SBD/November 9, 2012/Finance

Adidas Lowers '12 Sales Forecast As Reebok Brand Continues To Struggle

adidas has so far had a "strong year as sponsorships of teams and individuals at big sporting events helped drive up sales and profit," but the company on Thursday "cut its sales forecast for 2012 because of further problems at Reebok," according to Nicky Redl of the WALL STREET JOURNAL. adidas acquired Reebok in '06, and has "struggled to power the brand ever since." Reebok currently is "being hit by a player lockout in the National Hockey League and is continuing to sort out problems in India after 'commercial irregularities' were discovered." Reebok's "woes mean that while Adidas is competing strongly against Nike in Europe, Asia and fast-growing markets such as China and Latin America, it is losing ground in the U.S." Sales "fell 4.7% in the U.S. in the third quarter, predominantly because of Reebok's poor performance." adidas said that it "now expects group sales to rise by a high single-digit rate in 2012, compared with its previous forecast for a rate approaching 10%." Net profit "rose 14% on the year in the third quarter" to US$437.6M as "sales rose 11%" to US$5.3B, buoyed by "strong demand in Asia and Eastern European markets." Several attempts to "reinvent and reposition Reebok to take advantage of the U.S. market have failed to work." The latest plan is "to market Reebok as a fitness-only brand." adidas CEO Herbert Hainer said that the Reebok brand's "performance was 'by no means satisfactory,' but pointed out the sales fall was an improvement from the second-quarter decline of 10%" (WALL STREET JOURNAL, 11/9). REUTERS' Victoria Bryan noted adidas has "performed better than rivals Nike and Puma this year, taking market share in hotly contested countries such as China." The one "black mark on its record has been Reebok, whose sales fell 25% in the third quarter, following a 26% fall in the second quarter." However, Hainer "predicted a return to sales growth for Reebok in 2013 and said he was seeing the first signs of success with its Classics and children's ranges" (REUTERS, 11/8).
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Finance, Adidas, Reebok

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