Adidas may sell Reebok, thousands of jobs at risk

Reebok was acquired by Adidas about 15 years ago, but is now incurring losses

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A decision is yet to be taken regarding whether to sell Reebok or not, but Adidas is reportedly considering it. The subsidiary, which was acquired by Adidas 15 years ago, in a $3.8 million deal, is apparently causing losses to the German footwear company. This is mainly due to the pandemic-induced dip in sales and also due to the expiration of the licensing contract with the National Football League and the National Basketball Association. However, selling Reebok, the world’s second largest sportswear company, may put many jobs at risk, especially right now when a number of store closures are taking place in the retail sector.

In 2016, when Kasper Rorsted, CEO, joined, he launched a strategy to turn around profits for Reebok by 2020. It worked and began showing results well before, in 2018, when the 90’s was popularised and the focus was on women’s footwear. However, the pandemic seems to have stalled any hopes of reviving business for Reebok. In fact, early 2020 saw Reebok’s sale down by 20 per cent as well as Adidas’ by 18 per cent.

Reebok’s market parimarily lies in North America, which has been slower to recover than Europe. Further, the brand had a low focus on outdoor and running categories — the two categories saw a surge in sales during the pandemic. Somewhere, the then management at Adidas had failed to understand Reebok’s business model, which further added to the loss in revenue. Reebok may be retained by Adidas or sold off to private equity firms, nothing is final just yet.

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