German sportswear maker Adidas says it will stick to its €70
million (Rs 474 crores) plan to restart Reebok India operations afresh in 2013. This, after reporting a 26 per cent slide in Reebok’s second quarter global sales, primarily due to alleged irregularities in India. “While the issue is unpleasant, we will achieve our goal and set Reebok up for a fresh start in India in 2013,” Adidas AG Chief Executive Herbert Hainer told reporters in Frankfurt. Adidas reported 18 per cent jump in net earnings to €165 million (about Rs 1,123 crores) in the second quarter, helped by its sponsorship of the London Olympics and the Euro 2012 football tournament.
Sales at its Reebok unit, however, slid 26 per cent for April-June primarily because of the financial misconduct in India — of which about €17 million (Rs 115 crores) has already reflected in results so far this year — as well as the loss of a crucial National Football League contract in the US.
Hainer said Adidas has no plans to sell the struggling brand Reebok and that the unit would return to growth path in 2013. “I don't think it has anything to do with structure. What we were lacking in 2012 was new product initiatives,” he said.
In May, Adidas filed a police complaint with the Gurgaon police after allegedly detecting widespread irregularities in Reebok India unit that the company said could cost Rs 870 crores, to the parent company. Police are currently investigating the case.