Adidas to sell Reebok; will focus on its own brand

Adidas is parting ways with Reebok.

The German athletic footwear and apparel giant said it plans to sell or spin-off the underperforming brand as part of a new five-year strategy aimed at strengthening Adidas’ position in the global sporting goods market. Adidas acquired Reebok in 2006 for $3.06 billion.

The news was not unexpected. As previously reported, in December, Adidas said it has begun to review strategic alternatives for Reebok.

Adidas said it has begun a formal process aimed at divesting Reebok. It will report the U.S. brand as discontinued operations from the first quarter 2021 onwards.

“The long-term growth opportunities in our industry are highly attractive, particularly for iconic sports brands,” said Adidas CEO Kasper Rorsted. “After careful consideration, we have come to the conclusion that Reebok and adidas will be able to significantly better realize their growth potential independently of each other. We will work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it.” 

Adidas noted that, as a result of its successful “Muscle Up” turnaround plan, which it initiated in 2016, Reebok significantly improved its profitability and returned to the profit zone in 2018, two years earlier than initially forecast. In 2019, Reebok also returned to the growth path, according to Adidas. But the company has been hard hit by the pandemic and related store closures. Reebok's revenues fell 7% in the third quarter (compared to a 2% decline in Adidas sales, after falling as much as 44% the second quarter.