Adidas makes plans for Reebok |
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| Friday, 08 June 2007 | |
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German sporting goods giant Adidas says it has big plans for Reebok. It is going to focus on expanding the branded apparel business for the US company it acquired for $3.8 billion this year by buying back distribution and tweaking its image. Adidas is predicting net income double-digit growth for the next three years, 20 percent in 2007, partly thanks to its acquisition of Reebok. The combined sales of the group are $11 billion. “I called the Reebok acquisition a ‘once-in-a-lifetime opportunity' and I hold firm to this statement,� chief executive and chairman of the Adidas Group, Herbert Hainer said during a press conference. Hainer took the opportunity to announce that Adidas has replaced Reebok as the official apparel supplier to the NBA (National Basketball Association). The partnership is valid globally for 11 years and will allow Adidas to design, manufacture and market NBA apparel and footwear in the US, Canada, Europe and Asia. “At first glance, the NBA deal may look like a loss for Reebok, but it's not,� Hainer said. “It caters to the group on a worldwide level and we now have to look at how we can get the best benefits for the group.� Adidas' main motivation for acquiring Reebok was to enter the US market, where rival Nike dominates. The industry had already speculated that Adidas would take over some of Reebok's sponsorship deals, but the recent announcement has some industry specialists concerned. Reebok, however, has freed up funds to use for new sponsorships, such as with footballer Thierry Henry. Reebok is recommitting to individual players rather than teams. Recently, Reebok has experienced a slowdown in US sales due to uncertainty and weak sales of its classic footwear. Its orders at the end of last year were down 22 percent from the year before. Adidas regards branded apparel as it biggest global growth category. The group's goal is annual sales of €100 million by 2009. Paul Harrington, Reebok chief executive, said that Reebok would update its design and quality. Hainer added that Reebok's apparel strategy had been off-kilter till now, but said that Adidas would apply its experience and “considerable talents� to the Reebok collections. Adidas also plans to buy out Reebok's distributors and global joint venture partners. Hainer believes owning distribution guarantees a consistent global position and long-term commitment to the brand. He estimates annual revenues from Reebok to be at least €200 million by 2009. By that year the group aims to generate €500 million in extra revenues from the deal and €175 million in cost savings. www.adidas.com 12 April 2006 |
