Adidas seeks buyer for golf businesses to focus on shoes, clothing

Wed May 4, 2016 11:25am EDT
 
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By Emma Thomasson

BERLIN (Reuters) - German sportswear company Adidas ADSGn.DE aims to sell the bulk of its loss-making golf business to focus on shoes and clothing, it said after the core Adidas brand reported strong quarterly sales, particularly in the United States.

Adidas, which launched a review of its golf business last August, said on Wednesday that it would focus on selling golf shoes and clothing under the Adidas label and seek to sell TaylorMade and Adams, which sell golf clubs and other equipment, as well as the Ashworth golf shoes and clothing brand.

After peaking around 2000, when Tiger Woods was in his prime, the number of people playing golf in the United States, which accounts for half the global golf market, has fallen sharply.

"We expect this will remove the earnings volatility of an equipment business with higher fixed costs and lower sales visibility than traditional sportswear," said UBS analysts, who have a "neutral" rating on Adidas shares.

Analysts speculate that a sale could prompt writedowns.

Adidas bought TaylorMade in 1997 as part of its $1.4 billion acquisition of French skiing label Salomon, developing it into the world's biggest supplier of golf drivers. It bought smaller Ashworth in 2008 and Adams four years later.

The golf business achieved sales of 902 million euros ($1.04 billion) last year, accounting for about 5 percent of group sales and down by a third from a peak of 1.34 billion euros in 2012. The part of the business it is selling accounts for 60 percent of total golf-related revenue.

Analysts predict the business might draw interest from companies in Asia or a financial investor, rather than a rival such as Nike NKE.N, Puma (PRTP.PA: Quote), Under Armour UA.N or Callaway Golf ELY.N, which might be wary of increased exposure to golf.   Continued...

 
Adidas golf shoes "Adizero" are pictured during the company's annual news conference in Herzogenaurach March 7, 2013.   REUTERS/Michael Dalder