Building brands

French luxury goods producer PPR has big plans for German sports brand Puma, as well as that company's unconventional CEO, Jochen Zeitz.

Zeitz – who reportedly divides his time between Puma's headquarters in Herzogenaurach and his farm in Kenya – took charge of Puma in 1993, when he was just 30 years old. He quickly gained a reputation as a mover and shaker as he transformed the struggling company into a successful brand with a global presence.

PPR acquired Puma in 2007, and has since purchased other sports brands including the Cobra golf label. It wants Zeitz, now 47, to head up a new sporting goods and leisure division with Puma as its centerpiece.

PPR chief Francois-Henri Pinault said in a statement that "the reinforcement of the Puma management team under Jochen Zeitz is a decisive factor in the implementation of our strategy, which aims to make Puma the core brand of PPR's second pillar (sporting goods and leisure)."

Logical conclusion

Antoine Belge, a luxury and sporting goods analyst for HSBC, said Zeitz has been involved in PPR's strategic development for some time now.

"It's just a sort of formalization of something that already existed... effectively he was already in charge of doing acquisition," he told Deutsche Welle. "It's just a sign that expansion may accelerate."

To facilitate change, Puma will be restructured from a German AG corporation to a European SE corporation. Analysts expect a senior Puma manager will be appointed CEO, while Zeitz himself is stays on as executive chairman until a replacement is found.

"That is why they want to have a specific CEO for the Puma brand, because Jochen Zeitz will probably spend more time finding other brands to integrate into that division," Belge said.

Tighter branding control

PPR is expected to sell a number of subsidiaries – including electronics and entertainment retailer Fnac, furniture seller Conforama and Redcats mail order- to finance the acquisition of further high-end brands.

John Horan, publisher of industry newsletter Sporting Goods Intelligence, said it makes sense for PPR to shed its multi-brand retail chains and concentrate on developing its own labels. He described this as 'vertical retail,' in which brands maintain stores exclusively to sell their products.

"If you look at where all the real strength in retail is recently, it's been with vertical retailers of one kind or another," Horan told Deutsche Welle. "They see it as a way to really make a brand statement that is very difficult to make when you're selling through a retailer."

Author: Gerhard Schneibel
Editor: Sam Edmonds