Adidas is selling Reebok to focus on its own brand

Adidas is selling Reebok to focus on its own brand

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“Reebok and Adidas will be able to realize their growth potential significantly better independently of each other,” said CEO Kasper Rorsted. “We will work hard 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 reveal on March 10. It purchased the United States brand 15 years ago in an attempt to expand its reach in Nike (NKE)domestic market. At the time, Reebok had clothing deals with the National Basketball Association (NBA) and the National Football League (NFL).

But the brand underperformed in recent years and lost market share. It now accounts for only 7% of Adidas’ sales, down from around 18% in 2010, according to the financial statements.

Rorsted launched a recovery plan in 2016 after taking over as Adidas CEO, which brought Reebok back to profitability in 2018 and saw her endorsement deals with celebrities like Ariana Grande and Cardi B.

But forced store closures related to the coronavirus pandemic and a failure to capitalize on an increase in demand for sportswear affected sales 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 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, especially for iconic sports brands,” said Rorsted.

Adidas could turn Reebok into a public company or sell the brand. Analysts say potential buyers may include VF Corp (HRV), 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 may also be potential suitors. ABG owns the rights to the commercial ventures of the great basketball Shaquille O’Neal. O’Neal would have said in 2019 that he would love to be a co-owner of Reebok.

Adidas, which acquired Reebok in 2006 for $ 3.8 billion, will report the brand as “discontinued operations” beginning in the first quarter of 2021.

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