Adidas sells Reebok to focus on its own brand

Adidas sells Reebok to focus on its own brand

by

“Reebok and Adidas will be able to better utilize their growth potential independently of each other,” said CEO Kasper Rorsted. “We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it,” he added.

The decision to sell Reebok was taken as part of a new five-year strategy that Adidas will announce on March 10. He bought the American brand 15 years ago in an effort to reach it in Nike (NKE)se tuismark. At the time, Reebok traded clothing with the National Basketball Association (NBA) and the National Football League (NFL).

But the brand has underperformed over the past year and lost market share. According to financial statements, this is now only 7% of Adidas’ sales, compared to approximately 18% in 2010.

Rorsted launched a turnaround plan in 2016 after taking over as Adidas CEO, which made Reebok profitable again in 2018 and saw the approval of celebrities like Ariana Grande and Cardi B.

But forced store closures linked to the coronavirus pandemic and the failure to capitalize on an increase in demand for casual wear made sales plummet in 2020. Reebok’s revenue fell 7% in the third quarter compared to the previous year, compared to a 2% drop in adidas sales.

Adidas has said it will focus efforts on strengthening its own brand in the global sporting goods market. “The long-term growth opportunities in our industry are very attractive, especially for iconic sports brands,” Rorsted said.

Adidas could eliminate Reebok as a separate public company or sell the brand. Analysts say potential buyers may include it VF Corp. (VFC), the parent company of Vans and The North Face, which recently bought the streetwear brand Supreme for $ 2.1 billion.

Authentic Brands Group (ABG) and China’s Anta Sports could also be potential suitors. ABG owns the rights to the basketball game Shaquille O’Neal’s business efforts. O’Neal apparently said in 2019 that he would like to be a part owner of Reebok.

Adidas, which acquired Reebok for $ 3.8 billion in 2006, will report the brand as ‘discontinued operations’ from the first quarter of 2021.

.Source