German sports lifestyle brand Adidas expects its India sales and customer base to shrink following its restructuring.
“Revenues can even be less than half, as we want to take only customers where we can build a healthy sustainable business,” Herbert Hainer, Chief Executive, Adidas, said during a conference call after announcing third quarter results. The company also marginally scaled down its sales outlook. Earlier this year, Adidas had reduced its sales forecast for wholesale revenue following irregularities at its India operations. In April, it said it would incur a one-time cost of € 70 million in the remaining quarters on restructuring. Third-quarter net income rose 14 per cent to € 344 million compared with € 303 million in the same period a year ago. Group revenue climbed 11 per cent to € 4.17 billion .
Meanwhile, the Enforcement Directorate has begun a money laundering probe into the alleged fraud. It is also understood to be probing foreign exchange rules violation.
The Income Tax department, the Serious Fraud Investigation Office and the Economic Offences Wing of the Gurgaon police are also probing the case.
In a related development, Reebok is understood to have expressed its “dismay over the slow nature of the probe”. When contacted, the company said, “The matter is sub judice and it will be inappropriate for us to comment at this stage.”