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Micro-Exercise 5: Where Are the Factories of Luxury? Goodwill & Intangible Brand Equity
Micro-Exercise 5: Where Are the Factories of Luxury? Goodwill & Intangible Brand Equity
GROUP 5: PUIG BRANDS, S.A. (BME: PUIG)
GROUP 5: PUIG BRANDS, S.A. (BME: PUIG)
Welcome Team 5 (Puig Brands, S.A.) !
In this guided exercise, you will work directly with the Puig Integrated Annual Report 2025 (PDF)—covering luxury icons Rabanne, Carolina Herrera, Jean Paul Gaultier, Charlotte Tilbury, Byredo, and Dr. Barbara Sturm—to see how M&A-driven luxury brand building is recorded on the Balance Sheet and how intangible brand equity drives a 75.1% Gross Margin on the Income Statement.
Educational Objective
Educational Objective
To learn how to locate Goodwill and Intangible assets (brands and trademarks) on a luxury group's Consolidated Statement of Financial Position (Balance Sheet), compare them against physical Property, plant and equipment, and link those brand assets to the Consolidated Income Statement and Note 6 (Segment Information).
✨ THE STORY BEHIND THE NUMBERS: Where Are the Factories of Luxury? Goodwill, Brand Equity & The 75.1% Gross Margin!
✨ THE STORY BEHIND THE NUMBERS: Where Are the Factories of Luxury? Goodwill, Brand Equity & The 75.1% Gross Margin!
Welcome to Puig Brands, S.A., the Barcelona-based luxury beauty and fashion house founded in 1914 by Antonio Puig Castelló and listed on the Spanish Stock Exchange (BME: PUIG) following its landmark IPO in May 2024. Operating as a "Home of Creativity," Puig owns a curated portfolio of iconic "Love Brands" across three divisions: Fragrances & Fashion (Rabanne, Carolina Herrera, Jean Paul Gaultier, Byredo, Penhaligon's, Dries Van Noten), Makeup (Charlotte Tilbury), and Skincare (Uriage, Apivita, Dr. Barbara Sturm, Kama Ayurveda, Loto del Sur). Between 2020 and 2025, Puig more than tripled its net revenue—reaching a record EUR 5,042 million in FY 2025!
Puzzle #1: Why Does a Luxury House with Only 7 Production Plants Have 70.4% Non-Current Assets?
When you inspect Puig's Balance Sheet as of December 31, 2025, Non-current assets stand at EUR 6,015 million out of EUR 8,548 million in Total Assets (70.4% of the entire Balance Sheet!). Yet Puig operates only 7 European production sites, and its physical Property, plant and equipment represents less than 6% of Total Assets! Where are the remaining billions of Non-current assets?
Under IFRS 3 (Business Combinations) and IAS 38 (Intangible Assets), when Puig acquires prestigious founder-led luxury brands—adding 7 brands in five years, led by Charlotte Tilbury, Byredo, and Dr. Barbara Sturm—the billions paid above physical book value for brand prestige, registered trademarks, formulations, and customer loyalty are capitalized on the Balance Sheet as Goodwill and Other intangible assets!
Together, Goodwill, Intangible assets (brands), and PP&E amount to nearly EUR 5.0 billion (EUR 4,999 million), with intangible brand equity and goodwill making up roughly 90% of that figure! Furthermore, when Puig acquires a majority stake and agrees with founders on call/put options to buy the remaining minority shares later (such as the strategic agreement to assume 100% ownership of Charlotte Tilbury by early 2031), the present value of those future buyout commitments is recorded as a financial liability on the Balance Sheet.
Puzzle #2: How Do Intangible Brands Translate into the Income Statement? (The 75.1% Gross Margin!)
