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Tag: sporting

  • Adidas sells Reebok to Authentic Brands

    Adidas sells Reebok to Authentic Brands

    Authentic Brands has cemented its position as a major player in American retail after what one analyst described as a “massive acquisition” – the successful $2.456 billion bid for Reebok.

    Adidas confirmed the sale overnight after six months of negotiations with prospective bidders.

    Neil Saunders, MD of GlobalData, said Authentic Brands has proven its ability to turn around struggling brands like Aéropostale and so it will be confident that it can achieve a similar result with Reebok.

    But he warned the new owner needs to take a different approach to ensure Reebok’s future success.

    “If, under Authentic Brands, Reebok focuses less on competing with Nike and more on developing a credible brand that can be offered via its various stores and other third-party retailers it should be able to build sales. However, the market remains extremely competitive so coming up with a differentiated offer that has clear customer focus and a strong distribution strategy will be key to future success.”

    Reports emerged in May that Authentic had lodged a bid for Reebok. At the time the New York Post said the $1 billion fell far short of the $3.8 billion Adidas paid for Reebok five years ago and the $2.4 billion Adidas was thought to be seeking.

    Adidas CEO Kasper Rorsted said he believed the change in ownership would position the brand well for long-term success.

    “As for Adidas, we will continue to focus our efforts on executing our ‘Own the Game’ strategy that will enable us to grow in an attractive industry, gain market share, and create sustainable value for all of our stakeholders,” he said.

    Adidas acquired Reebok back in 2006. Saunders said the German company originally saw it as a vehicle with which to take on the might of Nike, especially in the US.

    “While Adidas did manage to restore Reebok to profitability it was far less successful in building a brand that was able to steal share and capture the hearts and minds of consumers. Part of the issue was a lack of clarity around what Adidas wanted Reebok to be. As a result, it was neither seen as the go-to brand for sporting professionals nor for those looking for athleisure fashion and style,” said Saunders.

    Adidas’ sale of Reebok for less than it paid for it – and after years of difficulty and disappointment – underlines the degree to which the brand’s equity has been eroded, he said.

    “The decision to sell should not solely be chalked up to the pandemic. Indeed, the footwear and sports apparel market has performed extremely well over the past 18 or so months.

    “However, the market is becoming much more competitive, with Nike and others doubling down on direct-to-consumer sales, brands like Lululemon eating up large slices of growth, and retailers launching a multitude of sporting own labels,” said Saunders.

    Jamie Salter, founder, chairman and CEO of Authentic Brands Group described it as “an honour” to be carrying Reebok’s legacy forward.

    “This is an important milestone for ABG, and we are committed to preserving Reebok’s integrity, innovation, and values – including its presence in bricks and mortar. We look forward to working closely with the Reebok team to build on the brand’s success.”

    The closing of the transaction is subject to customary closing conditions and is expected to occur in the first quarter of next year. Adidas intends to share the majority of the cash proceeds from the sale with its shareholders.

    When Adidas bought Reebok in 2006, the brand came along with the Rockport, CCM Hockey and Greg Norman brands, which were subsequently divested for €400 million (US$470 million at today’s exchange rate).

    In 2016 Reebok initiated a turnaround plan called ‘Muscle Up’ which saw the label significantly improve its growth and profitability prospects, according to Adidas.

    In March of this year, Adidas unveiled its 2025 ‘Own the Game’ strategy designed to significantly increase sales and profitability and build market share. As part of the process of developing that strategy, the company assessed options for Reebok, which in February led the company to opt to divest Reebok, rather than dilute its focus across two brands.

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  • Puma’s China sales slowly up

    Puma’s China sales slowly up

    After a pandemic-served beatdown last year, Puma has clawed its way to recovery. On February 24, the German sportswear giant reported that sales jumped 9 percent to 1.52 billion euros in the last three months of 2020 — a promising upswing from the 55-percent plummet in its second quarter. Overall, sales were down 1.4 percent to 5.23 billion euros for the financial year.

    This rebound was led by strong performance in the Asia Pacific, which surged 11.8 percent in the fourth quarter to 480.5 million euros, driven by mainland China. But the country alone was not enough to stop the region’s full-year sales from falling 3.2 percent compared to 2019 levels, down to 1.48 billion euros.

    Given the importance of these global markets, Puma doubled down on establishing local relevance, particularly through sports, influencers, and communication platforms. This was not only reflected in the brand’s return to basketball and collaboration with grammy-winning artist J. Cole, but also its increasing partnerships with popular Chinese talents, including actors Yang Yang, Li Xian, and Liu Haoran as well as supermodel Liu Wen.

    The brand further grew its China footprint by leveraging the country’s biggest shopping holiday, Singles’ Day, logging 2.8 million orders and 80 million euros in revenue over the week. And already, Puma is making good on its goal to design more products specific to the market, partnering with Hong Kong-based artist Michael Lau, “The Godfather of Toy Figures,” to ring in the new year.

