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Sports Biz
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In August 2005, Adidas bought Reebok for $3.8 billion. The idea was simple. Combine Reebok’s strengths in the United States with the strength of adidas worldwide and build a global company that would beat Nike [NKE
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] as the No. 1 shoe and apparel brand.
Well, here we are three and half years later, and aside from Reebok’s logo appearing on NFL jerseys, the most important initiative the brand has going for it is Jukari. It’s a new women’s fitness program that Reebok is pitching along with the endorsement of Cirque du Soleil. It seems innovative, but this isn’t 1987, when Reebok briefly passed Nike by selling women’s fitness.
If Jukari doesn’t work, the Reebok brand is going to be on life support. Pretty amazing when you think about the fact that adidas CEO Herbert Hainer called the purchase of Reebok “a once-in-a-lifetime opportunity.”
Now it’s probably a big regret.
When adidas purchased Reebok, adidas’ share of the US footwear market was nine percent. Today, remarkably, adidas and Reebok combine for the same percentage (9 percent) of the market, according to SportsOneSource analyst Matt Powell. Nike’s share of the market, Powell notes, has grown 7.5 percent since the merger went down. Today, excluding its licensed product business, Reebok is now a $600 million company.
Reebok is doing the right thing with Jukari. Build a totally proprietary workout connected to the brand that allows the company to try to pick up some momentum after quarter after quarter of steady decline.
The problem, many insiders say, is that Reebok didn’t have any particularly great proprietary technology or ideas when adidas bought the company, which made the purchase price premium hard to justify.
Questions? Comments?
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