Adidas Offloads Reebok to Authentic Brands Group for Focus on Core Brands
Adidas announced on a Thursday that it had reached an agreement with Authentic Brands Group for the sale of Reebok. The deal, scheduled for the first quarter of 2022, will see Adidas receive a substantial portion of its initial investment made in the purchase of Reebok back in 2006.
Authentic Brands Group, which has acquired bankrupt brands like Brooks Brothers, Aéropostale, and Forever 21 and recently applied for an initial public offering, will be the newly-appointed owner of the athletic wear brand.
Back in February, Adidas shared its intention to initiate the formal process of selling Reebok following the announcement of a Reebok review at the end of last year. Adidas aims to sell Reebok to boost its own brand presence in the global sports apparel market.
The German company bought Reebok in 2006 to boost its presence in the US market and compete with Nike (NKE) domestically. However, Reebok has experienced underperformance in recent years, struggling to keep up with changing consumer trends for sportswear and losing market share to competitors like Lululemon (LULU) and Nike.
Adidas reported that Reebok accounted for about 7% of its overall revenue at the end of 2020, a significant drop from the 18% it commanded in 2010. Neil Saunders, the GlobalData Retail CEO, commented:
"A part of the problem is that Adidas has not made its expectations for Reebok clear enough. It's neither seen as a first-choice brand for professional athletes nor is it viewed as a first-choice brand for those looking for athleisure-wear and style."
CB Insights reveals that the sale of Reebok to Authentic Brands Group could give the latter a significant boost in the US retail market. However, for Reebok to regain its market share, it needs to focus more on differentiated product development, better engagement with consumers, and an improved sales strategy in-store and online.
This article features contributions from Hanna Ziady of CNN Business.
