adidas predator pulse Adidas seeks buyer for golf businesses to focus on shoes
BERLIN Adidas said it would aim to sell the bulk of its loss making golf business to focus on shoes and clothing, after its core Adidas brand reported strong quarterly sales, particularly in the United States.
The German sportswear firm, which launched a review of its golf unit last August, said on Wednesday it would focus on selling golf shoes and clothing under the Adidas label and would seek to sell the TaylorMade, Adams and Ashworth brands.
After peaking around 2000 when Tiger Woods was in his prime, the number of people playing golf in the United States, which accounts for half the global golf market, has fallen sharply.
“We expect this will remove the earnings volatility of an equipment business with higher fixed costs and lower sales visibility than traditional sportswear,” said UBS analysts, who have a “neutral” rating on Adidas shares.
Adidas bought TaylorMade in 1997 as part of its $1.4 billion acquisition of French skiing label Salomon, developing it into the world’s biggest golf supplier. It bought Ashworth in 2008 and Adams four years later.
Analysts predict Adidas might draw interest from firms in Asia or a financial investor, rather than a rival such as Nike , Puma, Under Armour or Callaway Golf , which might be wary of increasing exposure to golf.
Adidas made the announcement as it reported a 31 percent jump in quarterly sales of its core brand in North America, as a hike in marketing spend helped it to gain ground on rivals.
Adidas shares, which soared to an all time high last week when it released strong headline quarterly figures and raised its 2016 outlook, were down 1.8 percent at 1000 GMT, compared with a 0.7 percent weaker German blue chip index. market behind Nike and Under Armour, Adidas has made a big push in North American sports and has also benefited from partnerships with celebrities such as Kanye West. sports gear sales up 50 percent in the quarter. consumer starting to acknowledge us as an authentic sports performance brand,” he said.
Total Adidas brand sales rose 26 percent, far outperforming the 6 percent of its Reebok fitness label, which some investors hope might also be put up for sale after Hainer is replaced as CEO by former Henkel boss Kasper Rorsted in October.
Hainer reiterated his desire to hang on to Reebok on Wednesday, pointing to a booming market for fitness.
TaylorMade sales returned to growth in the quarter, rising 6 percent, while Adidas golf sales grew 3 percent. But that failed to make up for double digit declines at Ashworth and Adams and Hainer said the unit was still making a small loss overall.
In 2015, golf unit sales fell a currency neutral 13 percent to 902 million euros ($1.04 billion) about 5.3 percent of group sales with the Adidas part of the business that it does not want to sell accounting for about 40 percent of the total.