Germany’s sportswear company Adidas is set to sell its Reebok brand. Sales of this brand have not been good for some time. Adidas reported on February 16 that it had begun the formal process of selling Reebok. Adidas has made a 5-year plan for growth, which it is going to present on 10 March. At the same time, the company is also going to release its results of 2020. According to the information so far, the company will stop functioning of Reebok from the first quarter of 2021. According to CNBC, a banking source said Reebok’s business is worth $ 1.2 billion.
“Reebok and Adidas can break apart and achieve better growth,” said Adidas chief executive Kasper Rorsted. In 2006, Adidas bought Boston’s Reebok for $ 3.8 billion. But due to its weak performance, investors have been continuously seeking to sell it.
Meanwhile, Adidas has managed to capture Nike’s stake in the US through its core brand. The company has partnered with Kanye West, Beyonce and Pharrell Williams, which has benefited well.
When Rorsted became CEO of the company in 2016, he planned to bring Reebok back on track. This also boosted Reebok’s profitability but continued to underperform. It also affected Adidas, when Coronavirus weakened the business.
In the third quarter of 2020, Reebok’s net sales fell 7 per cent to Euro 403 million. Whereas in the first quarter the company’s sales fell by 44 per cent. In 2019, Adidas reduced Reebok’s book value by almost half to 84.20 million euros as of 2018.