Adidas is now planning to sell Reebok as the U.S. brand’s sales continue to decline.
German sportswear giant Adidas is considering selling its U.S. sneaker brand Reebok after struggling with sales. Reebok was the third-largest sportswear brand globally, long before Adidas bought it for $3.8 billion in 2006.
Reports say that Adidas purchased the brand to go head-to-head with its top American competitor Nike. Nike is also the market leader for sportswear.
Since the acquisition, Reebok’s share in the Adidas revenue has been on a decline. Reebok shared at least $2 billion in Adidas’ retail income in 2007, a quarter of Adidas’ total sales for the said year. However, Reebok’s total shares have since declined in the last ten years, and Reebok has only contributed 6.4% of Adidas’ total sales.
Adidas Chief Executive Officer Kasper Rorsted took over the position in 2016 and has since averted rumors of Adidas selling Reebok. Since 2016, Rorsted has closed Reebok stores whose sales are continuously declining. Rorsted also allowed licensing deals to expire, resulting in the further decline of Reebok’s sales.
In early 2019, Rorsted launched Reebok’s new footwear lines, including the CrossFit Nano, in hopes of earning sales from Reebok’s newly-generated profitability. However, due to the pandemic, Reebok’s sales have suffered, and revenues fell by at least 42%.
According to Germany’s Manager Magazin, Adidas CEO Kasper Rorsted plans to complete the deal by March of next year. It also said that the sportswear giant would be using the coming months to assess whether to proceed with the agreement.
Adidas shares increased by approximately 3.4% in the Frankfurt trading.
Additionally, Manager Magazin’s report stated interested Reebok buyers, including U.S. apparel firm VF Corp which owns Vans and Northface, and China’s Anta Sports, which owns FILA. A source also told Bloomberg that the sportswear giant had formed a team to work on a potential agreement, but these are still early times.
Reuters said that VF Corp did not respond to comments on the said deal. On the other hand, Anta Sports was not available for an interview beyond China’s office hours.
According to Manager Magazin, Adidas CEO Kasper Rorsted hopes to make at least $2.4 billion from the deal but is now open to accepting less. Adidas neither confirmed nor denied the potential sale. However, according to Business Insider, an Adidas spokesperson told them that Adidas “does not comment on market rumors.”