According to a report from Germany’s Manager Magazin, sportswear giant Adidas is planning to sell its struggling subsidiary, Reebok, by March of next year. The decision to divest from Reebok comes as no surprise, as the brand has been underperforming for quite some time and has become a burden on the more successful Adidas label. Investors have long been urging Adidas to get rid of Reebok, and the news of the potential sale caused the parent company’s shares to rise.

While Adidas and Reebok have not publicly commented on the report, it revealed that Adidas had written down Reebok’s book value by nearly half to €842 million in the past two years. Reebok, originally founded in the UK in the 1950s by Joseph William Foster’s grandsons, has been owned by Adidas since 2005. Despite Adidas acquiring Reebok for $3.8 billion, the brand has struggled to achieve success in the North American market.

In the most recent quarter, Reebok saw a massive 44% decline in sales, largely due to its exposure to the weak US market. Consequently, Adidas reported a loss that included impairment charges related to retail stores and the Reebok brand’s trademark. Potential bidders for Reebok, as suggested by Manager Magazin, could include US-based VF Corp and China’s Anta Sports. However, neither company has confirmed their interest in the matter.

The fashion industry has been heavily impacted by the COVID-19 pandemic, leading many companies to reassess their portfolios and focus on their more profitable brands. Adidas’ decision to sell Reebok aligns with this trend, as the company aims to streamline its operations and enhance its overall performance. While uncertainty looms over the fashion sector, strategic moves like this can help companies navigate through these challenging times.

Useful links:
Link 1: Financial Times – “Adidas moves closer to selling Reebok with likely deal by March”
Link 2: Manager Magazin – “Adidas plant den Verkauf von Reebok”