Adidas warns of profit hit from Reebok fraud

Sportswear major Adidas on Thursday said global sales of its Reebok brand declined by 26 per cent in April-June quarter on a 'currency-neutral basis', mainly due to impact from Reebok India Company, which filed a police complaint for an alleged Rs 870 crore fraud.

The Group also said it expects a hit of 70 million euros in its global operating profit in 2012 on account of "irregularities" in Reebok India .

"Reebok sales declined 26 per cent on a currency-neutral basis, largely as a result of negative impacts from Reebok India Company and the non-recurrence of prior-year licence sales," the German Group said in a statement in its website.

Reebok brand's revenue in the quarter was at 336 million euro as against 427 million euro in the year-ago period.

Adidas, however, said: "Currency translation effects had a positive impact on sales in euro terms."

On the fraudulent practices in India, the Group said it expects a "projected negative impact of up to 70 million euro on group operating profit related to the reorganisation and changes to commercial activities at Reebok India Company" during the current year.