Adidas Makes $344M Reebok Write-Off, Stays Committed To Its India Unit Despite 'Fraud'
Adidas has been forced to write off £265M ($344M) at its Reebok business during a year in which Reebok "uncovered fraud at its Indian unit, endured a strike" in the NHL and saw a 10-year U.S. football contract "come to an end," according to Simon Neville of the London GUARDIAN. The writedown "pushed the German-based business into the red" by €239M ($310M) over the last three months. Sales in emerging markets "are improving," but the economic downturn in western Europe has "pushed sales down 4%." Over the full year, "profits were down" 3% to €920M ($1.2B) (GUARDIAN, 3/7).
STAYING IN INDIA: REUTERS' Keith Weir reported adidas CEO Herbert Hainer said that the sportswear company "plans to keep its Reebok brand in India despite finding financial irregularities at the unit." Adidas said that it believed it "had uncovered all the wrongdoing at the Indian business and laid the basis for a profitable operation there in the future." Hainer said, "Here let me reiterate our full commitment to the Reebok brand in India." Hainer also said that he expected the company to build on momentum in China where sales grew 15% in '12 (REUTERS, 3/7). PTI reported adidas said that "commercial irregularities" in India "negatively impacted" its balance sheet for '11 by euro €153M ($199M). In April, the company stated that "the estimated maximum negative impact" due to the alleged fraud by its two top executives at Reebok India, could be up to a pre-tax amount of €125M ($162M). Adidas said that it has "corrected its consolidated financial statements" (PTI, 3/7).