Adidas offers VRS at Reebok India, mulling store closures

Friday, 17 August 2012
Adidas Group has announced a three-pronged strategy at its Reebok India operation, which includes possible closure of nearly a third of its 900 Reebok stores, a voluntary retirement scheme (VRS) for the 200-odd Reebok employees and integration of the two brands’ suppliers. The German sportswear giant also said the financial irregularities discovered for financial year 2011 might have started much earlier and the company would not hesitate to open the accounts of previous years for investigation, if required.

The group had earlier announced that it had taken a hit of Rs 870 crores as a result of alleged financial irregularities committed in Reebok India in 2011. According to Claus Heckerott, MD of Adidas, group-market India, they are changing their model from a minimum guarantee scheme (rent plus model) offered to franchisees, which is not sustainable for a cash-and-carry model and one-third of the franchisees are ready to go with the model.

The VRS scheme would be offered to all Reebok employees at generous terms compared to current market standards. The company is also planning to integrate suppliers, which would include manufacturers making products of both the brands to bring in economies of scale.

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