Adidas AG, a German sportswear manufacturer brand is planning to sell or spin-off its struggling Reebok brand. Adidas bought Reebok 15 years ago to compete with their arch-rivals Nike.
Adidas stated that the company has decided to start the initial process of divesting Reebok as a part of a five-year strategy, that it expects to present on March 10th, when the company will also release the financial reports of 2020. Adidas also said that, as of January 2021, Reebok will be reported as a discontinued service. The valuation of Reebok brand was stated to be around $1 billion in 2019.
Adidas bought the Reebok brand in 2006 for $3.8 billion, but since then it has struggled to earn consistent profits for the company. In 2016, the newly appointed CEO of Reebok came up with a turnaround plan which helped the brand to return to profitability, but it lacked the consistency when compared to that of Adidas, and then it was hit by the COVID-19 pandemic. The investors repeatedly conducted meetings to discuss and plan about the future of Reebok and it seems that finally they have decided to sell the brand.
In the third quarter of 2020, Reebok’s net sales dropped by 7% to $488 million, after dropping as much as 44% in the second quarter. Adidas wrote down Reebok’s book value by almost half in 2019, to $1 billion compared to 2018.
