Puma Is no longer a Sneaker. It's a lifestyle

Illustration by Christina Ung

By Andrew Roberts

When Puma a venerable soccer Klang made famous by Brazilian footballer Pelé in a sneaker converted in 1998, sparked the shoe known as the King a global fashion sensation and an eightfold surge in Puma income in as many years. Yet since the German sporting-goods maker was bought by PPR French Luxury House in 2007, the brand has performed as David Beckham during his years Los Angeles Galaxy.

Sales growth slowed during the recession as larger rivals such as Adidas and Nike (NKE), making their names in high-performance shoes, expanded in the Puma focused more on fashion designer gear sports market. Puma sales grew only 3.1 percent from 2007 to 2009. "A lot of people jumped on what their niche was, and suddenly they were left looking pretty naked," says Simon Irwin, an analyst at Liberum capital.

PPR is determined to help Puma get a second wind. Chief Executive Officer François-Henri Pinault wants to increase revenue more than $ 1.4 billion in 2015 by the construction of a portfolio of "sport and lifestyle" Puma brands around. It is a strategy that is similar to one that he used in luxury goods, taking his signature Gucci label and seven others. Instead of focusing on the athletic gear aimed at serious sports enthusiasts, the French company envisions a broader universe of consumer goods and clothes that the sporty lifestyle without all the sweating may calls.

"The sport and lifestyle segment shares common characteristics with the luxury segment, grow quickly in the same regions of the world," says Pinault from his office near the Champs Elysées. The brand portfolio model "has been proven in the past 10 years — it was a winning choice."

Gucci small accessories snapped up fashion and creators as Balenciaga Bottega Veneta and a decade ago and invested in design, advertising and sales points. Both companies had earnings of less than € 65 million ($ 93.5) combined when PPR bought them in 2001; last year she posted turnover of more than 719 million dollars.

PPR has started a similar purchase spree for brands that complement Puma. The beginning of may, agreed the acquisition of Costa Mesa, California-based skater Volcom goods and clothing brand for $ 607.5 million. Billionaire Pinault says he is looking for other small to medium purchases in categories where Puma no presence, such as hiking, where there are marketing tie-in and expansion opportunities. "Buying a great brand that is already mature in this segment is meaningless for the PPR," he says. Instead, the company will acquisitions "with the same logic as in luxury — not too big — to grow quickly and to create value."

Pinault Puma, which also owns the brands Cobra Golf and Tretorn, says it will spend more this year on product development and marketing and accelerate store expansion, particularly in China and India. He set an aggressive goal of the Elimination of Puma sales by approximately 50 percent, to nearly 6 billion dollars, by 2015.

Analysts say that won't be easy without another Pelé-class endorser and a slew of hot new products. Other than three times Olympic gold medalist and sprint world record holder Usain Bolt and world champion formula 1 motor-racing Sebastian Vettel has Puma no a roster of memorable sporting talent, Irwin says. "Sports lifestyle is fine," he says. "A sporting brand you want to be associated with big names, but in my opinion, they just don't have enough."

Puma has also lag in product innovation, says Peter Farren, an analyst with European investment bank Bryan Garnier. Its first firming shoes, a popular footware design claimed to work back muscles during walking, only six months ago introduced. Reebok, which owns Adidas, unveiled the equivalent, the EasyTone, in 2009.

Since September, Puma has hosted parties at night clubs all over the world to promote his casual shoes and clothing. The events part of the "after hours" athletes worldwide marketing campaign that praises playing social games such as darts and pool and "any other sport you can play with a drink in the hand."

Puma strategy is still a work in progress. Although products such as Suede classic sneakers Puma of appealed to European and Latin American flavors, they never took off in the huge American market. Farren also says, the vast majority of the Chinese sporting goods market is in the acceleration of the performance, where Nike and Adidas dominate.

The bottom line: Owner PPR is betting that the Puma can blow by additional acquisitions. A lack of major endorsers hurts the effort.

Roberts is a reporter for Bloomberg News.