Adidas has a Reebok problem
The US brand will be restructured with job losses as Adidas looks to gain ground on Nike14:37 Thursday 3 November 2016, 14:37 3 Nov 2016
Investors dumped Adidas shares as the German sporting giant's 2016 hot streak hit a speed bump as sales growth slowed (although it remains healthy) and the company announced plans to take a one-off €30m hit restructuring Reebok.
Adidas' chief executive Chief Executive Kasper Rorsted, who recently took control of the company, said that the move will give Reebok greater independence as staff are relocated to a new HQ in Boston.
The division faces 150 job cuts, and a number of Reebok stores will be closed. This will allow more resources to be channeled into the company's core business.
The US sports company was purchased in 2006 for €3bn - but the brand has faced stiff competition in the growing athletic wear market.
A photo posted by Conor McGregor Official (@thenotoriousmma) on
Irish MMA superstar Conor McGregor is among Reebok's sponsored athletes. The company signed an exclusive deal to supply kits and training gear for the UFC in late 2014.
The brand also has a partnership with Straight Blast Gym (SBG) where McGregor trains.
"It is now time to get back to the gym and redouble our efforts on Reebok," Mr Rorsted declared earlier today.
The brand accounts for 10% of overall Adidas group sales.
Last week Adidas regained its position as the number two sports brand in the US - passing Under Armour and gaining ground on Nike.
Adidas shares have climbed by over two-thirds this year - they dipped by 3.7% following the publication of these results.
Its bottom-line has been holstered by demand for Adidas footwear.
"In particular, the Adidas brand continued its strong momentum with revenues up 20% on a currency-neutral basis, fuelled by double-digit sales increases in Sport Performance, at Adidas Originals as well as at adidas neo," the group commented.
Total Adidas sales increased by 17% on a currency-neutral basis while its operating profit grew by 11% growing to €563m.
Kasper Rorsted stated: "2016 will be a record year for the Adidas Group with truly exceptional results. Going forward, it is our job to make this fantastic company even better.
"We will ensure that the Adidas Group remains a growth company that delivers sustainable top- and bottom-line improvements in the years to come."
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