Adidas throws out Reebok after a weak quarter

Adidas is selling its subsidiary brand Reebok. The sneaker brand is not doing well, and Adidas wants to concentrate fully on its own brand.

“Better off going our separate ways”

There have been rumours for a while, but as of this moment, Reebok is officially on the market. Parent company Adidas has announced that it will divest the trainer brand, after a strategic review at the end of last year. Since the first quarter of this year, the German group has listed Reebok as “discontinued operations”.

“Reebok and Adidas will be able to increase their growth potential significantly independently of each other,” CEO Kasper Rorsted told CNN. “We will work diligently in the upcoming months to ensure a successful future for the brand Reebok and the team behind it.” 

Failed turnaround

Adidas acquired Reebok in 2006 for 3.8 billion dollars, mainly intending to strengthen its hold on the American market – rival Nike’s territory. At the time, Reebok had apparel contracts with the NBA basketball players and players from the National Football League (NFL). 

But in recent years, the brand has been losing market share. A turnaround plan in 2016, with a temporary revival in 2018 and sponsorship contracts with celebrities such as Ariana Grande and Cardi B, were unfortunately to no avail: in 2020, Reebok represented only 7 per cent of Adidas’ sales. In 2010, this was still about 18 per cent.

No Covid growth

The last quarter made it fully obvious: sales dropped by 7 per cent, whereas as a result of the Covid pandemic, there is a high demand for athletic and comfortable clothing. Meanwhile, Adidas’ own sales dropped by 2 per cent, so there is work to be done there as well. Still, CEO Rorsted believes that “the long-term growth opportunities in the industry are very attractive, especially for iconic sports brands”, so the focus will now be on that.

The owner of Vans and The North Face VF Corp and China’s Anta Sports are mentioned as possible takeover candidates. Authentic Brands Group, which owns the business rights around basketball icon Shaquille O’Neal, is also a contender. Possibly, the brand could also continue independently.