hnnhcronin Puma SE (PMMAF), which was not too long ago considered just an athletic shoe brand, has been experiencing tremendous popularity and has the sales volume to speak for it. The gym shoe is having a moment in fashion right now, and Puma has become one of the leading suppliers of gym shoes worn to go out rather than go on a run. The FENTY x Puma collaboration with Rihanna has capitalized on the singer’s trendsetter status and brought the brand into the spotlight. Throughout 2017, Puma has raised its guidance for sales on multiple occasions. On October 24th, Puma reported a 17% increase in currency-adjusted sales, with double-digit growth in all regions. The athletic company is expecting even more prospects for growth with its newest partnership with singer and social media icon Selena Gomez, as well as its stated plan to target the football market with its new Puma ONE collection. Because of Puma’s success thus far in 2017 and determination to capture both athletes with its sport-specific collections and partnership with athletes like Usain Bolt and fashion-forward individuals through designing sneakers with an added flare and recruiting influential celebrities with a sizeable social media presence to promote the brand, Puma now expects earnings before interest and taxes to be between 235 and 245 euros.
Despite the company’s recent success, however, it is rumored that parent company and French fashion conglomerate Kering has decided to put Puma up for sale as it continues its efforts to dismantle the sport sector of its operations. Kering owns approximately 85% of the athletic brand, and selling this share while Puma’s stock price is up on the Frankfurt stock exchange would be beneficial to Kering. For the past few years, Kering has been trying to concentrate more on its luxury division and less on its mass market companies, such as Puma and the California-based boardsports brand Volcom. Nothing is confirmed about the sale of Puma, but one thing is for sure: Puma’s turnaround has made it a valuable company.
Despite being 15% down for the year, Nordstrom (JWN) is considered undervalued by analysts and could be a good growth stock as it goes private. The Nordstrom family recently put the brakes on their plan to take the company private due to not enough money to fund the deal, which caused the stock to take a fumble. In order to go private, the Nordstrom family needed to convince other shareholders and bank lenders to help finance the buyout by emphasizing the future of the company and the direction they want to take it. Even though the family was not able to raise enough money from the banks to fund the deal, Nordstrom should experience successful holiday sales, which is expected to put the deal back into motion. The Nordstrom family, who owns 31.2% of the department store, feels that going private would allow the company to make the drastic changes necessary to achieve success in the digital retail market without the pressure of having to please investors.
Investors are reluctant to invest in retail due to the constant news of bankruptcies and earnings misses has brought down the share prices of the whole sector. Unlike most department stores, Nordstrom continues to open stores every year. The company is focused on customer service and on e-commerce growth, which positions it in a better place than its competitors. The company’s discount branch, Nordstrom Rack, allows it to attract a larger demographic than department stores like Macy’s or Neiman Marcus. Nordstrom is in touch with the needs of its consumers, consistently stocking the upcoming brands and trends of the moments.
When news first broke of a Nordstrom private equity buyout, shares jumped, but following the announcement of the paused deal, shares of Nordstrom were down 6% as of Monday, October 16th. Nordstrom’s future buyout will probably be clearer after the important holiday season is behind the company. Nordstrom’s franchise value is still formidable; this period may present an opportunity for investors to buy it cheap.
