Sighting “commercial irregularities” as a reason behind itsbad start this year, Adidas, the German sport’s giant is planning to slash down one-third of the 1,000 Reebok stores in India. "Although Reebok has some challenges to overcome in Western Europe this year and as retailers currently focus on the major sporting events, we nevertheless continue to see good progress in most other regions," said Herbert Hainer, Chief Executive, Adidas. He also stated that the irregularities, could cost Adidas up to €70 million, which is $92 million (Rs 492 crores).
The restructuring strategy has come about after the Adidas group witnessed a slump in Reebok sales that went down by 7 per cent in the first quarter of this financial year. While the Adidas group on the whole has achieved good returns for the quarter. Hainer says, "There is definitely no further restructuring necessary as we do believe the underlying business is good, going in the right direction.” He therefore, confirmed that brand still has a strong market base in the country.
Meanhwile, Adidas’ shares went up 1 per cent and sales by €3.8 billion (Rs 267 crores), on Monday in China, thereby generating a profit of 409 million for the company surpassing the group’s expectations. Beating its rivals like Puma and Nike in the Chinese market, Adidas is optimistic about its future in China as Haine declared, “We definitely do believe that our momentum in China is great, that it will continue and we foresee double digit sales growth for the years to come."
Haine is also looking forward to the sales that the Champions’ League final soccer event would bring in for the brand. Adidas is anticipating the revenue from the event to exceed its annual target of €1.5 billion as it is the kit supplier to both Bayern Munich and Chelsea teams which will be playing against each other at the soccer final. The final will be taking place on May 19 at Munich. The group is also counting upon June’s Euro 2012 soccer tournaments to be hosted by Poland and Ukraine.
Further ahead, Adidas will be disclosing the status of the current issue it is resolving in India during the half year results in August 2012.