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Experts see an opportunity without Adidas




New York / Munich In the coming days, Reebok will be launching the new collection by rapper Cardi B. After the spin-off from Adidas, the US sporting goods brand needs to sharpen its profile, and women play a key role in this. Experts are convinced that the company will have to specialize under the future owner Authentic Brands Group (ABG) if it is to finally build on successful times.

Because the restart will not be easy. Reebok is a very well-known brand and with a new owner it has the potential to become more relevant again, says Steve Dennis, president and founder of Sageberry Consulting. “But today Reebok is playing in a world with so many competitors that there is a lot more headwind than before.”

At the beginning of August, Adidas announced the sale of the US brand, which had been ailing for many years, for around two billion euros to the Authentic Brands Group. The DAX company now wants to concentrate fully on the core brand. Reebok, whose sales fell by 16 percent last year to around 1.4 billion euros, must now find its new place in the market. Because the brand will probably no longer be able to catch up with the global market leaders Nike and Adidas. “No one else can get involved in this mega-battle,” says the industry expert and ex-president of Intersport International, Klaus Jost. The marketing budgets of the two world market leaders are higher than the sales of competitors like Reebok.

Therefore, Reebok must seek salvation in the niche. Asics, for example, found this primarily in very functional running shoes and in high-quality indoor areas. At Reebok, the strengths lie particularly in women’s and fitness sports. “These have to be expanded.”

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With the Authentic Brands Group (ABG), Reebok has found a very special buyer who has already brought together other, almost dead brands. These include the clothing brands Brooks Brothers, Barneys New York and Eddie Bauer as well as the rights to the estate of Marylin Monroe and Elvis Presley.

Inventory is not held

Matt Powell, sporting goods expert at consultancy NPD, is convinced that Reebok’s business model will fundamentally change under ABG founder Jamie Salter. Salter has already told the industry service “Women’s Wear Daily” that he does not want to keep an inventory.

“As with the other brands, Authentic Brands at Reebok will go more to retailers and ask what they want,” estimates consultant Powell. Instead of designing the products himself and then seeing who is buying them, ABG founder Salter prefers to play it safe and only produce what is really in demand, Powell explains.
“That could mean that Reebok may only have a small number of products in its range, but they are very profitable,” says Powell. The expert points out that at the moment, for example, retro shoes from the 80s and 90s are doing well, as are lifestyle products. Reebok is currently not addressing real athletes.




Reebok shoes

The expert Powell is convinced: With its retro shoe models, Reebok is better positioned than with clothing for real athletes.

(Photo: Bloomberg)

In view of the still moderate purchase price, Reebok does not necessarily have to catch up with Nike or Adidas in order to be worthwhile for ABG as an investment, says consultant Dennis from Sageberry Consulting. “If you manage the brand efficiently, a lower turnover is enough for the investment to be worth it.” Authentic Brands is known for being able to breathe life back into once glorious brands with efficient marketing, licensing and product procurement.

The consultant could also imagine a variant in which Reebok becomes the house brand of a retailer like Kohl’s or Target in the USA, who then sells the brand exclusively. Recently, more and more retailers have tried to differentiate themselves through exclusive collaborations with certain brands. But whether Reebok can survive as a very small brand, the consultant Dennis has his doubts: “I am convinced that you still need a certain presence in retail in order to remain relevant with customers.”

After separating from Adidas, able to flourish again

At least Reebok boss Matt O’Toole is convinced that the brand can flourish after separating from Adidas. It can hardly go well when two consumer brands compete with each other within a group, he says, “Sports business” with a view to the time at Adidas.

In the end, one brand will always be the big brother and the other the little one. He noted a strong position in the women’s fitness segment and recent investments in e-commerce. O’Toole has developed the five-year “Reebok unleashed” strategy. He doesn’t want to rely so heavily on “hardcore performance”, but rather position Reebok at the intersection of sport and style.

Adidas now wants to really take off from the burden of Reebok. For the current year, CEO Kasper Rorsted expects growth of up to 20 percent. As part of the medium-term strategy, revenues should then increase by an average of eight to ten percent every year until 2025.

What about Reebok? Buyers, companies and experts agree on one thing: even if it has been watered down in recent years, the Reebok brand is still worth a lot. In contrast to some newcomers, Reebok has the advantage of being a traditional brand with a strong heritage, says Jost.

There are always retro revivals of old models in the sporting goods industry. “Reebok has a lot in the basement.” If the new owners do everything right, Reebok will at least have the chance to play for third or fourth place among the major sporting goods companies.

More: These are the highest paid athletes in the world


Arjun Sethi
Passionate guitarist, gamer and writer. Lives for the perfect review, and scrapes texts until they are razor-sharp.
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