Frankfurt: Adidas slashed its 2015 sales target for its struggling Reebok brand to €2 billion ($2.6 billion) from €3 billion after losing a major American football contract and fraud was discovered at its Indian operation.
The German company, the world’s second-largest sports apparel company behind Nike, bought Reebok in August 2005 for $3.8 billion. It enjoyed initial success with a range of toning shoes, but has since struggled to find its feet.
Sales at Reebok slumped 26% in the second quarter and annual revenue is expected to fall from 2011’s €1.96 billion. Its performance contrasts sharply with the rest of the Adidas group, which expects overall sales to rise nearly 10% in 2012.
Adidas chief executive Herbert Hainer has said that Reebok needs to come up with new products and will focus on fitness categories such as keep-fit trend Crossfit, running, gym, yoga and dance.
The company kept an overall target to increase group sales by almost 10% to €17 billion by 2015, with faster than expected growth at its Adidas brand and golf business offsetting the weakness at Reebok.
Sales for the Adidas brand are now expected to reach €12.8 billion in 2015, up 5% from the previous target of €12.2 billion.
Adidas shares, which have gained 30% this year as it takes market share from rivals, touched a record high of €65.76 on Wednesday.
The company announced in April that it had uncovered commercial irregularities at Reebok India and replaced management there. It said the fraud and a subsequent restructuring of Indian operations would cost Adidas almost €200 million. The unit’s two former managers were arrested on Thursday in India on suspicion of fraud. Reuters