New Adidas CEO, Kasper Rorsted, announces plans to reshape its struggling Reebok brand
Rorsted, who officially took over as the new chief executive last month, said that reshaping Reebok would cost around €30m and will involve 650 staff moving to a new location in Boston as well as cutting 150 jobs and accelerating store closures.
He admitted that Reebok’s growth and profitability were well below the group's average and said it was “time to get back to the gym and redouble our efforts on Reebok”.
Kasper Rorsted sets out his plans for Reebok to make the brand more independent
While some investors have called for Rorsted to sell Reebok, which former boss Herbert Hainer bought in 2005, he declined to comment on its future beyond the restructuring plans. It is the latest attempt to revamp the business after it successfully managed to reposition itself around Crossfit in 2013, a move that helped convince Adidas to invest in the business and try to expand it.
The reorganisation of the business means Adidas’ North American president, Mark King, will no longer be responsible for Reebok and will instead be able to focus entirely on the company’s recent US revival.
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According to data from market research firm NPD, Adidas doubled its share of the US athletic footwear market to 9% in the third quarter compared to a year ago, Nike fell slightly but still dominates with 52%.
Adidas recently reclaimed the number two spot from Under Armour in North America, however momentum has since eased in the third quarter leaving Rorsted to warn that he did not expect Adidas to reproduce the same revenue and profit growth next year.
His warning sent shares falling by around 5.9% however it is unlikely to cause alarm given slowing sales in the region for both Nike and Under Armour.
Looking ahead, Rorsted said Adidas will attempt to boost future growth by investing in its biggest store yet on New York's Fifth Avenue, which is expected to open on 1 December and the launch of a new sneaker with Houston Rockets basketball player James Harden.