Adidas to close down a third of Reebok stores in India
May 3, Reuters: Germany's Adidas said on Thursday it would cut the number of its Reebok stores in India by about one-third as it tackles "commercial irregularities" at the unit, an issue that has clouded a strong start to a bumper sports year.
Chief Executive Herbert Hainer said Adidas, the world's second biggest sporting goods firm, had set a "blistering pace" in the first quarter, leaving it well placed to benefit from the Euro 2012 soccer tournament and Olympic Games in London.
While the Adidas group as a whole surpassed expectations for first-quarter results, its Reebok brand saw sales in the first three months down 7 percent on a currency neutral basis.
"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," Hainer said.
The problems in India could lead to further charges of up to 70 million euros ($92 million), Hainer confirmed. The company has around 1,000 Reebok franchise stores in India.
"There is definitely no further restructuring necessary as we do believe the underlying business is good, going in the right direction," Hainer told reporters on a conference call, stressing that the problems were limited to India.
The company said it hoped to release further information on the issue at the time of half year results in August.