Sportswear retail brand Reebok India has reported a 93 per cent decrease in profits for the financial year 2020-2021. The company reported total net profits of Rs.4.9 crore in the year ending March 31, 2021, as compared to the net profit of Rs. 6.8 crores it posted in the previous financial year.
The sharp decline in profits of the brand has been the consequence of the lower sales rate it witnessed due to COVID-19 related restrictions, business intelligence platform Tofler predicted. In the financial year 2020-2021, Reebok reported a 26 per cent decline YoY in revenue as well, standing at Rs. 321 crores. Meanwhile, the company’s net expenditure amounted to Rs. 315 crores during the fiscal year under review.
In a statement released by Reebok, the reason for the company’s underperformance has been attributed to the impact that the COVID-19 pandemic had on its normal business.
The pandemic resulted in the disruption of the supply chain and obstruction of store operations of the franchise and wholesale partners. Moreover, it also led to the closure of warehousing and storage facilities during the long periods of lockdown, the company stated.
Reebok had thereafter made comprehensive assessments of the prospect of recovery and carrying value of its owned assets which comprise property, plant and equipment, store inventories, among others and inferred that the company was not required to make any material adjustments in its financial statement.
Owing to decreasing profits and inability to resume operations at full capacity, German sportswear retailer Adidas announced earlier this year that it has entered into an agreement to sell Reebok to Authentic Brands Group (ABG) for a total consideration of euro 1 billion.
