NEW DELHI — Adidas Group India wants to start over in India.
Following allegations of a 870 crore, or $156.6 million, fraud involving its previous senior management in India, the German sportswear group named a new managing director, Claus Heckerott, who is charting a new course for the group, especially for its market-leading Reebok brand.
Meanwhile, the fraud allegations continue to be investigated by three different agencies — the police, the income tax department and the Serious Fraud Investigation Office.
Heckerott said Reebok first will cut its number of stores by a third from the existing 900. Franchisees will be required to make stores more profitable. About 600 of Reebok’s stores currently are franchises.
“We are looking for a fresh start of Reebok India by 2013 and, as a part of it, we are offering voluntary retirement scheme to all the staff of the company. We want to help them move on while we look forward to a new beginning under a new business model,” he said. The company has 200 employees, who must make their decision before the end of the month.
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Another major change at the company is to combine vendors for both Adidas and Reebok in India. So far, both brands had their own separate supply chains.
The changes are part of a restructuring program after the announcement of financial irregularities in early May, which was followed up with a first information report, or FIR, being lodged with the Gurgaon police against former Adidas India managing director Subhinder Singh Prem and chief operating officer Vishnu Bhagat.