As PPR becomes Kering, Puma and Fnac problems remain
Monday, 1 July 2013 00:00
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Reuters: PPR turned the page on its retail past and started a new life as a luxury and sports brands group by renaming itself Kering at its annual general meeting orecently.
The company will now have to prove it can also change the fortunes of Puma, its underperforming sportswear brand and replicate in sports the success it has had in luxury goods.
Kering Chief Executive Francois-Henri Pinault said the new name, which took a year to develop, was a necessity to reflect the group’s “new reality.” But beyond the name change and new logo featuring an owl, Pinault gave few answers to shareholders about the future of Puma or Fnac, the group’s CD and book business, which will list on the stock market on Thursday.
Pinault called on shareholders to hold on to Fnac shares they will receive when the business floats, valuing Fnac at 400 million euros ($533.90 million), significantly below the 1 billion euro mark some analysts had forecast two years ago.
Fund managers and analysts have predicted that Fnac’s share price would fall once the stock started trading as investors would offload their shares.
Pinault called on shareholders to hold on to the Fnac shares they will receive in the float. Pinault also said his family holding Artemis, Kering’s biggest shareholder, would hold on to its 39 percent stake in Fnac for at least two years and a part of it beyond that. Pinault said he had full faith in Puma’s new chief executive Bjorn Gulden, poached from Danish jeweller Pandora, who starts on July 1. “He (Gulden) will bring a new energy and experience which will help him tackle the challenges that await him,” Pinault said.
Klaus Jost, chairman of Intersport International, the world’s largest sportswear retailer and CEO of Intersport Germany said Gulden knew the market incredibly well, but he needed time.
Gulden, a 47-year old former professional Norwegian footballer who was previously head of accessories and apparel at Adidas, has inherited some deep-seated problems.
Puma has lost its competitive edge and credibility in key areas such as the running shoe segment, allowing rivals such as Asics and New Balance to gain market share and bigger competitors such as Adidas and Nike to consolidate their lead.
Puma has made a number of mis-steps, including opening shops in the wrong places, poorly integrating licence businesses and back-office operations and spending money on sponsorships in sailing and rugby not closely linked to the brand. It suffered a 70 percent drop in net profit last year.
