Kering sets Puma free
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Kering sets Puma free

French luxury conglomerate Kering is divesting itself of its Puma shares earlier than expected. The company has said that it will distribute 70% of its Puma shares to investors, allowing it to focus on the high-end catwalk brands, like Gucci and Saint Laurent, that it is known for. Nonetheless, Kering won’t be “all out” – the company will remain a strategic investor in the fashionable German athleisure brand, holding “about 29%” of it through holding company Artemis.

Kering has had a phenomenal 12 months, seeing its share price appreciate by 83%

graph 0115 puma

SOURCE: Yahoo Finance

Luca Solca, an analyst at Exane BNP Paribas, thinks Kering is making the right decision. In a note to investors, he wrote: “The Puma divestiture materializing sooner rather than later will add oomph to the stock. We celebrate this as a landmark achievement for Kering.”

Kering chairman Francois-Henri Pinault also views the divestiture as a “landmark” for Kering, changing up its strategic focus: “The contemplated distribution of Puma shares to our shareholders would be a significant milestone in the history of the group. Kering would dedicate itself entirely to the development of its luxury houses.

Kering has owned Puma since 2007, when it decided to make a push into sports and lifestyle brands. However, ten years later, the group is better known for its traditional luxury. That is not to say, however, that Puma has suffered at Kering: initiatives like Fenty Puma by Rihanna have pushed the brand’s fashion credentials through the roof, leading to a resurgence that seemed unlikely years ago, when overextension and low desirability had crippled its appeal.

The only question investors should be asking is: how much further can Puma run once it’s off the leash?

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


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