German sportswear maker Adidas today said it plans to shut down one-third of its 900 Reebok stores in India as a part of an aggressive restructuring strategy for the brand in the country.
“The implementation of new commercial initiatives and terms could result in a reduction of our Reebok franchise store base by about one-third,as we focus on maximising our future returns in the market,” Adidas Group CEO Herbert Hainer said while announcing the group’s earnings in Germany today.
He said under the new leadership team which was announced at the end of March,the group will accelerate and more aggressively restructure the business activities in India.
Adidas,which on Monday had disclosed ‘commercial irregularities’ to the tune of Euro 125 million in Reebok India,said “the goal is to begin 2013 with a clean sheet in this market”.
Hainer,however,did not elaborate on the kind of commercial irregularities found in Reebok India.
“Due to the sensitivity of the ongoing investigation,we cannot comment further than we already did on Monday,” he said.
The restructuring could lead to additional one-time charges of an estimated Euro 70 million in the remaining quarters of 2012,he said.
Meanwhile,Adidas India’s former chief Subhinder Singh Prem has initiated legal action against the global giant for “defamation and unfair termination” of his services.
“I have sent legal notices to Adidas,one for defamation and another one for termination of my services in the manner they have,” Singh said,while refuting allegations of any financial irregularities on his part.
He said Adidas has not yet responded to the notices.
Adidas did not comment on the development.
The Group today reported a 17 per cent increase in revenue during the first quarter of 2012 at Euro 3.824 billion from Euro 3.273 billion in 2011.
The group’s net income increased to Euro 289 million in the first quarter of 2012 from Euro 209 million in 2011.