ADIDAS TO SELL LONG-STRUGGLING REEBOK BRAND

Wed 17 February 2021:

German sportswear group Adidas said Tuesday it will sell off its U.S. subsidiary Reebok after struggling for years to lift the brand’s fortunes.

The German sportswear company said in a statement on Tuesday that it has decided to begin a formal process “aimed at divesting Reebok” following a review of the business that it announced late last year.

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

It did not name any potential buyers but said further details would be announced at a meeting on March 10.

The group said it would focus its efforts on strengthening the eponymous Adidas brand in the future.

Adidas acquired Boston-based Reebok in 2006 for 3.1 billion euros ($3.8 billion) with the goal of taking on U.S. rival Nike.

Reebok, however, has struggled to shine under its German owner, despite high-profile collaborations with the likes of Victoria Beckham, Cardi B and Ariana Grande in recent years.

Forced store closures linked to the coronavirus pandemic and a failure to capitalize on a surge in demand for athleisure wear dented sales in 2020. Reebok’s revenues slipped 7% in the third quarter compared to the previous year, compared to a 2% decline in Adidas sales.

Adidas 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 highly attractive, particularly for iconic sports brands,” Rorsted said.

The brand is currently worth around 800 million euros, after several accounting write-downs.

Germany’s Manager Magazin reported late last year that China’s Anta Sports and North Face owner VF Corp. were potentially interested in acquiring Reebok.

As far back as 2017, Adidas boss Rorsted had to face down shareholders calling for the sale of then loss-making Reebok.

In the third quarter of 2020, when the industry was starting to recover from the coronavirus shutdowns earlier in the year, Reebok sales were down 7% year-on-year to 403 million euros.