French conglomerate PPR is eyeing acquisitions to bolster its performance and lifestyle portfolio, but first the company wants to get Puma back on track.
Speaking to reporters after a keynote address sponsored by the HEC Alumni Association of New York at the Consulate General of France, company CEO François-Henri Pinault said candidly that “we are having some issues” with the sustainability of Puma’s growth trajectory.
“We are No. 3 [in the space], but still much smaller [than our competitors] and not at all where our ambition is for the brand, so we’re putting in place the right organization to fulfill that. Once we’re on track, we’ll continue to build the portfolio around Puma,” he said.
Pinault added, “[We have] to make sure what we’re building around with Puma is not actually competing with Puma.”
Citing the 2011 acquisition of Costa Mesa, Calif.-based surf-and-skate brand Volcom as the foundation of its action-sports platform, Pinault said getting a foothold in the outdoor market is important because “it will never be the key category of Puma, but it’s a very big market segment. It’s really where we think sports performance [and technical product] extends to the lifestyle field, and it’s where we want to express ourselves.”
Pinault also spoke in detail about PPR’s recent decision to install American contemporary designer Alexander Wang as creative head at Balenciaga after just a month of talks.
“The brand has been built over the last 15 years with Nicolas [Ghesquière, who successfully created a new tailoring style that retained the spirit of founder] Cristobal [Balenciaga’s] work. We want to make sure that the person we hire understands and is capable of working with those elements, yet pushes them forward. I didn’t want … [someone who] wanted to do something completely different,” he said. “The challenge taken by Alexander, which I really liked in discussions with him, is for him to express his talent in a different situation for another brand with its own DNA, and he’s absolutely excited with that.”
In addition, Pinault shared his optimism for the continued strength of the luxury sector in 2013, reiterating that much of the growth will be in Asia, especially China, where PPR posted a 12 percent increase in sales in the third quarter.
Even mature markets in Western Europe are still growing in the double digits, he added, with tourist purchases on luxury brands offsetting anemic spending by locals.
Pinault doesn’t foresee any slowdown in America either, and dismissed concerns about the economy or consumer spending when tax cuts and spending programs expire on Dec. 31.
“It’s a fiscal cliff, not a fiscal mountain,” he quipped.