Home >Companies >News >Adidas to decide whether to sell its underperforming brand Reebok

Adidas AG has begun a review of whether to sell its underperforming Reebok brand, part of the development of the German sportswear maker’s new five-year strategy.

Adidas said Monday it will announce a decision on March 10, when it presents its new plan.

The company acquired Reebok for $3.8 billion in 2006, returned the division to profitability in 2018 and eked out 2% sales growth last year. Bloomberg reported in October that Adidas was exploring a sale and might start a strategic review, citing a person familiar with the matter.

Since his arrival at Adidas in 2016, Chief Executive Officer Kasper Rorsted has made a priority of fixing Reebok’s long-sluggish performance. He closed underperforming Reebok stores and allowed some licensing deals to expire, cutting sales at the long unloved sporting label while slashing expenses even more.

After Reebok finally regained profitability by early 2019, Rorsted said he wanted to generate sales growth with new footwear lines like the CrossFit Nano and the FloatRide Run. He compared overseeing Adidas and Reebok to being like a parent who loves both his children equally.

Reebok has long fascinated industry players, both as a cautionary tale and for the tantalizing potential of recapturing some of its old success. It became a giant seemingly overnight in the 1980s, propelled by the aerobics boom and soon exceeding even Nike Inc. for several years in terms of U.S. sneaker sales. That momentum, however, quickly sputtered, and even Adidas has never managed to reignite the brand.

The chance to capitalize on Reebok’s deep archive of classic footwear and apparel styles -- from the clean white sneakers featuring the Union Jack to the black-and-white bullseye basketball kicks worn by Shaquille O’Neal -- could be a motivating factor for potential buyers.

Reebok is likely to attract interest from rival sporting goods companies, especially in Asia, as well as private equity suitors, according to people familiar with the matter, who asked not to be identified because discussions are private. German publication Manager Magazin reported in October that interested parties include VF Corp., which owns the Timberland and North Face brands, as well as China’s Anta International Group Holdings.

While Rorsted had hoped for about 2 billion euros ($2.4 billion) from selling Reebok before the pandemic, he would now be happy with less than that amount, Manager Magazin has said.

Adidas looks like a “clearly motivated seller" and may accept a comparatively low price for the Reebok brand, which would probably have a relatively neutral effect on earnings, John Kernan of Cowen said in an October note.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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