What’s next for Reebok after leaving Adidas?
Reebok is getting another chance to recapture its past glory under new ownership by Authentic Brands Group (ABG) after nearly 15 years of floundering under Adidas.
The brand’s heyday dates back to the eighties with the launch of what many see as the first athletic shoe designed specifically for women, the Freestyle, tied to the Jane Fonda-inspired aerobics craze.
Successes with the Philadelphia 76ers’ legend Allen Iverson’s shoe and Pump inflatable technology followed. The brand was far ahead of the current trend of driving sneaker sales through pop culture. Cybill Shepherd wore a bright orange pair of Freestyles to the Emmys in 1985 and the brand forged early partnerships with hip-hop stars Jay-Z and 50 Cent.
Reebok surpassed Nike as the number one athletics brand by 1986. Sales peaked at $3.2 billion in 2004, but shrank to $1.4 billion by 2020.
Sales were already slowing prior to the 2006 Adidas acquisition but were also negatively affected by the transition of the NBA license to Adidas in 2006 and the loss of the NFL license to Nike in 2012. Reebok exited team sports categories, including basketball, to focus on fitness, with the move marked by a partnership with the Crossfit martial arts organization.
Reebok faced newer competition in fitness from Lululemon and Under Armour and had to take shelf space from Nike and Adidas, its sister brand. The retro craze that accelerated growth in recent years for Champion and Fila also largely missed Reebok.
Reebok returned to profitability in 2018, but sales have remained sluggish despite high-profile collaborations with Cardi B, Kendrick Lamar and Ariana Grande.
As it typically does, ABG, which has acquired stakes in recent years in Forever 21, Aéropostale, Lucky Brand, Barneys, Brooks Brothers, Eddie Bauer and other consumer brands, plans to secure a prominent licensing partner to reposition Reebok for growth.
Neil Saunders, manager director at Global Data and a RetailWire BrainTrust panelist, believes Reebok shouldn’t focus on going head to head with Nike. “The market remains extremely competitive so coming up with a differentiated offer that has clear customer focus and a strong distribution strategy will be key to future success,” he wrote in a note.
- Adidas To Sell Reebok To Authentic Brands Group – Adidas
- ABG to Acquire Reebok – Authentic Brands Group
- Adidas Agrees to Sell Reebok to Authentic Brands – The Wall Street Journal
- Adidas sells Reebok to Authentic Brands for $2.5 billion. – The New York Times
- Salter Talks Reebok’s New Biz Model – WWD
- Escaping Adidas Is The Best Thing That Could Happen To Reebok – High Nobiety
- Adidas ends Reebok era with $2.5 bln sale to Authentic Brands – Reuters
DISCUSSION QUESTIONS: How should Reebok be repositioned for growth under ABG’s ownership? What lessons do the struggles Adidas faced reviving Reebok’s growth provide?