Could ABG’s Interest in Reebok Spur Adidas to Offload the Brand?
Click here to read the full article.
It’s been nearly 15 years since Adidas snagged Reebok in a $3.8 billion deal — followed by a period of declining revenues and expired licensing contracts with the NFL and NBA that prompted analysts to question the brand’s future.
But CEO Kasper Rorsted helped launch a new business strategy for Reebok — with the goal of returning it to profitability by 2020, when he joined the athletic giant three years ago.
More from Footwear News
Adidas Celebrates the Beastie Boys' Impact on Hip-Hop Culture With New Sneaker Collab
How to be Cool: 10 Ways 'It' Brands Stand Out from Their Uncool Peers
Arizona Iced Tea x Adidas Sneaker Price Set to Increase After Pop-Up Shutdown Debacle
Through its renewed focus on women’s footwear and the resurgence of the ’90s as well as enlisting influencers, including rap star Cardi B, the brand has managed to reintroduce itself to a hipper generation of consumers.
Now experts are pondering whether Reebok could change hands again — particularly after Authentic Brands Group (ABG) chairman and CEO Jamie Salter expressed a desire to add the Boston-based company to its growing portfolio.
“Reebok would be an interesting brand for ABG to own,” said Jeff Van Sinderen, a retail analyst at investment research firm B. Riley FBR, noting that Reebok might not fit into Adidas’ long-term strategy. “Reebok’s performance generally has improved overall under Adidas, albeit with some fits and starts that are part of any athletic brand, particularly one that was acquired. But does it really make sense for Adidas to own Reebok? I’m not totally convinced that is the case.”
In Adidas’ first-quarter earnings report in May, Rorsted shared a need to put out “more attractive” merchandise in an effort to revitalize Reebok. (Growth in its classics and running collections did little to offset a drop of 12% and 7% of the brand’s sales in North America as well as the Asia Pacific and European markets, respectively.) “Despite the fact that we have made a lot of progress on Reebok’s profitability, we still need to drive growth back into Reebok,” he said. “That is the ultimate target [that] we have set for 2020.”
Although noting that Reebok is “on the right track,” VP and senior industry advisor for The NPD Group Inc. Matt Powell hasn’t ruled out the possibility that Adidas could offload the brand. “Reebok is beginning a revival in the U.S. around a solid retro collection,” he told FN, “[but] if the price is right, Adidas might sell.”
In an interview with FN’s sister publication WWD, Salter shared, “My partner [Shaquille O’Neal] beat me to the punch in mentioning it a few weeks ago: I’d love to buy Reebok. Maybe one day Adidas will let it go.”
ABG and the NBA legend have been partnered since 2015, when he sold the brand rights to his future entrepreneurial endeavors. But O’Neal’s history with Reebok goes deeper: The basketball star has been aligned with the sportswear company since 1992, when he signed a multiyear deal worth $15 million. O’Neal also recently launched a collection with Skechers — the first line of kids’ athletic footwear designed for the basketball court under the Skechers kids’ division.
“Well, [Authentic Brands Group, one of the companies] I’m involved in, we just bought Sports Illustrated, but I would love to purchase Reebok,” O’Neal said last month, criticizing Adidas for having “diluted [the brand] so much to where it’s almost gone.”
He added, “If they don’t want it, let me have it. I want to bring [Reebok] back to basketball and to fitness.”
Watch FN’s tips on cleaning your sneakers.
Want more?
Shaquille O’Neal Says He ‘Would Love’ to Own Reebok
Why Nike, Reebok & Famous Footwear Revamped Their Loyalty Programs in 2019
Sign up for FN's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