Why is Puig willing to pay billions for luxury brand equity? Look at the Consolidated Income Statement: in 2025, Puig generated EUR 5,042 million in Net Revenue, while the physical Cost of sales (ingredients, glass bottles, packaging, and manufacturing) was just EUR 1,255 million (24.9% of sales)! That leaves an extraordinary Gross Profit of EUR 3,787 million—a 75.1% Gross Margin! In luxury beauty, pricing power comes from brand desirability rather than heavy factories, allowing Puig to invest heavily in global brand building while delivering EUR 1,045 million in Adjusted EBITDA and EUR 594 million in Reported Net Profit.
📋 WORKFLOW FOR TEAMS 1–5: Paper First, Screen Second!
Use your printed paper worksheet as a scratchpad to extract the Y2024 figures from the PDF report and calculate your ratios. Once you have written down and rounded your answers on paper (whole numbers only, no decimals!), transfer them into the interactive online form below and click Check until every box turns 100% Green! Keep your paper worksheet ready for our live classroom comparison!
Step-by-Step Walkthrough (How to Read the Puig 2025 Integrated Annual Report PDF)
Step-by-Step Walkthrough (How to Read the Puig 2025 Integrated Annual Report PDF)
Follow these exact steps in the Puig Integrated Annual Report 2025 (PDF). Do not skip any step—this is the exact workflow you will use in future financial analyses!
STEP 1: Check the Reporting Currency and Units (Watch for €M vs. Thousand euros!)
STEP 1: Check the Reporting Currency and Units (Watch for €M vs. Thousand euros!)
Go to Page 3 of the PDF (Key Figures / 2025 Highlights): Notice that in the front section of the Integrated Annual Report and Financial Review tables, figures are presented in millions of euros (€M / EUR million)—for example, €5,042M Net Revenue and €1,045M Adjusted EBITDA.
What about the audited Consolidated Annual Accounts? In the detailed accounting tables and Notes in the Consolidated Financial Statements section, figures are reported in thousands of euros (Thousand euros)—where three zeros are cut off (for example, Total Assets of 8,547,614 thousand euros equals €8,548 million).
Since our main question asks for Net Revenue in EUR millions, you can read the exact integer directly in €M from Page 3, the Financial Review Income Statement, or the Segment table!
STEP 2: Inspect the Headline Key Figures &Chairman's Letter (Pages 3–8 of the PDF)
STEP 2: Inspect the Headline Key Figures &Chairman's Letter (Pages 3–8 of the PDF)
Go to Page 3 of the PDF: Check the headline 2025 performance metrics:
Net Revenue: €5,042M (+7.8% like-for-like / LFL growth vs. 2024, outperforming the premium beauty market).
Gross Margin: 75.1% (up from 74.9% in 2024).
Adjusted EBITDA: €1,045M (20.7% Adjusted EBITDA margin).
Adjusted Net Profit: €587M (11.6% margin), while Reported Net Profit reached €594M.
Go to Pages 6–8 of the PDF (Message from the Chairman and CEO): Read how Puig completed its Vision 2025 strategic plan (tripling 2020 revenue) and expanded its portfolio with seven acquisitions over the last five years (Apivita, Uriage, Loto del Sur, Kama Ayurveda, Byredo, Charlotte Tilbury, and Dr. Barbara Sturm).
STEP 3: Uncover Goodwill & Brand Intangibles on the Balance Sheet vs. the 75.1% Gross Margin
STEP 3: Uncover Goodwill & Brand Intangibles on the Balance Sheet vs. the 75.1% Gross Margin
Press Ctrl+F and search for 8,548 (or Consolidated statement of financial position / Balance sheet):
Compare Non-current assets vs. Current assets: Look at the 2025 Balance Sheet structure:
Non-current assets: €6,015 million (6,014,784 thousand EUR, or 70.4% of Total Assets).
Current assets: €2,533 million (2,532,830 thousand EUR, or 29.6% of Total Assets, including €1,036 million in Cash and cash equivalents and €694 million in Inventory).
Total assets: €8,548 million (8,547,614 thousand EUR).
