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Kering contemplates sale of Puma

By Don-Alvin Adegeest

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Sometimes reviving a fashion label is akin to flogging a dead horse. After struggling for eight years to turn German sporting goods brand Puma into a success, its parent company Kering is rumoured to be considering selling off its majority stake and shedding the brand from its portfolio.

This comes in the wake of Kering SA Chief Executive Officer Francois-Henri Pinault ruling out selling Puma back in February of this year, saying the German company can consolidate its position as the world’s third-largest sporting-goods maker behind Nike Inc. and Adidas AG. Pinault even told Bloomberg “I’m very confident that we will be able to continue to turn around Puma and to deliver strong growth in the years to come.”

One unnamed source stated a fashion conglomerate like Kering will find it difficult to complement its luxury brands with athletic labels. Disposing of Puma could make financial sense, as by 2020, Puma's earnings will still trail the level they were at when Kering bought the brand in 2007, according to analysts’ estimates.

“There’s growing speculation about a potential disposal,” said MainFirst Bank AG analyst John Guy, citing a 45 percent gain in Puma’s shares since the end of June. “If the turnaround is going to take too long, Kering has to think about other options.”

Puma, which is scheduled to report third-quarter results Friday, could fetch as much as 4 billion euros according to Guy, who predicts a disposal as soon as the second half of 2016. Its current market value is about 3.1 billion euros.

According to researcher Euromonitor International, Puma held 2.1 percent of the 255 billion dollar global sportswear market in 2013, versus 15 percent for Nike and 11 percent for Adidas.

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