Why Now Might Be A Good Time For Adidas To Sell Its Reebok Brand
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Why Now Might Be A Good Time For Adidas To Sell Its Reebok Brand

By Teresa Rivas
Wed, Dec 16, 2020 12:24amGrey Clock 2 min

Adidas might sell its struggling Reebok brand, potentially taking advantage of the strength of athletic goods, which have been a bright spot in apparel during the Covid-19 crisis.

On Monday, Adidas (ticker: ADDYY) said it was reviewing Reebok’s future, which could include a sale. The news comes ahead of the company’s five-year blueprint, which it is set to present in March, although the German athletic giant said it could ultimately decide to keep the brand.

Adidas purchased Reebok for $3.6 billion (A$4.76 billion) in 2006, as it looked to extend its reach in the U.S. But the process wasn’t a smooth one, and Adidas Chief Executive Kasper Rørsted announced a turnaround plan for Reebok shortly after he took the helm in 2016. On the one hand, that has been a success in that Reebok once again became profitable, two years ahead of schedule, and last year increased U.S. sales by double digits.

In another sense, though, Reebok remains a weak point in Adidas’s portfolio. It has lagged behind during the pandemic, with third-quarter sales falling 12.3%, nearly double the flagship brand’s 6.7% decline. Some analysts estimate that Reebok could sell for as little as $2.3 billion (A$3.04 billion), well under what Adidas paid for it.

While many investors have called on Adidas to divest itself of the brand before, now could be a particularly auspicious time for such a move. The pandemic has decimated demand for clothing and accessories in general, as people work and learn at home, but athleisure has bucked that trend.

Companies such as Nike (NKE) and Lululemon Athletica (LULU) have seen sales shrink much less dramatically than peers this year, and have been rewarded with rallies of 34.5% and 52%, respectively. Partner and third-party retailers, including Foot Locker (FL) and Nordstrom (JWN), have highlighted strength in fitness categories, as well, in recent earnings reports.

Athleisure isn’t a new trend, but consumers’ renewed focus on health and comfort during Covid has been a major tailwind. That has led for renewed calls for other companies to sell their outperforming fitness-focused labels, such as Gap’s (GPS) Athleta, although Gap said it plans to hold on to the brand.

That means that if Adidas were to sell Reebok in the near future, it could fetch a higher price, especially if it can continue to show improvement throughout the holiday season.

That would be welcome news for the stock. Compared with Nike and Lululemon, Adidas hasn’t done as well. Its American depositary receipts are up just over 7% year to date, and the European shares have been laggards.



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The Top 10 highest paid CEOs of the ASX 200 revealed

Along with pay rates, the latest report from the ACSI shows bonuses are no longer based on exceptional results

By Bronwyn Allen
Tue, Jul 23, 2024 2 min

The CEOs of the ASX 200 were paid a little less in FY23 compared to the year before, but bonuses appear to have become the norm rather than a reward for outstanding results, according to the Australia Council of Superannuation Investors (ACSI). ACSI has released its 23rd annual report documenting the CEOs’ realised pay, which combines base salaries, bonuses and other incentives.

The highest-paid CEO among Australian-domiciled ASX 200 companies in FY23 was Greg Goodman of Goodman Group, with realised pay of $27.34 million. Goodman Group is the ASX 200’s largest real estate investment trust (REIT) with a global portfolio of $80.5 billion in assets. The highest-paid CEO among foreign-domiciled ASX 200 companies was Mick Farrell of ResMed with realised pay of $47.58 million. ResMed manufactures CPAP machines to treat sleep apnoea.

The realised pay for the CEOs of the largest 100 companies by market capitalisation fell marginally from a median of $3.93 million in FY22 to $3.87 million in FY23. This is the lowest median in the 10 years since ACSI began basing its report on realised pay data. The median realised pay for the CEOs of the next largest 100 companies also fell from $2.1million to $1.95 million.

However, 192 of the ASX 200 CEOs took home a bonus, and Ed John, ACSI’s executive manager of stewardship, is concerned that bonuses are becoming “a given”.

“At a time when companies are focused on productivity and performance, it is critical that bonuses are only paid for exceptional outcomes,” Mr John said. He added that boards should set performance thresholds for CEO bonuses at appropriate levels.

ACSI said the slightly lower median realised pay of ASX 200 CEOs indicated greater scrutiny from shareholders was having an impact. There was a record 41 strike votes against executive pay at ASX 300 annual general meetings (AGMs) in 2023. This indicated an increasing number of shareholders were feeling unhappy with the executive pay levels at the companies in which they were invested.

A strike vote means 25 percent or more of shareholders voted against a company’s remuneration report. If a second strike vote is recorded at the next AGM, shareholders can vote to force the directors to stand for re-election.

10 highest-paid ASX 200 CEOs in FY23

1. Mick Farrell, ResMed, $47.58 million*
2. Robert Thomson, News Corporation, $41.53 million*
3. Greg Goodman, Goodman Group, $27.34 million
4. Shemara Wikramanayake, Macquarie Group, $25.32 million
5. Mike Henry, BHP Group, $19.68 million
6. Matt Comyn, Commonwealth Bank, $10.52 million
7. Jakob Stausholm, Rio Tinto, $10.47 million
8. Rob Scott, Wesfarmers, $9.57 million
9. Ron Delia, Amcor, $9.33 million*
10. Colin Goldschmidt, Sonic Healthcare, $8.35 million

Source: ACSI. Foreign-domiciled ASX 200 companies*

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