, is expected to experience an economic slowdown that will likely persist through 2028, according to the International Monetary Fund (IMF), as the Asian giant struggles with sagging productivity and a rapidly ageing population. Meanwhile, slow growth in Europe could also hit demand for those goods.

However, one banking source dismisses these concerns. “People will still consume baked goods (referring to Europastry, which intends to list this year) and there will remain a market for luxury goods (Puig). I think you’ll continue to see consumer as an ongoing theme in the market going forward,” he said.

But only defensive businesses will do well in this climate, he added.

An ECM lawyer concurred that Europe consumers, especially in the high-end segment, are still spending, even though less than in the United States.

The New York listing of Birkenstock [NYSE:BIRK] is also still fresh in the memory as a positive development for the sector, he added.

In Europe, there is a pipeline of deals that could boost already growing volumes. A spokesperson for Dutch online retailer Bol.com previously told this news service that management still believes the company possesses considerable value which is not being fully recognised and they remained committed to an IPO when market conditions improve.

Italy has a few long-time candidates in the sidelines, namely Design Holding, the furniture and lighting group owned by private equity firms Carlyle [NASDAQ:CG] and Investindustrial, whose CEO Daniel Lalonde said there is still commitment to an IPO; and Selle Royal, which previously postponed its plans.

We are yet to see how other discretionary consumer businesses such as Permira-backed Italian high-end sneakers company Golden Goose will fare amid stiff headwinds, but if it can demonstrate growth even in hostile conditions, then investors may still jump onboard.