Dive Brief:

• Adidas has concluded its strategic assessment for Reebok with an announced plan to unload the smaller brand.
• In a press release, the company offered few details about a possible sale or spin off but said it has now "decided to begin a formal process aimed at divesting Reebok." 
• Explaining the decision, Adidas CEO Kasper Rorsted said in a statement that "we have come to the conclusion that Reebok and adidas will be able to significantly better realize their growth potential independently of each other."

Dive Insight:

Adidas first openly teased the idea of putting Reebok on the market in December, after reports that the sports apparel and footwear giant might sell the brand, which Adidas acquired in 2006.

Since 2016, which followed a year of anemic sales growth for Reebok, the company has been working to re-energize the brand and its business performance. In announcing its divestment plans, Adidas declared victory in that effort. "As a result of the successful implementation of the turnaround plan 'Muscle Up' initiated in 2016, the brand was able to significantly improve its growth and profitability prospects, laying the foundation to unleash its full potential in the highly attractive global sporting goods market," the company said in the release.

Reebok returned to positive sales growth in 2019, and its profitability improved as well. Sales, however, fell again in 2020 amid the coronavirus pandemic. The Adidas brand, which in past years has brought in more than 10 times the sales than Reebok, fell as well but by a smaller margin than Reebok.

Reebok's turnaround efforts have included a revamped digital strategy, which featured a new website and a more personalized e-commerce experience, as well as efforts to make the site more welcoming to women. The brand also reimagined its loyalty program around data and a user-friendly experience.

Reebok's future is still an open question. An unnamed source told Reuters Reebok could be worth $1.2 billion. One possible acquirer, according to Women's Wear Daily, is the fast-growing licensing conglomerate Authentic Brands Group.

In fact, for more than a year and a half, some have speculated that the ongoing interest at Authentic Brands in Reebok could spur Adidas to sell the brand. Both Authentic Brands CEO Jamie Salter and one of its largest investors, four-time NBA champion Shaquille O'Neal, have both publicly said they are interested in running Reebok. 

As for Adidas, the company said it will focus "further strengthening the leading position of the adidas brand in the global sporting goods market." It plans to release more details in March on its strategic business plans over the next four years. Rorsted said that the company would "work diligently in the coming months to ensure a successful future for the Reebok brand and the team behind it."