As of Wednesday, the day after Rory Mcllroy inked a long-term deal with TaylorMade, German-based apparel company Adidas announced the decision to exit the golf equipment industry and sell its golf brands TaylorMade, Adam Golf and Ashworth to New York-based private equity firm KPS Capital Partners for $425 million.
The evidence of the brands' sale price demonstrated that the retail golf equipment market suffers the slowest sales growth. In 2012, Adidas, the biggest sportswear manufacturer in the world, reached $1.7 billion in revenue. Eventually, four years later, Adidas' revenue was down to $500 million.
The company now intends to focus on selling its apparel and footwear. According to press release, the company will pay about half of the sale price in cash. The deal of the brands' sale is set to close in 2017.
Nike also exited golf equipment business in 2016
In 2016, Nike, which currently has a deal with Mcllroy, announced that the company was no longer producing golf equipment after finalizing the fiscal year of 2016 with $706 million in revenue, making the year the worst for the company since 2011. Golf retailer Golfsmith also filed for bankruptcy, seeking a buyer after a decline in North American sales. As ESPN reported Wednesday, the equipment business facing sales fallout led companies and retailers to discount clubs with the hope of pushing consumer purchases.
Adidas will not sell struggling Reebok brand
The brand of Reebok, which is owned by Adidas, is struggling, but Adidas CEO Kasper Rorsted told shareholders at the company's annual meeting Thursday, according to Reuters, that the company will not sell the brand. Shareholders seemed to lose patience with the Reebok brand decline and questioned Reebok's future, but Rorseted is confident that Adidas will boost the Reebok brand in the next few years.
Adidas has improved its sales performance in North America tremendously. The company, which generated $532 million in revenue -- a 13 percent increase year-over-year -- has been widely regarded as the fastest-growing sportswear brand in the U.S. after North American sales went up 30 percent in the recent quarter.
“Within our long-term strategy ‘Creating the New,’ our focus is clearly on our core competencies in footwear and apparel and on our two major brands Adidas and Reebok,” Rorsted said in a statement.
