Puma CEO’s Role Changes

Luxury giant PPR is seeking to become a bigger player in the athletic and leisure goods sector.

Three years after acquiring Puma, the company has appointed the brand’s CEO, Jochen Zeitz, as the head of PPR’s new sport and lifestyle division, a move that analysts said cements the firm’s plans to become more of a lifestyle-branded company.

“PPR has talked about [becoming] less retail focused, so this is not so much Puma-specific but more about the evolution of PPR and where it’s going,” said Susquehanna Financial analyst Christopher Svezia.

Zeitz will be charged with building a portfolio of strong, complementary brands within the sport and lifestyle arena that will benefit from international growth opportunities and new synergies from overlapping consumer audiences and pooled resources.

“We will now look into expanding our sport and lifestyle investments in the coming years, with Puma as a core brand in our future portfolio,” François-Henri Pinault, chairman and CEO of PPR, said in a statement.

Zeitz will remain the CEO of Puma until a replacement is found, and then will become the brand’s executive chairman. He will assume immediately the newly created role of chief sustainability officer at PPR.

The brand still has plenty of room for improvement at PPR, analysts said. Amid the global recession, it has underperformed its competitors, showing the lowest relative share price performance versus Adidas and Nike since July 2007. 
“The Puma acquisition has yet to provide a good return, so we’ll have to see how this pans out,” said Luca Solca, analyst at Sanford C. Bernstein in Zurich. “At the end of the day, the only practical consequence of [this change] is Zeitz is able to be executive chairman and have a new CEO report to him.”
Puma AG intends to become a European Corporation, trading under the name of Puma SE, where SE stands for Societas Europaea, subject to approval at the firm’s 2011 AGM in April.
The new management structure also will facilitate the implementation of Puma’s five-year strategic plan to grow the brand’s total revenues to 4 billion euros, or $5.6 billion, from 2.5 billion euros, or $2.5 billion, in 2010.
Meanwhile, PPR continues to look to shed its retail operations, namely the remaining stake in distributing unit CFAO and retailers FNAC, Conforama and Redcats. The firm has said proceeds from those divestitures will be used to fund new acquisitions, both in the lifestyle and luxury sectors.
Although PPR has noted that lifestyle acquisitions could be easier and cheaper, analysts told Footwear News that no deals are imminent since the group has yet to complete sales of those retail units.

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