Kering's Sporting-Goods Disposal May Signal Eventual Puma Exitby
Kering sells goggle maker to group led by U.S. brand's CEO
Deal could spell end of sports unit, MainFirst analyst says
French luxury group Kering continued to dismantle its sports and lifestyle unit with another disposal, boosting speculation the owner of Gucci may exit Puma, the ailing German shoemaker it bought in 2007.
Kering sold snow-goggle maker Electric to a group led by the brand’s chief executive officer, the Paris-based company said in a statement Wednesday after European markets closed. Electric, which Kering acquired when it bought skategear maker Volcom in 2011, was probably unprofitable last year on sales of 22 million euros ($25 million), estimates MainFirst Bank AG analyst John Guy.
“The small deal makes sense” as it allows Kering to allocate capital elsewhere, said Guy. “Could this be the start of increased focus on returns, which may ultimately seal the sporting-goods division’s fate?”
The transaction follows last year’s sale of footwear label Tretorn to Authentic Brands Group. Kering hasn’t said if it plans to sell Puma, nor has it ruled it out since Bloomberg News reported in November the French company was open to disposing of the brand. Kering’s priority is making the brand more profitable, Chairman and Chief Executive Officer Francois-Henri Pinault said earlier this year. A spokeswoman declined further comment.
Kering views Puma as peripheral to its long-term strategy, a person familiar with the situation told Bloomberg in November. Analysts estimate Puma’s earnings in 2020 will still trail the level they were at when Kering bought the brand in a deal valuing the German business at 5.3 billion euros. The company, which makes running shoes worn by Usain Bolt, is now worth less than 3 billion euros, based on its market capitalization.