Why are Non-current assets €6,015 million when Puig has only 7 factories? Look at the composition of Non-current assets on the Consolidated Statement of Financial Position:
Goodwill and Other intangible assets (Brands & Trademarks): Dominate the Balance Sheet! Together with a relatively small line of physical Property, plant and equipment (only ~6% of Total Assets), they account for €4,999 million (4,998,691 thousand EUR—over 83% of all Non-current assets!). Under IFRS 3 and IAS 38, this represents the billions paid to acquire the brand prestige, trademarks, and customer loyalty of Charlotte Tilbury, Byredo, Dr. Barbara Sturm, and other luxury houses.
Right-of-use assets (IFRS 16): €374 million (373,505 thousand EUR in leased boutiques and offices).
Investments in associates and joint ventures: €415 million (414,760 thousand EUR, such as 50% of dermo-cosmetics leader Isdin and 35% of Brazilian luxury brand Granado).
Check Equity and Liabilities: Total Equity stands at €3,912 million (45.8% of assets), Non-current liabilities at €2,382 million, and Current liabilities at €2,254 million (which include financial liabilities for future buyout options of non-controlling interests in acquired brands).
Now press Ctrl+F and search for 3,787 (or Consolidated income statement):
Inspect the top three lines of the 2025 Income Statement (in €M):
Net revenues: €5,042 million (vs. €4,790 million in 2024).
Cost of sales: €(1,255) million (vs. €(1,202) million in 2024).
Gross profit: €3,787 million (vs. €3,588 million in 2024)—which equals 3,787 / 5,042 = 75.1% Gross Margin!
Operating profit (EBIT): €812 million, and Reported Net Profit: €594 million.
STEP 4: Verify the 3-Division Breakdown in Segment Reporting (Note 6 / Financial Review)
STEP 4: Verify the 3-Division Breakdown in Segment Reporting (Note 6 / Financial Review)
Press Ctrl+F and search for 3,646 (or Segment reporting / Note 6):
Inspect how Puig's €5,042 million of FY 2025 Net Revenue is generated across its 3 operating divisions (and 3 geographic regions: EMEA 55% / €2,752M, Americas 35% / €1,760M, and Asia-Pacific 10% / €530M):
Fragrances & Fashion: €3,646 million (72.3% of Group revenue, +6.4% LFL growth—where Puig holds an 11.1% global market share in selective fragrances, with Rabanne and Carolina Herrera both ranking in the world's top 10!).
Makeup: €845 million (16.8% of Group revenue, +13.7% LFL growth—powered by #1 UK luxury makeup brand Charlotte Tilbury).
Skincare: €551 million (10.9% of Group revenue, +8.9% LFL growth—led by Uriage, Charlotte Tilbury Skincare, Apivita, and Dr. Barbara Sturm).
Verify the sum: 3,646 + 845 + 551 = 5,042 EUR million!
🎯 Task / Question for Team 5 (Y2024 Data)
Please complete STEP 3 (Balance Sheet on Page 77 / Page 281 & Income Statement on Page 70 / Page 280) and STEP 4 (Segment Reporting on Page 72 / Note 6 on Page 304) for Y2024 data (using the 2024 comparative column)!
📋 WORKFLOW: Paper First, Screen Second!
Use Your Printed Worksheet First (Scratchpad): Before typing anything on the screen, use the printed paper worksheet provided by your instructor to extract the Y2024 figures from Pages 70, 72, and 77 (in EUR million / €M) or Pages 280–281 (in thousand EUR) of the Puig 2025 Integrated Annual Report PDF and calculate the percentage shares by hand.
Whole Numbers Only (No Decimals!): Enter exact whole numbers in EUR million (€M) directly from the 2024 column, and round percentages to the nearest whole number (e.g., write 72 instead of 71.90% and 75 instead of 74.91%).
Transfer Your Answers to the Online Form Below: Type your 10 answers into the interactive Y2024 Checker below and click Check until every box turns 100% Green!
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