Adidas’ own golf brand TaylorMade and various ancillary businesses will have their future decided within weeks amidst free-falling performance on the market.
The company’s CEO, Herbert Hainer, explained the concerns in a letter to shareholders which reads in part:
“Following a decade of strong and profitable growth, TaylorMade-Adidas Golf experienced two very difficult years in 2014 and 2015, caused by a number of structural, commercial and operational issues. As a result, halfway through last year we started analyzing future options for our golf business. This strategic review is expected to be concluded by the end of the first quarter of 2016.”
Adidas hired an investment bank to analyze the future of Adidas’ golf brands, specifically Adams and Ashworth, as well as initiating a restructuring program last year.
TaylorMade will hold firm on prices and slow down its product release schedule while the internal review is ongoing.
“As the market leader in metalwoods, TaylorMade-Adidas Golf will put a high emphasis on maximizing list prices for future product launches, while at the same time extending product life cycles,” Hainer’s report included. “In light of management’s efforts to shift to longer product launch cycles, TaylorMade-Adidas Golf will further reduce the number of new product introductions, thus limiting the overall marketing activity.”
TaylorMade’s sales declined 13 percent over the past year, with net sales dropping from decreased from €913 million in 2014 to €902 million (roughly $989 million) in 2015. Sales for the brand declined 26 percent in 2014 and a further 15 percent in 2015, in large part due to a glut of product on the market from all brands and worse weather globally.
But not is all bad for Adidas, as net income grew 29 percent over the past year for all of its brands, including a 12 percent growth for Adidas itself in the United States.
Adidas bought TaylorMade in 1997.
