Reebok’s sales declined by 4.3 percent to €449 million, a fall of 8.6 percent in constant currencies for the quarter. The situation at the end of the six months motivated a downgrade in the group’s forecast for Reebok’s sales in the full year, predicting a low- to mid-single-digit sales decline instead of stable sales.
This was chiefly due to the fact that Reebok’s sales in emerging markets had not grown as fast as expected. Sales in China proved particularly weak as Reebok rationalized its business there, admitting that it may have opened mono-brand stores too fast in the last two years. And growth in Latin America, where Reebok tightened its grip on its distribution in large markets last year, proved more sluggish than expected.
Adidas Group managers added that it would be unrealistic to expect any sort of return to profitability for Reebok this year. Nonetheless, they spotted signs that some of the investments made in the last years to re-position the brand were paying off. Reebok implemented drastic clean-up measures in the last years, which involved large volumes of sales at reduced prices. Since these measures no longer apply on the same scale this year, sales of Reebok footwear were down in volume for the quarter, but average selling prices increased at a double-digit level. The company has finished setting up its new distribution strategy and entirely eliminated the entry price level of $29.99 on Classics.
At the core of the Reebok brand’s strategy, sales of women’s training products were up by nearly 50 percent for the first half, and sales of women’s lifestyle products have stabilized. Meanwhile, Reebok has become a prominent brand in the muscle toning category, which some trend-spotters are comparing to aerobics in the 1980s.
The group’s management was also upbeat about TaylorMade-Adidas Golf, which saw its sales increase by 12.6 percent to €255 million in the quarter, equivalent to an increase of 2.8 percent in constant currencies. This was driven by the purchase last year of Ashworth, but excluding that, currency-neutral sales of TMAG were down by only 7 percent, which is a relatively small drop compared with the state of the global golf market.
The golf market is estimated to be down in the high teens so far this year, they said, indicating that TMAG is gaining market share. The golf business of the Adidas group saw its sales increase in all regions with the exception of Asia, pointing to a fall in Japanese sales. Managers said that it had reached record high market shares in the U.S., by far the world’s largest golf market, in both metalwoods and irons.
Furthermore, TMAG has reacted swiftly to adjust to the market situation. Its inventories were down by 26 percent at the end of June compared with the end of the previous quarter, as TMAG quickly got rid of non-core products and took measures to reduce lead times.
