A third of Reebok stores in India are to be shut, as Adidas comes to grips with “commercial irregularities” at Reebok India, the German sports gear maker said on Thursday, as it reported its first quarter results.
Adidas Route 2015 plan
There are around a thousand Reebok franchise stores across India and this figure would be reduced by a third over time as part of Adidas' Route 2015 plan for growth and as it re-examined the franchisee model, a spokesperson for Adidas said.
“What we will be doing in the coming weeks is talk to our franchise partners and move forward with it. We want it to grow and be more profitable.”
“We are absolutely committed to the Indian market,” he said, adding, “We are only restructuring the Reebok part of it, the brand Adidas will not be touched.”
This follows the company's announcement of a restructuring of its Indian business, including changes to commercial business practices earlier this week, which it warned could lead to a total one-off cost of €70 million.
In addition, the identified irregularities could result in changes to the group's consolidated results from previous years to a pre-tax maximum of €125 million.
Ex-chief sues adidas
Meanwhile, Mr Subhinder Singh Prem, former India chief of Adidas, has initiated legal action against Adidas for defamation and unfair termination of his services. He said Adidas is yet to respond to his notices.
Mr Prem was heading Reebok's business in India before he was made Managing Director of Adidas India last year, but on May 1 was replaced by Mr Claus Heckerott, Adidas Vice-President for Finance and Global Sales.
Revenues up 14%
It came as Adidas announced a strong first quarter on Thursday, with group revenues up 14 per cent year-on-year, with sales up 26 per cent in both Greater China and the rest of Asia sales.
The company did not give a separate figure for India.