Adidas cuts Reebok 2015 sales target by 1 billion euros
By Victoria Bryan
FRANKFURT (Reuters) - Adidas (ADSGn.DE: Quote) has cut the 2015 sales target for its struggling Reebok brand by a third to 2 billion euros ($2.6 billion) after a torrid year in which it lost a major American football contract and fraud was discovered at its Indian operation.
The German company, the world's second-largest sports apparel firm, bought Reebok in August 2005 for $3.8 billion to try to close the gap on market leader Nike (NKE.N: Quote) in the United States. It enjoyed initial success with a range of toning shoes, but has since struggled to find its feet.
Sales at Reebok slumped 26 percent in the second quarter and annual revenue is expected to fall from 2011's 1.96 billion euros. Its performance contrasts sharply with the rest of the Adidas group, which expects overall sales to rise nearly 10 percent to about 14.5 billion euros in 2012.
Adidas Chief Executive Herbert Hainer has said that Reebok needs to come up with new products and will focus on fitness categories such as keep-fit trend Crossfit, running, gym, yoga and dance.
Reebok will also restrict sales growth in less lucrative markets such as India and Latin America and instead focus on improving its profit.
"While we have seen some good progress from the brand ... we cannot claim that we are on the path to sustainable global success just yet," Hainer told investors in California.
Shares in Adidas, which have gained 30 percent this year and touched a record high of 65.76 euros on Wednesday, were down 1.5 percent at 64.56 euros at 0830 GMT, making them the biggest faller on Germany's Dax index of leading shares .GDAXI.
The reduced target for Reebok is a rare spot of bad news for Adidas, which has managed to perform better than Nike and Puma (PUMG.DE: Quote) this year in Europe and China, where consumer spending has slowed. Continued...