SBD/November 4, 2016/Finance

New Adidas CEO To Scale Back Struggling Reebok In Effort To Turn Business Around

Rorsted said he doesn't expect adidas to reproduce the same revenue next year
adidas will "scale back its struggling Reebok unit, highlighting the urgency being applied" by new CEO Kasper Rorsted to "turn around a business that’s weighed on the sporting-goods maker for years," according to Ricadela & Jarvis of BLOOMBERG NEWS. Rorsted on Thursday "unveiled plans to overhaul the brand, including relocating its head office, closing stores, and trimming 150 jobs." He also predicted that adidas "will announce the long-awaited sale of its ailing golf unit by the end of the year." Rorsted said of Reebok, "We're not going to have eternal patience for seeing results." Reebok and the TaylorMade golf division have "long held back Adidas’s performance while its mainstay three-striped sneakers are firmly back in fashion." But Rorsted is "close to solving" the future of the "golf unit, where sales are now rising after years of decline." Rorsted said that the number of U.S. outlet stores "will be halved" (BLOOMBERG NEWS, 11/3). Rorsted said that he "does not expect adidas to reproduce the same revenue and profit growth next year after soaring demand for Superstar sneakers and Ultra Boost running shoes put it on course" for a record '16. REUTERS' Emma Thomasson noted adidas will take "one-time costs to boost future growth, including spending on its biggest store yet on New York's Fifth Avenue that opens on Dec. 1 and the launch of a new shoe" designed by Rockets G James Harden. Some investors have suggested that Rorsted should "consider selling Reebok." Rorsted "declined to speculate on the future of Reebok -- which accounts" for about 10% of group sales -- beyond the restructuring. He said that the new structure -- with North America President Mark King no longer responsible for Reebok -- should "help the main adidas brand focus on extending its recent U.S. revival" (REUTERS, 11/3).
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