GERMANY: Adidas cuts Reebok revenue targets by one-third
Adidas has made dramatic cuts to the long-term revenue targets for its Reebok brand, which has been impacted by lost business in the US and fraud allegations in India.
The German sportswear group said it now expects Reebok to post revenues of EUR2bn (US$2.6bn) in 2015, down from the initial target of EUR3bn outlined in November 2010 as part of the group’s Route 2015 long-term strategy.
However, the company maintained its overall group target of EUR17bn, increasing projected Adidas brand revenues to EUR12.8bn from EUR12.2bn, and TaylorMade-Adidas Golf revenues from EUR1.8bn to EUR2.2bn.
Second quarter sales for the Reebok brand were down 26%, with the brand losing a lucrative NFL licence – described by Adidas as a “strategic decision” – and changing its reporting of NHL-related licence sales.
In April, Adidas reported that it discovered “commercial irregularities” at Reebok India, with the losses and consequent restructuring likely to cost it EUR200m.
Meanwhile, the company hailed the “outstanding performance” of its golf division, which it said would hit its 2015 target as early as this year.
Adidas said its three key markets of North America, Greater China and Russia/CIS were expected to contribute 50% of the sales growth in Route 2015, with fiscal 2012 revenues projected up 10%.
Addressing a US investor event in California, company CEO Herbert Hainer said Route 2015 had made “great progress” and added: “Everything I have seen over the past 20 months has only reinforced my confidence that Route 2015 will be an overwhelming success.
“While the first two years of our execution were marked by exceptional sales momentum, we will now focus on deliver even stronger on improving the profitability of our group.”
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