Adidas Drops Golf Handicap as Rorsted Chases a Cooler CrowdBy and
KPS Capital Partners to buy golf brands for $425 million
CEO Rorsted seeking to focus on Adidas and Reebok sport brands
Seven months into his reign as Adidas AG supremo, Kasper Rorsted has removed one of the main distractions to his push for dominance on soccer fields and in street fashion.
The German sporting-goods maker said late Wednesday it agreed to sell its TaylorMade golf unit to KPS Capital Partners LP for $425 million, ending a yearlong search for a buyer that predated Rorsted’s October appointment as chief executive officer.
Selling the golf unit, which includes the Adams and Ashworth brands, was among the first priorities for Rorsted as he seeks to focus the company on its main brands and to outstrip growth at archrival Nike Inc. A declining golf market weighed on Adidas’s performance for years, though sales have started to turn the corner, enabling the company to find a buyer.
“Adidas is not cash strapped, but its current momentum requires all management attention on its core brands Adidas and Reebok,” Juergen Kolb, an analyst at KeplerCheuvreux, said in a note.
Adidas shares fell 0.7 percent to 179.35 euros at 10:42 a.m. in Frankfurt, having hit a record high earlier in the year after the company raised its sales and earnings forecasts.
The golf unit generated about $1 billion in annual sales last year but has been unprofitable in the recent past. Adidas got into the sport when it bought French ski and skate company Salomon in 1997, though lately younger consumers have stayed away from the game, and it isn’t popular in emerging markets like China and India.
Former CEO Herbert Hainer started the search for a buyer early last year with a target to conclude a deal by the end of 2016. The purchase by KPS doesn’t include Adidas-branded golf shoes and clothing -- about 40 percent of the unit.
For Rorsted, the next challenge for will be to find a purchaser of the smaller CCM hockey business. That sale process is still in its initial stages though there are already several interested parties, the CEO told shareholders at Adidas’s annual general meeting in Fuerth, Germany, on Thursday.
The divestments will allow Rorsted to focus on his main goal of capitalizing on the trend for retro and “athleisure” fashions worn off the sporting grounds to expand sales of the company’s casual sports shoes.
Adidas also reaffirmed Wednesday its long term goal of raising sales to between 25 billion euros ($27.2 billion) and 27 billion euros by 2020, from 19.3 billion euros last year.