Reebok India, owned by German sportswear major Adidas, will submit an application with the Department of Industrial Policy & Promotion (DIPP) for setting up fully-owned flagship stores in the country. The application is expected to be made within this year.
(Adidas bought the US-based Reebok in 2006.)
Parent company Adidas received clearances for setting up 100 per cent company-owned stores in the country. But, this does not include Reebok. Adidas plans to open large stores in India, 2017 onwards, like it has in other major markets.
According to Dave Thomas, Managing Director, Adidas Group India, the company has already got the necessary approvals from the Board and will “soon” apply to the DIPP.
The move comes nearly four years after Reebok’s India operations were hit by a ₹870-crore accounting fraud.
“We will apply to the DIPP for setting up fully-owned flagship stores in India,” Thomas told BusinessLine during an interview. “It (application before DIPP) is just a matter of weeks,” he added.
India had, in January 2012, allowed 100 per cent FDI in single-brand retail but with riders on local sourcing.
Adidas (together with Reebok) has a 40 per cent market share in the sportswear category in the country and competes with the likes of Nike and Puma. While Puma already has a retail licence (it can set up company owned stores); Nike does not have one (it sells through franchises).
Reebok, Thomas said, is scripting a turnaround since 2012. Losses have come down by about 20 per cent in March 2015 over the year-ago period. Net loss (for Reebok India Co) stood at ₹84 crore (₹105 crore), while turnover stood at ₹332 crore.
‘Fitness brand’Reebok has around 250 stores.
Growth, Thomas said, is “being seen” after a concerted repositioning attempt as a “fitness brand”.
“When I came to India (2014), I saw Reebok as a brand that was trying to have a foot in both camps…. a sports brand with a little bit of fitness. So we went all the way to reposition it as a fitness brand,” he said.
The brand was not hit despite the crisis. An example can be gauged from the fact that Reebok is one-third the size of Adidas in India. In places like Japan and also globally, it is one ninth or similar.
Growth strategyAccording to Thomas, the first “couple of years” (since 2012) were spent to “tighten up controls”. Unprofitable shops were closed down.
“We suffered in the past from trying to do too much, opened too many stores which didn’t have the right catchments,” he said.
The next two years saw growth come in with “fewer and better” partners.
At the group level, the number of partners (franchisees) has come down from 250 to 80.