Adidas announced on Thursday, August 12, that it has struck a deal to sell struggling sneaker and sportswear brand Reebok to Authentic Brands Group (ABG) for up to €2.1 billion (US$2.5 billion).
Adidas bought Reebok for US$3.8 billion in 2006 to help to compete with arch-rival Nike, but its sluggish performance led to repeated calls from investors to sell the brand, Reuters reported.
In the meantime, Adidas managed to eat into Nike’s dominance in the United States with its core brand, helped by partnership with celebrities like Kanye West, Beyonce, and Pharrell Williams.
ABG has rapidly amassed over 30 labels that are sold at about 6,000 stores. Those brands include apparel chains Aéropostale and Forever21, as well as and Sports Illustrated magazine.
“This is an important milestone for ABG, and we are committed to preserving Reebok’s integrity, innovation, and values – including its presence in bricks and mortar,” said Jamie Salter, founder, chairman and CEO of ABG.
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After Kasper Rorsted took over as Adidas CEO in 2016, he launched a turnaround plan for Reebok, which helped it return to profitability, but its performance continued to lag that of the core Adidas brand and it was then hit by the COVID-19 pandemic.
Adidas reported last week that Reebok’s first-half sales jumped to €823 million from €600 million a year ago, and the brand made a net gain of €68 million compared to a net loss of €69 million in the first half of 2020.
Reebok’s recent collaborations with celebrities like Cardi B and a renewed focus on women’s apparel have put the brand in a better place, analysts say.
Adidas has already sold the Rockport, CCM Hockey, and Greg Norman brands for €400 million, which had been part of the original Reebok acquisition.
Adidas said in a statement that the sale had no impact on its financial outlook for the current year or for its targets set out in the five-year strategy it announced in March.
