Aditya Birla Fashion to now own and operate Reebok stores in select markets

(ABFRL) will also open Reebok outlets that are owned and operated by it in select markets, instead of having stores only through its existing franchise model.

Last year, ABFRL signed a long-term licensing pact with Authentic Brands Group (ABG) - the owner of Reebok - for exclusive rights to distribute and sell the sports brand's products through wholesale, e-commerce and Reebok-branded retail stores. The company said Reebok India's operations will be transferred to it from October 1.

Reebok's primary model in India is a completely franchisee-owned one.

"We believe, to strengthen the brand, we will do a combination of franchise... and some exclusive company-owned stores. This is required to reposition the brand well to gain share in some of the key markets," Ashish Dikshit, managing director of ABFRL, told investors during an earnings call. "There will be some investments in at least the key markets where we would like to establish the brand more strongly and spend the company's money."

Reebok's operations will be classified under subsidiary Madura Fashion and Lifestyle and will gain a net economic benefit for the second half of the fiscal year, the company said.

Reebok was the largest sports footwear brand by revenue a decade ago, but financial irregularities forced the brand to shut down many stores. ABFRL said it was betting on its legacy and will try to regain its leadership position.

"The task ahead is to be able to bring that kind of position back to the brand. Multiple things have to be done. We will be moving in from October 1. Pricing, the kind of product segments where we want to strengthen further, the kind of geographies, the distribution... will have to be addressed," said Vishak Kumar, chief executive of lifestyle business at ABFRL, during the earnings call.

Currently, German sportswear maker Puma's revenue in India was more than those of its rivals - Adidas, Nike and Reebok - combined last fiscal year, spurred by increased awareness about fitness and surging demand for 'athleisure' wear in the country.

India has also seen increasing interest in sports such as kabaddi, soccer, volleyball, hockey and badminton. Reebok's positioning was historically skewed towards cricket. Sixteen years after acquiring Reebok for $4 billion, German sportswear giant Adidas sold the brand to ABG for $2.5 billion last year.