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BERLIN: German sportswear manufacturer Adidas plans to sell or spin-off its underperforming Reebok brand, 15 years after it bought the American fitness brand to help compete with archrival Nike.
Adidas said Tuesday that it had decided to begin a formal process aimed at selling Reebok as part of a five-year strategy that it plans to present on March 10, when the company will also release 2020 results. It will report Reebok as a discontinued operation as of March 10. first quarter of 2021.
A banking source said the business could be worth around 1 billion euros ($ 1.2 billion).
“Reebok and Adidas will be able to significantly better realize their growth potential independently of each other,” Chief Executive Kasper Rorsted said in a statement.
The company bought Boston-based Reebok for $ 3.8 billion in 2006, but its sluggish performance prompted repeated requests from investors to ditch the brand.
Meanwhile, Adidas managed to devour Nike’s dominance in the United States with its flagship brand, helped by partnering with celebrities like Kanye West, Beyonce, and Pharrell Williams.
After Rorsted took over as CEO in 2016, he launched a restructuring plan for Reebok, which helped make it profitable again, but its performance continued to lag behind that of the main Adidas brand and was then hit by the COVID pandemic. -19.
Reebok’s net sales fell 7 percent in the third quarter of 2020 to 403 million euros ($ 488 million), after falling as much as 44 percent the previous quarter. In 2019, Adidas cut Reebok’s book value by almost half, compared to 2018, to 842 million euros.
Options for Adidas include spinning off Reebok as an independent public company or selling the brand to private equity, another major sports retailer, or a multi-brand player such as VF Corp.
Reebok’s recent collaborations with celebrities like Cardi B and a renewed focus on womenswear have put the brand in a better place, analysts say.
Adidas said in November that it expected a drop in overall sales by the end of 2020, as the re-imposition of locks in Europe offset the return to growth in China and strong demand for Beyonce-designed running gear and products.
