Adidas to shore up Reebok India
German sportswear retailer Adidas has unveiled a plan to shore up its Reebok business in India.
Reebok’s second quarter sales plummeted 26 per cent globally attributable to its business challenges in India. Its revenue fell from 427 million euros (US$528.49 million) to 336 million euros (US$415.86 million) in the quarter ended June, compared year on year. Reebok, which was bought by Adidas in 2005, also lost the National Football League license agreement in the US.
Despite the challenges, Adidas said it has no plans to sell ailing Reebok. The company needs initiatives that would revive its growth, says Adidas Group CEO Herbert Hainer.
“While the issue is unpleasant, we will achieve our goal and set Reebok up for a fresh start in India in 2013,” said Hainer.
Earlier this May, Adidas said it would cut one-third of its 900 Reebok stores in India citing commercial irregularities and aggressive restructuring as the reasons.
Adidas now says it will invest Rs 476 crore (70 million euros or US$86.63 million) in Reebok India in line with its Route 2015 plan. In 2010, Adidas revealed its strategic plan called Route 2015 that would open up to 400 new stores worldwide and achieve a sales of 17 billion euros (US$21 billion) by 2015.
Meanwhile, Adidas Group’s sponsorships to the London Olympics and Euro 2012 football tournament have boosted its profit, resulting in a rise in net earnings to 165 million euros (US$204.22 million), up 18 per cent over last year.