Reebok drags sports giant Adidas in season

After wearing Reebok, Adidas seems to be running slower. The world’s second-largest maker of sporting goods said that due to the high costs of acquiring the company’s Reebok, the company’s fourth quarter’s “unexpected” net loss, while the full-year earnings may also be affected. According to available data, the sales prospects of Reebok in the United States this year are not optimistic.

Adidas posted a net loss of 4 million euros in the fourth quarter, compared with a net profit of 20 million euros in the same period last year, after analysts expected a profit of 5 million euros. “Reebok has indeed encountered some problems. Its number of orders is decreasing, and retailers are worried that Adidas will position itself as a low-end brand,” said Deutsche Bank analyst Omila.

In the fourth quarter, Reebok’s global sales fell 5% to US$930 million, and the number of orders fell by 22%, of which the US market experienced the largest drop, reaching 28%.

However, the upcoming 2006 World Cup may cause German sports giants to breathe. Herbert Heiner, chairman and CEO of Adidas, said that this summer's World Cup is expected to push the company's annual sales to 10 billion euros for the first time. But industry insiders also pointed out that the huge marketing expenses before and after the World Cup will devour a considerable portion of profits.

Since the Adidas acquisition of Reebok 3.8 billion US dollars, its battle with the boss Nike is also escalating. Last month, Nike accused Adidas of infringing its own shoe buffer patent rights, and Adidas also countered Nike's concealment of the actual sales of football.