The new CEO of Adidas says he plans to streamline and restructure the ailing Reebok business as a priority under his watch.
CEO Kasper Rorsted, in a conference call with business media, also promised a completion of the sale of the Adidas TaylorMade golf business by the end of this year, even if that meant booking a loss.
While its core Adidas brand business is performing well enough to prompt four raises in the company’s financial outlook this year, a Reebok restructure is necessary while the unit continues to struggle.
“We’ll give Reebok more freedom to operate globally, and more responsibility in the US,” Rorsted said. “We’ll get a more focused organisation, and that will enable us to continue the momentum we have right now of Adidas in the US and it will make Reebok stronger.”
Rorsted will move Reebok’s headquarters from Canton to new premises in Boston where the team will be 100 per cent Reebok, with about 150 jobs cut. At least one US factory will be closed and the US store network cut back to focus on wholesale. Restructuring is estimated to cost $33 million.
Adidas has been converting Reebok from a traditional sports shoe maker into a fitness brand. Top-line sales growth has grown for the last 14 quarters, but it still lags its parent.
“We have to be realistic. Reebok is growing slower than Adidas and our competition, and we have seen no growth in North America in the past three years. And lastly, the profitability is significantly below the group average. It’s time to get back to the gym and redouble our efforts on Reebok.”
So strong is Adidas performing the costs of restructuring and a potential loss on the sale of the golf business is unlikely to impact on group profit. And Rorsted indicated there was no sign of any slowing in Adidas’ growth.
“The consumer centric approach has increased our brand desirability and relevance with the consumers. You can see that not only in our markets or in our revenue numbers, but also in the market share gains in the key categories and markets where we are active.”
