Why is Adidas selling Reebok, and that too at a steep loss? - Things You Know But Not Quite | Amazing Facts | Trivia

Things You Know But Not Quite | Amazing Facts | Trivia

category
6645e0646ab8f
0
0
Loading....

Why is Adidas selling Reebok, and that too at a steep loss?

Reading Time: < 1 minutes
  1. Adidas is selling Reebok to Authentic Brands Group (owner of brands such as Nautica, Forever 21, Sports Illustrated).
  2. ABG will buy Reebok for $2.5 billion—that’s $1.3 billion less than what Adidas had paid to acquire Reebok.
  3. Reebok, a US-based brand, was bought over in 2005 by German-based Adidas, hoping to gain an edge in its competition with Nike.
  4. Reebok started in England in 1958 but was bought over by an American businessman in the 1980s.
  5. And then it became an iconic brand in the US—in 1982, it became the first company ever to produce a fitness shoe specifically for women (Freestyle sneaker).
  6. Focus on women and fashion-outside-fitness worked for the brand, and for a brief period in the 1980s, Reebok had a bigger market share than Nike.
  7. The brand focused on nonconformist individualism with campaigns such as UBU (you-be-you), and never promoted itself as a sports brand.
  8. Then in 1988-89, the earnings started to decline—realising that Nike had begun focusing on fashion, Reebok decided to enter Nike’s core strength, i.e., performance/fitness.
  9. It introduced the tech-infused Reebok Pump in 1989 and signed several basketball players over the years as its brand ambassadors.
  10. While the Pump was successful, it exposed Reebok’s confused thinking (is it sports or fashion?).
  11. Soon, Reebok got into other sports, and insiders later confirmed that the several decisions during the time were reactive and not well-thought through.
  12. Another problem was Reebok’s delay in getting into the apparel market that Nike and Adidas quickly dominated.
  13. Soon other players (Puma & Under Armour) gained prominence, and Reebok could never recover.
  14. COVID was especially hard on Reebok—sales plunged by around 20% in 2020, and Reebok contributed just 7% to the overall Adidas revenue (it contributed 25% in 2007).
  15. Experts believe that Adidas also couldn’t do much to sort Reebok’s sports-or-fashion identity problem.
  16. By 1988, Reebok had annual revenue of $1.8 billion, while Nike was at $1.2 billion.
  17. Today, Nike is at $40 billion while Reebok is around $2 billion.
Image courtesy of Grailify through Unsplash
You may also like :
Share :

Share this:



LEAVE A COMMENT

Your email address will not be published. Required fields are marked *

Join us to get updates

* By continuing, you accept the privacy policy