London, UK (CNN) – Adidas said it will sell troubled US sportswear brand Reebok as part of a strategic reform plan.
The German sportswear company said in a statement on Tuesday that it had decided to start a formal process “aimed at liquidating Reebok” after reviewing the business it announced late last year.
“Reebok and Adidas will be able to better realize their growth potential independently of one another. We will work hard in the coming months to ensure a successful future for the Reebok brand and the team behind it,” said Chief Executive Officer Casper Rorsted.
The decision to sell Reebok was made as part of a new 5-year strategy that Adidas will unveil on March 10. Adidas acquired the American brand 15 years ago for $ 3.8 billion, in an attempt to expand its reach in the domestic market for Nike. Reebok then had several apparel deals with the National Basketball Association and the National Football League.
But the brand has been underperforming in recent years and has lost market share. Reebok sales now account for only 7% of Adidas, down from around 18% in 2010, according to the financial statements.
Rorsted launched a transformation plan in 2016 after taking over as CEO of Adidas. It brought Reebok back into profit in 2018 and has seen deals with celebrities such as Ariana Grande and Cardi B.
However, compulsory store closures linked to the Corona pandemic and the failure to benefit from increased demand for sportswear led to a decline in sales in 2020. Reebok revenue declined 7% in the third quarter compared to the previous year, compared to a 2% decline in sales of Adidas.
Adidas said it would focus its efforts on strengthening its brand in the global sporting goods market.
Adidas could separate Reebok as a separate public company or sell the trademark. Analysts say potential buyers may include VFC Corp., the parent company of Vance, and The North Face, which recently bought the Supreme brand for $ 2.1 billion. The Original Brand Group (ABG) and the Chinese company “Anta Sports” could also be potential buyers.
Adidas will announce Reebok as a discontinued operation, effective in the first quarter of 2021.
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