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Adidas mulls potential sale of Reebok brand

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LaToya Harding
·Contributor
·2-min read
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Adidas plans for the group will be announced on 10 March. Photo: Alex Tai/SOPA/LightRocket via Getty
Adidas plans for the group will be announced on 10 March. Photo: Alex Tai/SOPA/LightRocket via Getty

Sportswear giant Adidas (ADS.DE) is considering “strategic alternatives” for Reebok, including a potential sale of the US-focused brand.

In a statement the German company said that Reebok, which it bought for $3.8bn (£2.9bn) in 2006, had returned to the “profit zone” in 2018, two years earlier than expected, on the back of strong growth in its home market of North America.

“These strategic alternatives include both a potential sale of Reebok as well as Reebok remaining a part of the company,” it said.

Its plans for the group, which has origins in the UK, will be announced on 10 March when Adidas presents its new five-year strategic outline.

Reebok, which had previously been underperforming, made a 2% sales growth last year. However, during the first nine months of 2020 revenues fell by a fifth due to the mass closure of physical stores as countries across the globe tried to curb the spread of the virus.

Figures revealed that Reebok's revenue grew by 4% to at €1.7bn (£1.55bn, $1.21bn) in 2019, making up just 7% of Adidas' total annual sales.

The New York Times previously reported that Adidas has brought in JP Morgan to assist with the sale.

Rumours had been circulating for a while as to whether Adidas would put the brand up for sale amid pressure to offload the ailing brand. It was first reported in October that Adidas could put Reebok up for sale as chief executive Kasper Rorsted seeks to bolster the company’s performance.

READ MORE: UK retail records sixth consecutive month of growth in October

Rorsted has already shuttered underperforming Reebok stores since his appointment to the helm four years ago and has also allowed some licensing deals to expire.

The sale may attract rival sportswear companies as well as private equity investors such as Permira which owns footwear company Dr Martens.

In October, German publication Manager Magazin revealed that interested parties in the sale include VF Corp (VFC), which owns the Timberland and North Face brands, as well as China’s Anta Sports Products (2020.HK).

Manager Magazin added that Rorsted had hoped for around €2bn from selling Reebok before COVID-19 but that he would now settle for less than that amount.

Adidas looks like a “clearly motivated seller” and may accept a comparatively low price for the Reebok brand, John Kernan of Cowen said in a note at the time.

Yahoo Finance has reached out to Adidas for comment.

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