Troubled sportswear division suffered fraud at its Indian unit, lost a major American football contract and had to endure the professional ice hockey strike

Sports group Adidas has been forced to write off €265m (£231m) at its troubled Reebok business during a year in which Reebok uncovered fraud at its Indian unit, endured a strike in the National Hockey League and saw a 10-year American football contract come to an end.

The writedown pushed the German-based business into the red by €239m over the last three months.

Adidas bought Reebok in 2005 for $3.8bn (£2.9bn) in an attempt to close the gap on bigger rival Nike but has now cut its 2015 sales target for the brand by a third after two quarters of declining sales.

Adidas sponsored the London Olympics and Euro 2012 championship, at a cost of £100m, and gains from those deals helped the firm famous for its three stripes logo recoup some of the losses from Reebok.

Sales in emerging markets are improving, but the economic downturn in western Europe has pushed sales down 4%, the company said.

Over the full year profits were down 3% to €920m.

An ill-fated push into muscle-toning shoes by Reebok was also disappointing. Adidas is now trying to focus the Reebok brand on the fitness sector, providing clothes and shoes for a range of activities from aerobics to yoga and dance.

Among Reebok initiatives was involvement with the Cirque Du Soleil Jukari: Fit to Flex workout, launched by supermodel Helena Christensen, left, in 2008.

The Indian fraud was related to financial irregularities by the company’s two most senior officials in the country, accounting for £160m-worth of losses.

Allegations against senior management led to a police investigation with accusations of over-inflated balance sheets during the merger of Adidas and Reebok in the country in 2011.

Reebok also lost a 10-year supplier deal with the National Football League, replaced by Nike to supply the American football franchises’ team kits for the next five years. Along the way it suffered defeat in a lawsuit against Nike over sales of some jerseys.

The loss of the contract is thought to be worth about $200m.

For 2013, Adidas said it expects sales to increase at a mid-single-digit rate from 2012′s record level of €14.9bn, though with a slower start to the year. Bosses will be focusing on 2014 with the World Cup in Brazil.

Despite the problems, there was a dividend increase of 35%, sending the shares up 6.6% to an all-time high on the German stock exchange.