After months of speculation, Adidas has announced that it is seeking to sell its TaylorMade, Adams and Ashworth brands.
According to a company press release, “The company conducted a full review of its golf business in August, and even though TaylorMade sales rose 6% in the first quarter of 2016, Ashworth and Adams suffered double-digit losses, resulting in a net loss overall for Adidas”.
“TaylorMade is a very viable business,” Adidas CEO Herber Hainer said in the press release. “However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market. With its leadership position in the industry and the turnaround plan gaining traction, which is clearly reflected in the top- and bottom-line improvements recorded in Q1 as well as recent market share gains, I am convinced that TaylorMade offers attractive growth opportunities in the future.”
TaylorMade adidas Golf has a huge stable of professional players on its payroll. It’s unlikely that a purchaser for the TaylorMade portion of the company would be able to keep them all. World #1 Jason Day, Dustin Johnson, Justin Rose and Sergio Garcia are just a few of the top ranked athletes in question.
ESPN buisness reporter Darren Rovell believes the big deals for the big names are secure but many others would scatter to rival equipment manufacturers.
It would make sense for adidas to try and keep as many of its athletes as possible for footwear and apparel deals, as that will be the area they look to grow in the future.
Naturally, any announcement about a possible sale generates speculation as to who might purchase the various brands. Rivals such as Nike, Puma and Callaway already have established equipment franchises and are unlikely to increase their exposure to the hard goods side of the business with its thin margins and massive marketing costs.
Speculation that UnderArmour would get into hard goods has been rampant for months but with adidas and to a lesser extent Nike focusing more resources on apparel and footwear, a move in that direction would buck the current trend.
The last big deal for a major equipment company involved Titleist and financial investors from Asia.