Three private equity firms have expressed their intention to buy Sergio Rossi. British based Lion Capital already has much experience in the fashion sector as it owns Jimmy Choo and controls All Saints, John Varvatos and GHD, whereas Emerisque is closer to sportswear owning Marina Yachting, Henry Cotton’s and MCS. Investindustrial has a more diversified portfolio holding Aston Martin, Gruppo Coin, Perfume Holding and Flos, a luxury lighting company.
Kering owns luxury brands such as Saint Laurent, Gucci and Alexander McQueen. It acquired 70% of Sergio Rossi in 1999 and has struggled to position the brand since then. It currently has 90 retail shops worldwide as well as corners within major department stores such as Saks 5th Avenue in New York and Harrods in London.
At the same time, the board of directors of Kering has to decide on Puma’s future. Thomas Chauvet, analyst for Citygroup Inc, thinks the company will not sell its shares with depressed prices in a hurry but reckons the announcement that Puma is up for sale will come within the next 12-18 months.
Kering Chief Executive Officer Francois-Henri Pinault has always been confident that they would be able uplift Puma but competition has been tough with rivals Nike and Adidas reporting growing operational margins.
While Kering has not yet made any official announcements on Puma’s sale, Chauvet states that “Kering management has historically been pragmatic about asset disposals” and disposing of Puma would “create a pure-play luxury group and justify a re-rating in our view.” He says that Puma has a valuation of €2.4 billion (US$2.7 billion), based on a peer group multiple of 15.8 times estimated 2016 earnings.
Last week Nike issued better than expected results. Click here to read.