    That said, all Puma products did well in the fourth quarter, with apparel growing 15.7 percent, accessories up 7.3 percent, and footwear increasing 3.8 percent.

    “We clearly see a running boom in the whole world,” CEO Bjorn Gulden told journalists, adding that orders for 2021 are up almost 30 percent compared to last year, especially for running products.

    This tracks with Puma’s Q3 results, which showed strong demand for performance-related products, especially for individual sports like running or hiking. With the healthy living trend expected to persist after the pandemic, the sporting goods sector is positioned to weather the crisis better than most.

    But Puma isn’t out of the storm just yet. With almost half of its retail stores in Europe still closed and other markets operating under significant restrictions, the apparel maker is bracing for impact in the first half of 2021. However, the brand is also confident that its quick Q4 recovery and strong order book — along with global efforts to combat the virus — will lead to a moderate sales bump later this year.

    “I am convinced that 2021 will be a better year for us than 2020,” Gulden said. Knock on wood.

  • Adidas expects strong rebound, takes Reebok hit

    Adidas expects strong rebound, takes Reebok hit

    German sportswear maker Adidas AG predicted a strong rebound in sales in 2021, particularly in China, the rest of Asia, and Latin America, although its profits will be trimmed by costs associated with divesting the Reebok brand.

    The outlook for 2021 is part of a five-year strategy that Adidas is due to present on Wednesday.

    Fourth-quarter sales rose a currency-neutral 1 percent to €5.55 billion ($6.59 billion), while operating profit slipped slightly to €225 million, ahead of the €5.47 billion and €202 million expected by analysts.

    About half of its stores were closed in Europe in the period, but online sales grew 43 percent.

    Now that more than 95 percent of its stores have reopened after lockdowns, Adidas expects sales growth at a mid-to high-teens rate on a currency-neutral basis in 2021, rising by up to 30 percent in greater China, the rest of Asia, and Latin America.

    Rival Puma said last month it expects the financial impact from lockdowns to last well into the second quarter but believes global growth in running should help to support a strong improvement after that.

    As part of its new strategy, Adidas will manage greater China as a separate market from the rest of Asia, and has integrated Europe, Russia and emerging markets into a new Europe, Middle East and Africa (EMEA) region.

    For EMEA, Adidas expects sales growth in the mid-to high-teens, but only a high-single-digit rate in North America.

    Net income from continuing operating is set to rise to between €1.25 billion and €1.45 billion.

    However, Adidas said it expects a hit of around €250 million to the operating profit level and €200 million to net income due to costs to set up Reebok as a stand-alone company, with a third of that in 2022, but none in 2023.

    Adidas said last month it plans to sell or spin-off the underperforming brand, 15 years after it bought the U.S. fitness label to help compete with arch-rival Nike Inc .

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  • Decathlon store replaces old Metro at Singapore’s Orchard Rd

    Decathlon store replaces old Metro at Singapore’s Orchard Rd

    Decathlon Singapore is opening a new experience store in Orchard Rd, the brand’s fifth experience store in the city.

    Located at the Centrepoint shopping mall, Decathlon Orchard spans two floors, occupying a 3200sqm area. The store will feature some 5000 products spanning more than 50 sports.

    In the new Decathlon Singapore experience store, customers will be able to test products before purchasing with in-store “innovative solutions”. According to the company, the store will feature several interactive concepts including virtual reality test zones and free sport events

    Based on the photos the brand has shared on their social media channels, the fit-out process is still underway, but the store is scheduled to open on September 12.

    The new Decathlon store location takes up space previously leased to the Metro department store.

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  • Puma focuses on survival and recovery as sales goes down

    Puma focuses on survival and recovery as sales goes down

    Outlining a survival strategy for the coronavirus pandemic, Puma says its global operations are split into three phases: Survive, Recover and Grow Again. The sportswear retailer and manufacturer reported a 1.3-per-cent decrease in first-quarter sales to €1.3 billion, with strong growth during the first 10 weeks undermined by the widening impact of the pandemic. Net earnings fell 61.6 percent to €36.2 million.

    However, in the current quarter, global revenue is running at about 50 percent of normal levels.

    CEO Bjorn Gulden said the year started very well with a great order book, strong sell-through, and record retail numbers. “Then, at the end of January, the Covid-19 virus hit China. Since then we have worked to minimize the damage short-term without hindering the mid-term momentum of Puma.

    “The different markets are at different stages. Asia Pacific with China and South Korea is recovering. Europe is hopefully also moving towards recovery while the Americas, with almost all stores closed, are in the middle of the Survive phase.”

    Describing the first quarter as “difficult,” he believed Puma had done “a decent job”.

