The German company acquired Reebok in 2006, and has struggled to power the brand ever since. Most recently, Reebok lost out to Nike on a contract to supply products to the U.S. National Football League, is being hit by a player lockout in the National Hockey League and is continuing to sort out problems in India after “commercial irregularities” were discovered.

Reebok’s woes mean that while Adidas is competing strongly against Nike in Europe, Asia and fast-growing markets such as China and Latin America, it is losing ground in the U.S., the world’s biggest sports-apparel market. The group’s sales fell 4.7% in the U.S. in the third quarter, predominantly because of Reebok’s poor performance, compared with a 23% increase for Nike in North America in its most recent quarter.

“I don’t think the Adidas brand is losing ground to Nike, but Reebok is,” said Barclays analyst Julian Easthope.

Adidas said it now expects group sales to rise by a high single-digit rate in 2012, compared with its previous forecast for a rate approaching 10%. The company in September cut its midterm sales outlook for Reebok to €2 billion ($2.55 billion) in 2015, from €3 billion, but said it expected the Adidas brand to compensate.

The company’s shares were down Friday afternoon in Frankfurt as the lowered sales guidance took the shine off third-quarter results that otherwise beat the market’s expectations.

Adidas’ net profit rose 14% on the year in the third quarter to €344 million as sales rose 11% to €4.17 billion, buoyed by strong demand in Asia and Eastern European markets. The company benefited from its sponsorship of prominent teams and individuals at the summer Olympics in London and the European soccer championships. It said it expects net profit in 2012 to rise between 15% and 17% to between €770 million and €785 million.

Part of Reebok’s problems relate to an continuing dispute in the National Hockey League. Owners of the league’s franchises barred members of the NHL Players’ Association from playing after failing to reach a new deal on contracts, prompting the cancellation of all games since preseason started Sept. 19 up until the end of November, and the dispute is continuing. Reebok is the official outfitter to the league.

That followed the NFL’s decision that Nike would replace Reebok as the league’s exclusive maker of on-field apparel and fan gear. The terms of the five-year Nike deal weren’t disclosed, but Adidas has said the loss of the license agreement, which Reebok has held for the past decade, will result in an estimated $200 million to $250 million a year in lost revenue for Reebok.

Adidas also said problems at Reebok’s Indian unit would continue affecting results in the fourth quarter, without giving details. The company in May filed a criminal complaint against the former chief of its Indian operations and another former senior employee for alleged financial and commercial irregularities that resulted in the company taking a charge of $155 million plus a further $87 million in restructuring costs.

Several attempts to reinvent and reposition Reebok to take advantage of the U.S. market have failed to work. The latest plan is to market Reebok as a fitness-only brand. In September, Reebok marketing chief Matt O’Toole assured investors the brand’s new structure “will bring more focus and a deeper product offering and will provide better commercial opportunities as we turn the corner into 2013.”

But Reebok’s problems are deeply rooted and sales were down 6% excluding the loss of licenses and the problems in its Indian unit.

Adidas Chief Executive Herbert Hainer conceded the Reebok brand’s performance was “by no means satisfactory,” but pointed out the sales fall was an improvement from the second-quarter decline of 10%.

Mr. Hainer was more positive about the group’s prospects, predicting Adidas would increase sales, boost its profit margin and see earnings rise by a significant double-digit percentage in 2013.

This article was published by The Wall Street Journal on November 9, 2012.

The UFO labor union Tuesday said it is preparing for strikes that may start anytime from Wednesday and involve up to 19,400 crew members.

A Lufthansa spokesman said any industrial action would cost the airline millions of euros each day and the company is examining its legal options, without going into further detail.

Lufthansa last week vowed to press ahead with a sweeping cost-saving program, including the elimination of 3,500 administrative jobs, to improve long-term profitability due to high fuel prices and worsening economic prospects in Europe.

“It’s very important for Lufthansa to stick to its plans if it wants to stand up to low-cost and other competition, important enough that it has to hazard the consequences of strikes,” Commerzbank analyst Frank Skodzik said.

A 2009 file picture shows Lufthansa staff on strike at Frankfurt airport. The union representing Lufthansa cabin crew says its members plan to strike after talks on pay and conditions broke down. Associated Press

In April, UFO demanded a 5% wage increase for about 18,000 Lufthansa flight attendants, a profit-related bonus worth up to a month’s pay, and a guarantee that the airline wouldn’t outsource jobs or employ temporary cabin crew workers.

Like other European flag carriers, Lufthansa’s short-haul operations face increasing competition from leading discount carriers like Ryanair Holdings PLC and easyJet PLC. Air France, the French unit of Air France-KLM SA, and Iberia, the Spanish arm of International Consolidated Airlines Group, have said changing pay and conditions for staff on domestic routes to make them more competitive with budget airlines is vital to bring their short-haul operations back to profit. Like Lufthansa, Air France is considering the elimination of thousands of jobs.

In April, UFO demanded a 5% wage increase for about 18,000 Lufthansa flight attendants, a profit-related bonus worth up to a month’s pay and a guarantee that the airline wouldn’t outsource jobs or employ temporary cabin crew workers.

Lufthansa said Tuesday it offered a 3.5% wage increase and is willing to forgo hiring temporary workers for three years.

Lufthansa has faced industrial action this year. In February, about 1,700 flights were canceled in Frankfurt, Europe’s third-busiest airport, due to industrial action by the GdF union, which represents airport operator Fraport AG’s ground staff. Fraport said the cancellations cost it around €4 million ($4.9 million) and Lufthansa said the strikes cost the airline at least €10 million.

The airline also had to cancel about 50 flights in 2009 after cabin crew staged strikes for several hours in Berlin and Frankfurt. At the time, UFO said Lufthansa suffered damages of about €50 million.

This article was published by the Wall Street Journal on August 28, 2012