Footwear manufacturer Bata India is negotiating with Adidas for a strategic partnership for the Indian market, according to a report from CNBC-TV18, with the talks likely to advance.
According to its latest annual report, Bata India, the flagship of Netherlands-based Bata BN, has over 2,050 stores across the country. It sells its products primarily under the Bata, Bata Red Label, Marie Claire, Hush Puppies, Naturalizer, Bata Comfit, North Star, Power, Floatz by Bata, Disney, Bubblegummers, Footin, Scholl, CAT, Weinbrenner, Bata 3D, and Bzees brands.
In a note following the reports, Adam Cochrane, an analyst at Deutsche Bank, said expansion across India could play a key role in Adidas’s push to accelerate top-line growth over the next 3-5 years. He noted that Puma, a brand current Adidas CEO, Bjørn Gulden, formerly led, has taken the leading share in the India market aided by its highly successful partnership with Virat Kohli. However, Adidas recently signed a five-year kit sponsorship deal with the Indian cricket team and a Bata India partnership could build on the sponsorship.
Cochrane wrote, “In our view a strategic partnership would likely entail Adidas either offering its products on a wholesale basis to Bata (with potential exclusivity for a Western sports brand) or using the Bata store estate to create an adidas standalone ‘shop in shop’ within the stores. Either of the options would help turbocharge the Adidas growth in an important long-term growth market and likely help it overtake Puma as the number one sportswear brand in India.”
Cochrane maintained his “Buy” rating on Adidas. He wrote, “Sustainable long term growth (alongside margin recovery) supports our expectation of an ongoing re-rating for Adidas.”
Adidas has not issued a response to the report.
In a regulatory filing Friday, Bata India said it could not comment on the alleged talks. The filing said, “We would like to inform that the company continues to explore opportunities for strategic alliance/collaborations/tie-up for the Indian market, and, as and when matters arise that require disclosure, the company will fully comply with its obligations under listing regulations. The company has had successful long-running strategic tie-ups with various brands over the years for offering unique propositions to consumers.”