    “The second quarter will financially be even worse with more than 50 percent of global sports and sports lifestyle space being closed. We are mitigating the impact on our revenues wherever we can by focusing on e-commerce and the markets that are opening up again. We are working with our factories and other partners in our supply chain to minimize the damage, assure timely deliveries, avoid excess stock as much as possible and to find fair solutions for all of us.”

    Puma has secured a €900 million revolving credit facility to tide it over the crisis and has asked all partners to get additional financing to ensure operations can continue.

    “The goal is to get through this without any Puma employee losing their job. To survive this crisis in cooperation with all our partners such as retailers, suppliers, landlords, financial institutions, authorities, investors, and customers is crucial. We can only get through this together. So far, cooperation with most of them has been great.”

    Puma’s gross profit margin declined by 140 basis points to 47.6 percent, during the first quarter, impacted by negative currency valuation, lower China sales, inventory devaluation, and return provisions.

    The almost complete shutdown of China retail from the last week of January caused the most damage to Puma’s sales and profitability during the quarter.

    “Over the [ensuing] six weeks, the whole business in China, except for e-commerce, basically disappeared,” the company said in a statement. “As China started to recover in mid-March, Covid-19 had started to spread globally and by the end of the month basically 80 percent of Puma’s retail doors, both owned and operated as well as partner stores, we’re closed.”

    A significant challenge for Puma going forward is the inventory levels resulting from the lack of trading. The total inventory value is up 24.5 percent to €1.13 billion.

    However, the company has struck a positive note on its mid-term prospects. Sales in China and South Korea are already improving and the first stores are reopening in some European markets. Offsetting that is the almost full shutdown in the Americas. While e-commerce sales are rising, it is not at a pace that can compensate “in any way” for the declining sales across other channels, the company said.

    While short-term prospects are not bright, the company said it is committed to managing the crisis in the short term “without hindering the midterm momentum”.

    “This year is, and will continue to be, a difficult year, where the goal for Puma is to survive, recover and then emerge stronger with growth again. Different markets will go through these phases at different times and execution, therefore, must be very locally driven,” the company said.

    Puma expects all markets to recover by the year’s end and to return to growth next year.

    “The industry is expected to be in a strong position after the crisis. People have already now started doing more sports wherever it is possible, even under difficult circumstances. There are many indications that health and sports will be even more important than before the crisis.”

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  • Peu a Peu opens new flagship in Hangzhou

    Peu a Peu opens new flagship in Hangzhou

    Hangzhou-based Chinese design firm So Studio has created a retail space for sporting goods brand Peu a Peu featuring a system of pulleys, steel racks, and large metallic spheres.

    The store’s 70sqm interior, which was recently celebrated in a Designboom report, is inspired by the movement and interaction observed on a sports field as well as contemporary pop artist Jeff Koons’ balloon series.

    Peu a Peu, owned by JNBY, a designer brand focused on contemporary apparel, footwear and accessories.

    The retail space shows off metal finishes alongside grey coloured floors and walls, attempting to create a futuristic and industrial atmosphere. The detachable racks serve to divide up the room as well as supporting the metallic spheres that move around the shop area.

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  • Global athleisure wear market expect strong growth numbers

    Global athleisure wear market expect strong growth numbers

    Consumer desire for a multifunctional wardrobe is set to continue driving the global athleisure wear market, according to data and analytics research group GlobalData.

    Over the last two years, the athleisure trend has risen as demand for comfort, performance and style has driven the need for a multifunctional wardrobe. 68 percent of consumers who purchased sports clothing for exercise also wore such items for eating out or shopping.

    The firm forecasts that the global athleisure wear market will rise 9 percent this year and will continue to outperform the total clothing and footwear market beyond their 2023 forecast period.

    “Over the next five years, the sportswear market will be one of the leading retail sectors,” said GlobalData principal retail analyst Honor Strachan. “Activewear brands are selling consumers a lifestyle, and fashion retailers are leveraging their style credentials to produce affordable fitness ranges to sell alongside core casual and formalwear collections.”

    In the UK, 20 percent of consumers purchased sports clothing specifically for leisure activities and free time, not to exercise in.

    “This willingness to pair sportswear with core wardrobe pieces has opened sportswear brands up to new audiences and allowed them to diversify into new product areas,” said Strachan, “boosting their share of the global clothing & footwear market.”

    While fashion trends and influencers have driven the success of the global athleisure wear market , the sustainability movement will continue to support the desire for a multifunctional wardrobe. Consumers are purchasing more consciously and reducing spend on fast fashion, playing into the hands of those retailers and brands that can showcase the versatility of their items, as well as the durability and quality.

    Moreover, increasing consumer appetite for comfort has also fuelled sales of activewear and trainers with brands utilizing their technical expertise in ensuring products offer freedom of movement, aid temperature and sweat control, shape the body and provide support. These qualities have filtered into consumers’ everyday wear and not just when they are at the gym.

