Adidas is selling Reebok to focus on its own brand

Adidas is selling Reebok to focus on its own brand

Adidas (ADDDF) says it will offload struggling US fitness brand Reebok as part of a strategic overhaul.

The German sportswear company said in a statement on Tuesday that it has decided to begin a formal process “aimed at divesting Reebok” following a review of the business that it announced late last year.

“Reebok and Adidas will be able to significantly better realize their growth potential independently of each other,” CEO Kasper Rorsted said. “We will work diligently 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 made as part of a new five-year strategy that Adidas will unveil on March 10. It bought the US label 15 years ago in a bid to expand its reach in Nike (NKE)’s home market. Reebok at the time had apparel deals with the National Basketball Association (NBA) and the National Football League (NFL).

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

Rorsted launched a turnaround plan in 2016 after taking over as Adidas CEO, which returned Reebok to profitability in 2018 and saw it land endorsement deals with celebrities such as Ariana Grande and Cardi B.

But forced store closures linked to the coronavirus pandemic and a failure to capitalize on a surge in demand for athleisure wear dented sales in 2020. Reebok’s revenues slipped 7% in the third quarter compared to the previous year, compared to a 2% decline 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, particularly for iconic sports brands,” Rorsted said.

Adidas could spin Reebok off as a separate public company or sell the brand. Analysts say that potential buyers could include VF Corp (VFC), the parent company of Vans and The North Face, which recently bought streetwear brand Supreme for $2.1 billion.

Authentic Brands Group (ABG) and China’s Anta Sports could also be potential suitors. ABG owns the rights to basketball great Shaquille O’Neal’s business endeavors. O’Neal reportedly said in 2019 that he would love to be a part owner of Reebok.

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


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