Adidas CFO says investors are not pushing for Reebok sale
Adidas is not facing pressure to trim its portfolio beyond the sale of footwear brand Rockport and several golf labels, despite the recent arrival of three big activist shareholders, the German sportswear group’s chief financial officer has said.
Over the course of 2015, the US investor Mason Hawkins, Belgium’s Albert Frère and the Egyptian billionaire Nassef Sawiris have all built up stakes in Adidas. Mr Hawkins and Mr Sawiris earlier this month set up a combined entity to co-invest in European companies.
Their purchases have prompted speculation that they could push for the German group to offload low-performing assets such as Reebok or the US golf brand TaylorMade.
One top 20 investor said that shareholders expect the trio to demand a role in the search for a successor to Herbert Hainer, Adidas’s longstanding chief executive, whose contract expires in 2017.
But Robin Stalker, Adidas’s chief financial officer, said that the investors had not been pushing for the group to sell assets. “I’ve never had a conversation where anyone has given me any pressure about anything,” he said in an interview with the Financial Times
Mr Stalker conceded that the company — which posted operating profits of €1.08bn from sales of €12.7bn in the first nine months of the year — had not yet met its ambition of a double digit operating margin.
But he added that Adidas as had “good discussions” with Mr Hawkins’ Southeastern Asset Management and Mr Frère’s GBL. He said the group had not yet spoken to Mr Sawiris, who has built up a stake via his investment vehicle NNS Holding.
“What has been of interest to everybody is that we have said that we are prepared to look at our portfolio. We’ve done a very good review of that,” said Mr Stalker. After selling off footwear business Rockport, Adidas indicated it might sell its Adams and Ashworth golf brands.
The group plans to decide in the first quarter of next year whether to part company with TaylorMade as well, which, like other golf brands, has been hit by a decline in the popularity of the sport. It has lost money this year.
Mr Stalker said that Adidas would make the decision based on how TaylorMade fits into its overall strategy. “We are more in soft goods and footwear than we are in hard goods. The TaylorMade part of golf is hard goods . . . If we were to decide to divest, it has to be for the right price. We don’t need to sell TaylorMade,” he said.
The arrival of the new investors comes at a critical juncture for Adidas, which in March launched a new strategy in a bid to boost profitability and close the gap on its arch-rival Nike.
A key part of the strategy is a marketing push in the US, where Adidas has been investing heavily to recover ground after losing its second place in the market to Under Armour last year.
Mr Stalker concedes that Adidas’s US business has been an “area of scepticism in some parts of our investor community” because of the company’s lack of scale in comparison to Nike.
But he said he is confident that Adidas’s offensive in the country — including signing sponsorship deals with an additional 250 American footballers and a similar number of baseball players — will bear fruit. The group will also double the number of basketball players it has under contract over the next couple of years.