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Adidas Considering Sale of Struggling Reebok Brand; Shares Gain

Adidas, which bought Reebok in 2006 for $3.8 billion but wrote its value down to just under $1 billion last year, will decide the fate of the struggling brand by March 10.

Adidas AG  (ADDYY)  said Monday that it will consider selling its struggling Reebok brand as it looks to strategic alternatives that could close the gap on sports apparel rival Nike Inc.  (NKE) - Get NIKE, Inc. Class B Report

Adidas said a decision on the future of Reebok, which it purchased in 2006 for $3.8 billion, will be made by March 10, with options including the outright sale of the group or keeping it within the broader Adidas stable. Adidas wrote down the value of Reebok to just under $1 billion last year, as sales of the brand struggled.

Germany's Manager magazin reported in October that V.F. Corporation  (VFC) - Get V.F. Corporation Report and China-based Anta Sports could be interested in purchasing the Reebok assets. 

"As a result of the successful implementation of the turnaround plan "Muscle Up" initiated in 2016, the brand was able to significantly improve its profitability and returned to the profit zone in 2018, two years earlier than initially planned under "Muscle Up"," Adidas said in a statement. "In 2019, Reebok also returned to the growth path. Driven by double-digit growth in its home market North America, global Reebok sales increased by 2% on a currency-neutral basis compared to the previous year."

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Adidas' German-listed shares were marked 1.55% higher in late-morning trading in Frankfurt following news of the Reebok option to change hands at €287.00 each, extending their six-month gain to around 24.3%.

Nike shares, however, have risen around 40% over the same time period, thanks in part to an 82% surge in digital sales - that now comprise around a third of the overall total, a figure Nike didn't expect until at least 2023.

Looking into the whole of its 2021 fiscal year, Nike said it sees revenues rising in the "high single-digits to low double-digit" range, a much better forecast than the prevailing Street forecast of a 6% growth rate.