Adidas Looking At Selling Off Some Or All Golf Assets

Bloomberg's Aaron Ricadela reports on the adidas conference all where CEO Herbert Hainer revealed the retention of Guggenheim Partners to consider selling off Adams, Ashworth and perhaps even the Taylor Made brands.

And of course, just as with Dick's Sporting Goods, it's all golf's fault, not the decision to introduce three drivers in a year or overall oversaturation of the market.

Golf is waning in popularity in the U.S. and Adidas now forecasts a full-year sales decline for the business, excluding currency shifts. The company previously expected “significantly improved top-line development” for the unit, which accounted for 913 million euros in sales last year, 6.2 percent of Adidas’s total.

Fred Speirs, an analyst at UBS, said TaylorMade could be worth 80 percent to 100 percent of its 2015 sales on an enterprise value basis.

This Emma Thomasson and Jörn Poltz Reuters story also uses what is looking like boilerplate language these days under the headline of, "Adidas considers giving up golf as cycling booms."

After peaking around 2000 when Tiger Woods was in his prime, the number of U.S. golfers has been steadily falling as fewer young people take up the sport and as busy professionals switch to cycling rather than spending the best part of a day playing 18 holes.

Adidas bought the TaylorMade brand in 1997 along with Salomon, developing it into the world's biggest golf supplier. It acquired the Ashworth brand in 2008 for $72.8 million and the Adams brand for $70 million four years later.

Investors have criticised Adidas for responding too slowly to the declining popularity of the sport, flooding the market with new products that it then had to discount heavily.

Actually, the company pushed for profits and the third driver was released to flesh a few more bucks, so this one isn't really a golf problem. We know this because Adidas admitted as much on multiple occasions (here and here).

Also, though golf is to blame, the story did include this paraphrased admission from the CEO.

Chief Executive Herbert Hainer admitted that two new golf clubs - the R15 and the AeroBurner drivers - had not sold well and competitors had been raising their game, but said he had high hopes for another new club which it will be launching soon.