The hope of recovery may force Puma to engage in more sponsorship deals with sports unicorns as well as by modeling its current partnerships with celebrities.

The shares of Puma SE (ETR: PUM) took a plunge in the early trading hours on Tuesday following news that Kering SA (EPA: KER) sold about 5.9% of its share capital in Puma, in a deal valued at approximately €655.6 million, corresponding to a selling price of € 74.50 per Puma share. According to the official release from Kering, the Puma shares sell-off will leave the luxury goods company with about 9.8% of Puma’s outstanding share capital.

The company noted that the shares were sold to Artemis, one of its shareholders in a lock-up arrangement.

“Kering and Artémis have entered into a lock-up agreement relating to the Puma’s shares, which lock-up is expected to end after a period of 90 calendar days from the settlement date of the Shares, subject to certain exceptions or waiver by the joint global coordinators,” Kering said in a statement, adding that the proceeds from the sales “will be used for the general corporate purposes of Kering and will further strengthen its financial structure.” The firm expects the Settlement of the Placement by 8 October 2020.

The sell-off from Kering plunged the shares of Puma lower to put a dent on the stock’s recent return to levels just before the pandemic. The shares were trading 3.1% lower at 75.7 euros at 07:28 GMT. As at the time of writing, the shares are trading with a 1.74% fall, at 76.74 Euros.

Puma Hopes for Boom Amid Kering Sell-Offs

Puma reported earnings plunge both in its first quarter and second-quarter earnings report. In July, Puma reported second-quarter sales fell a currency-adjusted 30.7% to 831 million euros, and earnings before interest and taxes slumped to a loss of 114.8 million euros as coronavirus lockdowns closed most global sports stores. In addition, Puma’s gross profit margin declines to 43.9%, caused by higher discounts, inventory devaluation, and return provisions due to COVID-19 as well as negative currency impacts.

While the German-based sportswear manufacturer had implemented some strategies to stir its market rebound, the stunning move from Kering may compound its strides to properly balance its books. With investors doubtful on the company’s stocks as evident in the latest share plunge, the company’s hope will revolve around.

With the recent record earning from Nike Inc (NYSE: NKE), a rival outfit that posted a better than expected earnings in September. From this, Reuters noted that the recent gains from Nike contributed to helping Puma’s shares return to levels last seen before the pandemic stirred lockdowns in March.

The hope of recovery may force Puma to engage in more sponsorship deals with sports unicorns as well as by modeling its current partnerships with celebrities including Rihanna and Selena Gomez amongst others.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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