Reeboks, a footwear legend, has fallen. Adidas has agreed to sell the famous Reebok sneaker company and brand to Authentic Brands Group (ABG) for only $2.5 billion. This means taking a loss of roughly one-third, compared to the $3.8 billion Adidas paid when it bought Reebok in 2006. Even when the purchase was made, there were those who thought that Adidas was paying too much. Indeed, there were those who said it was paying one-third too much. It appears they were right.
Adidas, a German company founded nearly a century ago, is the largest sportswear manufacturer in Europe. Of late it has partnered with show-business giants (Kanye West, Beyonce, and Pharell Williams) and that has helped it sell its own brand. This has made Reebok – originally purchased precisely with the idea that it would add a strong North America presence – less valuable.
Reebok, which will maintain its Boston headquarters, is a brand with a storied past. For example, it began in Britain in the 19h century with the first ever spiked running shoe.
The short story of its recent past is: great prominence in the 1980s and into the ’90s, decline in the later years of the ’90s, but then something of a revival. Adidas purchased it during that hopeful period of revival. But it was not to last.
The Brand Behind a Fitness Craze
In the late 1980s, at the height of its pop-cultural prominence, Reebok worked with fitness guru Gin Miller in developing Step Reebok and what became an exercise craze, “step aerobics.”
Miller toured the United States in person promoting step aerobics and the Sports Step of Atlanta, made of molded plastic and the brand name on it. The company sold many thousands of these adjustable-height steps, and millions of the high-top shoes with ankle support that went with them.
Reebok kept a Union Jack as a logo until 1993. When it switched to the “vector logo” in that year, this symbolized both the by now thoroughly American nature of the company and its transition into a sports/performance brand. Also, it is possible for sentimentalists still to see a stylized Union Jack in the cross of one red slash with a blue racing track, on a white backdrop.
Step aerobics, as a fad, peaked in 1995.
Stepping Down From Prominence
Reebok, too, stepped down from prominence, through the final years of the millennium. Hip-hop fashions dominated this period, and much of the “why” of its decline may simply be that Reebok missed that boat entirely. It was the future parent company, Adidas, which was on top of that trend.
There was another logo change in 1997. Oddly, Reebok stuck with most of the elements of the vector logo but drained it of its color. It was now simply three crossing curves in light grey. This must have seemed fashionably minimalist at the time. In retrospect, it looks like the logo of a company that has accepted its own fade-out.
By 2003, though, Reebok was earning back some pop culture cred. It struck a deal with Jay Z, then the biggest-name rapper in the world. When the Jay Z branded sneaker (called the S. Carter, for the rapper’s birth name, Shawn Carter) hit the market on April 18, it sold 10,000 pairs within hours.
Even the early period under Adidas’ corporate roof seemed good for Reebok. In 2007, Reebok generated nearly a quarter of the parent corporation’s overall revenue. Unfortunately, it again lost its way.
This time, the problem was a loss of focus. Reebok has encouraged too much retrospection, which can create waves of selling but in the not-so-long run simply confirmed the impression that it is a name of the past. Recently, Reebok has been accounting for only 6.9% of the parent corporation’s overall revenue.
Where Does Reebok Go Now?
The sneaker business has as many ups and downs as, well … step aerobics. It is certainly possible that Reebok has another step up in it.
Nike is easily still the dominant player. Below that, though, it is a fluid market where everything is up for grabs.
Meanwhile, over the last 11 years, ABG has bundled more than 30 labels, including Aeropostale and Forever 21 (both apparel chains) and Sports Illustrated, a venerable magazine. Reebok, properly handled, could be a productive contributor to that product portfolio.