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In the great global sports shoe race, Puma comes third. Decades in the shadow of Nike and Adidas might explain why France’s Pinault family, the biggest shareholder in the the German group, has been rumoured to seek a buyer for its 29 per cent stake. But if it does, it might be missing a chance to turn bronze into gold.
As business models go, sneakers and sportswear struggle to get the blood pumping. Brands’ popularity waxes and wanes. Even for those with enduring appeal, tariffs are complicating the economics of manufacturing in cheap Asian locales and selling to customers in richer countries.
Puma occupies a hapless middle ground. With a market share of about 3-4 per cent, it is far behind Nike and Adidas, yet also lacks the cult appeal of smaller niche brands such as On or Hoka.Multiple profit warnings have pummeled its share price; new boss Arthur Hoeld, whose predecessor was ousted in April, inherits a share price that has halved this year.
It has been tricky to make a buy case for Puma, which may be why only three of the dozen or so analysts tracked by Visible Alpha do so. Buyers would need more than a cheap price tag to pique their interest. Artémis — the Pinault company that also owns the family’s stake in Gucci parent Kering — is not going to let it go cheap.
Still, there’s reason to think Puma could be performing better. It slid into the red this year, but in all but one of the previous seven years garnered an operating margin of 7-8 per cent. The company has engaged in some kitchen-sinking: it expects sales to fall more than 10 per cent this year, whereas analysts reckon revenue at Nike, which reported earnings on Tuesday, will be roughly flat.
Private equity buyers have been bandied about, but there’s a strong case for the Pinaults giving Hoeld, who hails from Adidas, a chance. After all, even if a buyer offered a 30 per cent premium, Puma’s enterprise value would be equivalent to about one year’s worth of revenue; that hardly seems lavish, since on average, the company has traded at 1.3 times over the past decade, according to LSEG.
There might be room to trim Puma down a little — a new owner might tee up a sale of equipment maker Cobra Golf, for example. But mostly, whoever owns the company will be following the same playbook: sell more shoes more profitably. The field is clear for Hoeld to do that himself.