German sportswear group Adidas has said it is ready to sell Reebok, after years of trying to topple the underperforming US brand it acquired in an ill-fated $ 3.8 billion deal.
Nike’s rival said on Monday it had “started evaluating strategic alternatives for Reebok,” with divestment being an option.
However, Adidas stressed that no final decision has been made and that it may choose to retain control of the Boston-based brand. “A decision will be announced on March 10, 2021, when the company’s new strategy is officially presented,” he said.
Shares of Adidas closed up 1.5% at € 287.50 in Frankfurt on Monday.
The German group bought Reebok in 2005 with the aim of attacking its big rival Nike in its domestic market. But high hopes for the label did not materialize and years of sluggish sales and losses followed. Despite a series of strategic restructuring and redevelopment plans, Adidas has repeatedly noted Reebok’s book value which was 842 million euros ($ 1 billion) in 2019.
The FT reported last month, private equity firms such as Permira and Triton circled the brand which last year generated € 1.74 billion in revenue – less than 8% of overall revenue from Adidas.
In the latest turnaround plan, dubbed “Muscle Up,” CEO Kasper Rorsted attempted to reposition Reebok as a dedicated fitness brand and cut spending by closing underperforming stores and letting some licensing agreements expire. .
Adidas does not disclose the detailed financial performance of its individual brands, but according to Mr. Rorsted, Reebok returned to profitability in 2018 and continued to be profitable last year. However, its revenue grew only 2% last year, compared to an increase of more than three times the group-wide.
Reebok sales fell 12% year-on-year in the third quarter, compared to a drop of just 7% for the Adidas brand.