• Disposal would be about-face for CEO after pledge to fix brand
  • Divestment process said not to begin before next year

Kering SA is open to selling its majority stake in Puma SE after struggling for eight years to turn around the German sporting-goods maker, according to people familiar with the matter.

The owner of Gucci views Puma as peripheral to its long-term strategy as its goal to complement its luxury brands with athletic labels hasn’t worked, said one of the people, who asked not to be named discussing confidential matters. A formal sale process hasn’t started, the people said, and won’t until next year as Kering focuses on boosting Puma’s sales. A spokeswoman for Paris-based Kering declined to comment.

Disposing of Puma, the maker of Usain Bolt’s running shoes, would be an about-face for Kering Chief Executive Officer Francois-Henri Pinault, who in February pledged to fix the brand known for its leaping-cat logo. His commitment has been tested as the company’s sales have barely grown in recent years. By 2020, 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.”

Disposal Predicted

Puma, which is scheduled to report third-quarter results Friday, could fetch as much as 4 billion euros ($4.4 billion), 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.

Pinault has a history of exiting underperforming investments, having sold or spun-off about a dozen businesses in the past decade, including department store Printemps and retailer Fnac. Kering tested buyer appetite for Puma last year, contacting investors in the Middle East and Asia, people familiar with the situation told Bloomberg News in December.

Kering, then called PPR, bought control of Puma in 2007 in a deal that valued the German business at 5.3 billion euros. The purchase gave it a global brand whose sneakers straddled sports and fashion. At the time, designers such as Alexander McQueen and Stella McCartney were collaborating with sporting-goods makers including Puma and Adidas AG to capitalize on demand for footwear and apparel that evoked a sporting lifestyle.

Gap Widened

Pinault later added brands such as skatewear label Volcom and predicted in 2012 the sporting-goods division could generate revenue of 9.6 billion euros by 2020. That’s not likely: Puma’s gap to market leaders Nike Inc. and Adidas has widened amid competition from faster-growing rivals such as Under Armour Inc.

Puma’s sales have stagnated around the 3 billion-euro mark since 2011 and profitability has narrowed every year under Kering’s ownership. New management at Puma has restored revenue growth over the past six quarters by promoting performance gear for athletes like Bolt and soccer star Mario Balotelli.

“The market believes it’s going to happen,” said Citigroup analyst Thomas Chauvet, referring to a sale of Puma by Kering. “An exit would mark an important milestone for the company after almost 25 years of asset rotation and create a group focused on luxury.”

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