Thursday, 13 June 2013

Reebok plans to moderate expansion for profitability

Sports goods major Reebok is now planning to tread carefully as it seeks to unleash its second phase of restructuring in the country after incurring significant losses due to financial irregularities at its India unit.

"We are definitely being more cautious," said Erick Haskell, the managing director of parent brand Adidas, who assumed office in January.
In an attempt to ensure profitability, the brand is planning to moderate its pace of expansion by focusing only on select cities and towns for its store presence. As part of the restructuring process undertaken last year, Reebok has already shut down one-third of its stores in the country. "We had to rationalize this time to fix it. But now we will adopt a scientific approach on how we choose cities, store size, rentals, etc," he added.

As an outcome of financial irregularities that were unearthed at Reebok India last year, parent brand Adidas had taken a hit of 125 million euros or around Rs 870 crore to its global profits. The alleged scam had led to the sacking and arrest of the company's erstwhile brass” India head Subhinder Singh Prem and COO Vihsnu Bhagat. "From business point of view, it is behind us now. But if there are any inquiries, we will cooperate," he said.

While Haskell took over from the then managing director Claus Heckerott as the company planned to go for an overhaul of its business operations earlier this year, the brand is now also roping in a new retail head in India. In a bid to get growth back on track, the company has charted out a three-year strategy for its India unit.

"From building external capacity to sourcing capabilities, the three year plan is very comprehensive and has 12 key initiatives. We are focusing more on investment rather than on cost cutting for this market," Haskell said.
http://articles.timesofindia.indiatimes.com/2013-06-11/india/39897775_1_claus-heckerott-reebok-india-subhinder-singh-prem

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