Adidas boots Reebok for underperformance
The German sportswear maker has been trying to revive Reebok for a decade, but is now looking to sell it for far less than the $3.8bn it was bought for
Geneva — Adidas plans to divest its underperforming Reebok brand as the German sportswear maker moves on after trying to revive its performance for more than a decade.
Adidas is starting a formal process to exit the business, and it will present more details on its new strategy on March 10, the company said on Tuesday. The apparel maker said in December that it was weighing options for Reebok.
Adidas is throwing in the towel 15 years after acquiring the brand for $3.8bn. While the pandemic could mute prospects for the sale somewhat, soaring stock markets are driving asset prices higher. Reebok is likely to attract interest from rival sporting goods companies, especially in Asia, as well as private equity suitors, Bloomberg reported in December, citing people familiar with the matter, who asked not to be identified because discussions are private.
Reebok returned to profitability in 2018 and eked out 2% sales growth in 2019. It was reported in October that Adidas was exploring a sale and might start a strategic review, citing a person familiar with the matter.
Adidas shares erased most of their intraday decline after the statement. As of 3.03pm in Frankfurt, they were down 0.8%.
Since his arrival at Adidas in 2016, CEO Kasper Rørsted has prioritised fixing Reebok’s long-sluggish performance. He closed underperforming Reebok stores and allowed some licensing deals to expire, cutting sales at the long-unloved sporting label while slashing expenses even more.
German publication Manager Magazin reported in October that interested parties include VF Corporation, which owns the Timberland and North Face brands, as well as China’s Anta International Group.
While Rørsted had hoped for about €2bn from selling Reebok before the pandemic, he would now be happy with less than that amount, Manager Magazin has said.
Reebok became an industry giant seemingly overnight in the 1980s, propelled by the aerobics boom. That momentum, however, quickly sputtered, and even Adidas has never managed to re-ignite the brand.
The chance to capitalise on Reebok’s deep archive of classic footwear and apparel styles — from the clean white sneakers featuring the Union Jack to the black-and-white bullseye basketball kicks worn by Shaquille O’Neal — could be a motivating factor for potential buyers.
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