March 4 (Bloomberg) -- PPR SA, the French owner of Gucci and Puma, is considering changing its name to Kering to cap its transformation into a luxury and sporting-goods specialist, according to people with knowledge of the plan.
The re-branding of Paris-based PPR may be announced this month, said the people, who asked not to be identified because the information is confidential. The name, which would be the company’s fifth since listing on the Paris stock exchange in 1988, is supposed to evoke the idea of caring and signal a new chapter in the company’s development, one of the people said.
PPR, known formerly as Pinault-Printemps-Redoute and before that as Pinault-Printemps and Pinault SA, is disposing of retail assets it amassed in the past two decades to focus on luxury and sporting goods, which are more profitable and have better growth prospects. Chief Executive Officer Francois-Henri Pinault’s goal is to lift PPR’s sales to 24 billion euros ($31 billion) by 2020 from 9.7 billion euros in 2012.
Louise Beveridge, who heads communications at PPR, declined to comment on the name change to Kering, which means dry or dried in Indonesian. The stock rose 0.4 percent to 173.55 euros at the close of trading in Paris, and has added 23 percent this year, giving the company a market value of 21.9 billion euros.
PPR sought to register the name Kering with the U.S. Patent & Trademark’s office in November of last year, according to the department’s website. The application to use the name on everything from clothing and leather goods to business management is under review.
PPR, which on Feb. 25 agreed to sell two home-shopping brands to a Swedish buyout firm, aims to complete its transformation this year after spinning off the Fnac media and consumer-electronics chain and selling online retailer La Redoute, Pinault told Bloomberg News Feb. 15. Once that happens, PPR’s name would no longer reflect businesses it still owns, having sold department-store operator Printemps in 2006.
If a company is changing strategy and its current brand equity no longer plays a role, “then, to get something which demonstrates that you have a particular point, purpose, vision that is appropriate for your brand, can mean that it’s worth signaling a new name,” said Graham Hales, London CEO of brand consultant Interbrand.
With a new name and focus, PPR, whose brands include handbag maker Bottega Veneta and surf and snowboarding clothier Volcom, aims to boost its share price, which has traded at a discount to its luxury peers because of its retail businesses.
While PPR’s price-to-earnings multiple will probably rise after disposing of Fnac and the remainder of online fashion retailer Redcats, it may still trail rivals’ because of the sports lifestyle division, according to Luca Solca, an analyst at Exane BNP Paribas.
A “re-rating is hampered by PPR having turned into a different kind of conglomerate,” Solca said.
Puma, Europe’s second-largest sporting-goods maker that PPR acquired in 2007, is taking longer than anticipated to turn round, Pinault said last month.
Corporate re-branding exercises can cost from tens of thousands of euros to millions of euros depending on their strategic objectives and intended audience, according to Charles Skinner, strategy director of brand and design consultant FutureBrand in London. Such an investment would be better spent on PPR’s underlying business as the effect of changing the name is going to be cosmetic only, said Solca.
“To me, this is just nice-to-have or borderline useless,” the analyst said. “I don’t think this is going to provide any material benefit.”
The case studies on major re-brandings that have made no difference to companies’ revenue “could fill a library,” said Roger Tredre, senior vice president of content at research and advisory firm Stylus.
“PPR should tread with caution,” Tredre said.
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