    Adoption of the athleisure trend in much of Asia has been slower, so international and national brands are leveraging social media, third-party selling platforms and brand ambassadors to sell the appeal of having a sports and street-influenced wardrobe.

    “Chinese brand Li-Ning has exploited its credentials as a sports manufacturer to produce high fashion casualwear which can be worn for training or leisure,” concluded Strachan, “while Nike’s instore and online outfit styling provides inspiration on how to wear pieces for multiple uses encouraging consumers in China, Taiwan, South Korea, and Japan to incorporate sportswear into their everyday wardrobes.”

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  • Li Ning profit up as restructure pays off

    Li Ning profit up as restructure pays off

    Chinese sportswear retailer Li Ning reaped the benefits of a restructure in the first half of this year, with net profit attributable to shareholders by 196 per cent to RMB795 million (US$113 million).

    For the last two years, Li Ning has been investing in its retail business, upgrading stores, refining its product offer and reorganising its supply chain and other back-of-house operations.

    More recently it has launched a new retail brand Li Ning Young, which has added 79 more stores so far this year, taking the network to 872.

    The company said its margin has increased from 5.7 per cent during the first half of last year to 12.7 per cent in the same period this year.

    While the huge profit boost was partly due to non-operational factors, the regular business still posted a surplus up 109 per cent to RMB561 million, and net profit margin was 9 per cent.

    Group sales revenue rose 33 per cent to RMB6.255 billion ($889.5 million), with same-store sales growing by the mid-teens.

    The company said it was focused on strengthening its brand and product competitiveness during the first half, especially its five core categories: basketball, running, training, badminton and sports casual.

    “We set professionalism and functionalism as the foundation, and consolidated the brand’s DNA of professional sports,” the company said in an earnings statement.

    As at June 30, Li Ning had 6422 points of sale, a net increase of 112 over three months.

    The network of conventional stores, flagship stores, China Li-Ning stores, factory outlets and multi-brand stores under its brands amounted to 7294 as of June 30, representing a net increase of 157 since December 31.

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  • Yue Yuen to move more production into SE Asia as trade war continues

    Yue Yuen to move more production into SE Asia as trade war continues

    Hong Kong-listed footwear manufacturer Yue Yuen Industries says it expects to move more of its manufacturing from China to other Southeast Asia countries as the US-China trade conflict shows no sign of abating.

    “The US government’s plans to implement a 10-per-cent tariff on US$300 billion of exports from the PRC, which will include footwear, could further accelerate the pace of capacity migration from the PRC to Southeast Asia,” said chairman Chu Chin Lu in the management review of the company’s half-year results.

    Vietnam accounted for 45 percent of Yue Yuen’s shipments in the first half of this year and Indonesia for 38 percent. Mainland China accounts for 13 percent

    “The group will continue to migrate its manufacturing capacity from the PRC to Southeast Asia, while being mindful of the labor supply situation in countries where we operate, especially in Vietnam,” said Lu, who is also worried that continued uncertainty surrounding both the US and China’s future trade policies may impact on consumer sentiment.

    The group’s manufacturing business produced 163.2 million pairs of shoes in the six months to June 30, an increase of 2.7 percent year on year.

    The average selling price per pair was US$16.49, up by 2.2 percent.

    Sales through the company’s listed subsidiary Pou Sheng, increased by 12.3 percent returning 1.968 billion to Yue Yuen. In RMB terms (Pou Sheng’s reporting currency), revenue during the first half of increased by 19.4 percent.

    Yue Yuen reported group revenue to $5.071 billion for the half-year, up by 6.3 percent with profit attributable to shareholders up by 10.5 percent to US$165.9 million. Non-recurring profit was boosted by $19.1 million from the disposal of Texas Clothing Holding Corp.

    Lu said the group faced several headwinds during the half other than the trade war.

    “The group continued to face operational disruptions and challenges resulting from brand customers’ demands for more flexible procurement approaches and changing consumer preferences. This resulted in more volatile monthly sales orders, uneven capacity utilization, and lower production efficiency, alongside the increased complexity and versatility of product portfolios during the period,” he said.

    “To address these challenges and sustain our long-term position, we have continued to ramp-up the implementation of automated production and enhance our operating efficiency through process re-engineering to provide differentiated value-added and one-stop OEM/ODM services to customers with whom we have maintained long-term relationships. We also furthered our efforts to foster environmental sustainability, eyeing at the long-term growth viability of our business.”

    The group’s athletic footwear category outperformed all other categories as a result of the global athleisure trend, accounting for 78.1 percent of footwear manufacturing revenue in the first half of the year. Casual and outdoor shoes accounted for 19.7 percent of footwear manufacturing revenue.

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