Adidas sees fresh start for Reebok India in 2013
German sportswear maker Adidas said it does not expect any major deviation from the 70 million euros ($86.1 million) in restructuring charges it has already flagged as the cost of dealing with "commercial irregularities" in India.business Updated: Aug 02, 2012 23:59 IST
German sportswear maker Adidas said it does not expect any major deviation from the 70 million euros ($86.1 million) in restructuring charges it has already flagged as the cost of dealing with "commercial 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," chief executive Herbert Hainer said on Thursday, adding that around 17 million euros was already reflected in results so far this year.
Adidas had said in May that it would cut the number of its Reebok stores in India by about one-third.
The company has around 1,000 Reebok franchise stores in India.
However, Rainer said there are no plans to sell off Reebok.
Reebok India had lodged a police complaint against two former top executives, MD Subhinder Singh Prem and COO Vishnu Bhagat, accusing them of fraud that had led the company to lose Rs 870 crore.
Prem subsequently sued the company for Rs 15 crore in damages.
Both companies have also come under investigation by the serious frauds investigation office (SFIO).
Rainer said that sales for Adidas, which is the sportswear sponsor of the London Olympic Games, were up 24% in the UK this year, enabling it to close the gap on market leader Nike.
Its net earnings totalled 165 million euros ($203 million) in the April-June period, up from 140 million euros a year earlier, an increase of nearly 18%. Revenue was up to 3.5 billion euros from 3.1 billion euros, nearly 15%.
"I don't think it has anything to do with structure. What we were lacking in 2012 was new product initiatives, he said.
Reebok brand saw sales in the first three months dipped 7% on a currency neutral basis.