Adidas Plans to Sell Struggling Reebok Brand

Adidas plans to sell or spin-off its underperforming Reebok brand. (Reuters)
Adidas plans to sell or spin-off its underperforming Reebok brand. (Reuters)
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Adidas Plans to Sell Struggling Reebok Brand

Adidas plans to sell or spin-off its underperforming Reebok brand. (Reuters)
Adidas plans to sell or spin-off its underperforming Reebok brand. (Reuters)

German sportswear maker Adidas AG plans to sell or spin-off its underperforming Reebok brand, 15 years after it bought the US fitness label to help compete with arch-rival Nike Inc.

Adidas said on Tuesday it had decided to begin a formal process aimed at divesting Reebok as part of a five-year strategy it plans to present on March 10, when the company will also publish 2020 results. It will report Reebok as a discontinued operation from the 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 led to repeated calls from investors to dispose of the brand.

In the meantime, Adidas managed to eat into Nike’s dominance in the United States with its core brand, helped by partnership with celebrities like Kanye West, Beyonce and Pharrell Williams.

After Rorsted took over as CEO in 2016, he launched a turnaround plan for Reebok, which helped it return to profitability, but its performance continued to lag that of the core Adidas brand and it was then hit by the COVID-19 pandemic.

Reebok’s net sales fell 7% in the third quarter of 2020 to 403 million euros ($488 million), after falling as much as 44% the preceding quarter. In 2019, Adidas wrote down Reebok’s book value by nearly half, compared with 2018, to 842 million euros.

Options for Adidas include spinning Reebok off as a stand-alone public company, or selling the brand to private equity, another major sports retailer or a multibrand player like VF Corp.

Reebok’s recent collaborations with celebrities like Cardi B and a refreshed focus on women’s apparel have put the brand in a better place, analysts say.

Adidas said in November it was expecting a drop in overall sales for the end of 2020 as the reimposition of lockdowns in Europe offset a return to growth in China and strong demand for running gear and products designed by Beyonce.



Struggling Puma Names Former Adidas Sales Chief as CEO

FILED - 04 November 2022, ---: Arne Freundt poses for a picture. Photo: Christoph Maderer/PUMA/dpa
FILED - 04 November 2022, ---: Arne Freundt poses for a picture. Photo: Christoph Maderer/PUMA/dpa
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Struggling Puma Names Former Adidas Sales Chief as CEO

FILED - 04 November 2022, ---: Arne Freundt poses for a picture. Photo: Christoph Maderer/PUMA/dpa
FILED - 04 November 2022, ---: Arne Freundt poses for a picture. Photo: Christoph Maderer/PUMA/dpa

Sportswear brand Puma said on Thursday former Adidas sales chief Arthur Hoeld would take over as CEO, replacing Arne Freundt due to what the company called "differing views on strategy execution".
Puma has struggled to boost sales and profitability for more than a year. Its pick for the top job marks the latest talent swap between the competing brands, two years after its CEO Bjorn Gulden jumped ship to lead Adidas through a successful turnaround, Reuters reported.
Based across the road from each other in Herzogenaurach, Germany, the companies have a rivalry going back 75 years to a feud between shoemaker brothers Adolf Dassler, founder of Adidas, and Rudolf Dassler, who started Puma.
Puma said Freundt, CEO since November 2022, would step down on April 11 and Hoeld would take over as chairman and CEO effective July 1, with the board leading the company in the transition phase.
"I am incredibly excited to join the PUMA family as their new CEO," Hoeld, who left Adidas in October last year, said in a statement.
Adidas has enjoyed strong sales growth as it surfed a trend for its Samba and Gazelle sneakers, while Puma sales have been sluggish as it struggles to boost interest in new sneakers like the Speedcat.
Puma last month warned its 2025 sales would likely be weaker than last year, and said uncertainty was denting consumer spending in the US, which accounts for between 20-25% of its global sales.
"We expect this news to be taken positively, given ongoing investor concerns around performance and strategic execution," said Citi analyst Monique Pollard.
US tariffs on China, Vietnam, Indonesia and other key manufacturing hubs hit sportswear retailers, sending Puma shares down 10% on Thursday.
Puma sourced 28% of its products in China last year, while Vietnam was its second-biggest sourcing country with 26%, and Cambodia was third with 16%.
The share price, pummeled by slowing sales, is close to its lowest in nine years.
"We are convinced that thanks to his strategic vision and focus on product and brand, Arthur will lead Puma into a new chapter of strength and growth," said Heloise Temple-Boyer, chair of the supervisory board at Puma.