German sportswear maker Adidas AG (ETR: ADS, OTCQX: ADDYY) said it decided to enter into concrete negotiations with interested parties aimed at a divestiture of parts of the company’s golf division, and is actively seeking a buyer for its TaylorMade brand, a market leader in golf equipment, as well as the Adams and Ashworth brands.
“TaylorMade is a very viable business. However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market,” said Adidas Group CEO, Herbert Hainer.
“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,” Heiner added.
“At the same time, the planned divestiture will allow us to reduce complexity and focus our efforts on those areas of our business that offer the highest return and where we can have the biggest impact in reaching our consumers and winning their loyalty for the adidas and Reebok brands,” he concluded.
Adidas began exploring strategic alternatives last year, when its second quarter earnings for TaylorMade fell by 26%.
Going forward, Adidas intends to focus its efforts in this market segment on further strengthening its position as a leading provider of innovative golf footwear and apparel through the Adidas Golf brand, the company says.
Separately, the Adidas Group recorded a very strong start into the year 2016. During the first quarter, group revenues increased 22% on a currency-neutral basis, with accelerating momentum at both adidas and Reebok. In euro terms, group revenues grew 17% to € 4.769 billion (2015: € 4.083), the highest quarterly revenue in the group’s history.
adidas AG, together with its subsidiaries, designs, develops, produces, and markets athletic and sports lifestyle products worldwide. It operates through 13 segments: Western Europe, North America, Greater China, Russia/CIS, Latin America, Japan, Middle East, South Korea, Southeast Asia/Pacifc, TaylorMade-adidas Golf, Reebok-CCM Hockey, Runtastic, and Other centrally managed businesses.
As of December 31, 2015, the company operated 2,772 stores, including 1,484 stores under the adidas brand; 366 stores under the Reebok brand; and 872 factory outlets. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.
TaylorMade Golf Company
In the spring of 1979 a golf equipment salesman named Gary Adams took out a $24,000 loan on his home and founded the TaylorMade Golf Company. He rented a 6,000 square-foot building that at one time housed a television assembly plant. Counting him, there were three employees and a single, innovative product: a 12-degree driver cast of stainless steel. This new metalwood looked and sounded different from a wooden wood, and most important, it performed differently. The clubhead’s perimeter-weighting offered greater forgiveness on mis-hits, while the lower center of gravity made it easier to launch the ball in the air.
Adams, the son of a golf professional, was adamant that TaylorMade clubs maintain ties to what true golfers perceived an authentic golf club should look and feel like. They were committed to combining innovation with authenticity, to always be passionate about the game, and pledged to be competitive – to work hard to establish itself and grow. These four tenets would take them far. The same values singled out 30 years ago by Gary Adams are still revered and practiced today at TaylorMade, adidas Golf and Ashworth.
Starting with $47,000 in sales in 1979, the company eventually reached its first billion dollars in revenue in 2006, marking only the second time in history that a golf brand had achieved this milestone.
TaylorMade was independently owned until 1984, when Salomon SA acquired the company. At the time, the union was strategically compatible for both companies which were innovators in their industries: Salomon wanted to diversify and made the decision to enter a “three-season” market, and TaylorMade benefited from the worldwide resources of Salomon.
Adidas bought Salomon in 1997, and shortly thereafter the image and focus of TaylorMade were redirected to take over the driver market. The company succeeded in achieving this goal in late 2005, when it officially became the top driver in golf.
PGA Tour Professionals are said to play more TaylorMade drivers than Callaway, Cleveland, Cobra, Nike and Ping combined.
Currently, the company markets TaylorMade drivers, fairway woods, hybrids, irons, wedges, golf balls and accessories. The company’s major equipment claims, promoted in marketing materials with small “No. 1” shields, include: No. 1 Driver in Golf, No. 1 Fairway in Golf and No. 1 Irons in Golf.