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The Reebok brand struggled with several years of steady decline before finally seeming to find its feet in 2014 with a focus on fitness rather than sport, and more recently on "tough fitness". At one point in the 1980s it was - briefly - the world's top-selling sports shoe, but its position slipped steadily over the next few decades. Like its rivals, the company felt the pinch from the global shift away from white trainers in the late 1990s. Reebok was a little slower to manage a rebound, despite diversification into other clothing lines, such as Rockport walking boots. More recently, the group scored a hit with its street-oriented Rbk range which was closely aligned with the rap music and urban fashion markets and in 2005, the company agreed to be acquired by Adidas for around $3.8bn, creating a stronger competitor to leader Nike. Yet despite the best efforts of Adidas the brand suffered fresh declines over the next couple of years, falling behind rival Puma in 2008 to languish in last place among the big four brands. There were, finally, signs of a turnaround from 2009 as a result of the success of new fitness sub-brand Easytone (now Skyscape), and partnerships with CrossFit and more recently UFC.
Click here for agency account assignments for Reebok from Adbrands.net. The group declared a marketing budget of €267m for Reebok in 2015.
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Reebok gives Adidas Group badly needed additional weight in North America, but the two brands still need to be handled carefully to avoid crossover. Early speculation that Reebok would be repositioned as a lower-priced range were unfounded, although no clear strategy emerged immediately, and the brand's market share declined significantly after 2006 as a result of that vacuum. The brand still needs strengthening in all its sports-related activities. Its association with rappers and other non-sporting celebrities somewhat overshadowed the core sports apparel business in the mid-2000s, even in North America. Outside the US, Reebok has only a very low profile on the sports field. In 2014, the group repositioned Reebok as primarily a fitness brand, rather than for all-round sports, and this has resulted in a much stronger general performance, and steady growth. In 2015, the group unveiled a brand goal of becoming "the best fitness brand in the world".
Adidas agreed to acquire Reebok in August 2005 for around $3.8bn. The deal completed in February 2006, and significantly enhanced the enlarged group's overall position, especially in the US market, where combined share of the US athletic footwear market in 2005 was around 18% (according to SportsOneSource), closer to (though still some way behind) Nike's 35%. Outside the US, Adidas-Reebok actually overtook Nike in several important markets. However, the added weight has failed to help Adidas group narrow that gap further, and if anything it has continued to fall behind the leader. By 2014, SportsOneSource estimated Reebok's share of the US market to have slumped to under 2% while Adidas fell to 6%. By contrast Nike had soared to 60%.
Reebok operates as a separate unit of Adidas group, although much of the brand's one-time independence has been reined in since 2008. It encompasses a wide variety of sports footwear, apparel and accessories. Prior to its purchase by Adidas, it was the #2 athletic footwear brand in the US, with 12% market share. Globally it was #3 with around 10%. The Rbk label launched in 2002 as the umbrella for a range of more street-oriented footwear, drawing heavily on urban fashion and music for its positioning. This was supported by a high-profile marketing campaign based around the "I am what I am" slogan, featuring endorsement partnerships with rap music stars Jay-Z and 50 Cent, among others. Jay-Z and 50 Cent also signed up as the brand icons for two signature product lines, respectively S Carter Collection by Rbk and G-Unit by Rbk. Both lines performed very strongly in the US in 2004, doubling in sales.
In another departure from conventional endorsement deals, Reebok signed up actress Scarlett Johansson to develop her own (short-lived) signature line under the Scarlett "Hearts" Rbk banner in 2007. In 2009, along similar lines to Adidas's high-end fashion lines, Reebok formed a partnership with Giorgio Armani's Emporio Armani label to develop a line of premium designer sportswear under the EA7 banner; and with theatrical troupe Cirque du Soleil to introduce the Jukari fitness programme. A more recent entertainment partner for the Reebok brand was singer Alicia Keys, who introduced her own signature line in 2012, and supermodel Miranda Kerr has featured in several campaigns for the Skyscape general fitness sub-brand. In 2015, it unveiled the first of several collaborations with rapper Kendrick Lamar.
After 2006, Reebok attempted to reclaim its sporting reputation, but results were mixed. It introduced two new running shoes, the Trinity KFS II and Hatana for women, in 2007, and attempted to bolster its position in football through an endorsement partnership with French star Thierry Henry, who it poached from Nike at the end of 2006. The group also sought closer promotional ties with professional bodies and players in several other sports. In the US, it was the official outfitter for America's National Football League (NFL) for a decade, until losing that role to Nike from 2012. Another partnership, with the North American NHL, was hampered by a dispute between teamowners and players which led to the cancellation of all games in the first quarter of the 2012/12 season. Reebok still has a licensing arrangement with the Major League Baseball (MLB) association. Similar licensing partnerships with the US National Basketball Association (NBA) and UK football club Liverpool were transferred to Adidas in 2006. Among the handful of traditional professional athletes with which it maintains an endorsement arrangement is NFL star JJ Watt.
Traditional sporting endorsements have been largely discontinued since 2013 in favour of fitness-oriented partnerships. The most significant of these is a partnership with CrossFit, a separate company which has developed a strength and conditioning program which is licensed to gyms across the globe. Reebok sells a range of co-branded apparel and equipment, and worked with CrossFit to open combined store/gyms in several US locations. CrossFit Nano is a co-branded line of training shoes. The brand sponsors a number of non-professional high-fitness disciplines, including global Spartan Race obstacle events (since 2013), Les Mills fitness training, Tara Stiles yoga and Color Run in Paris.
In 2015, the brand formed a similar sponsorship partnership with UFC to provide apparel and footwear, and several UFC stars have appeared in the brand's advertising, including Conor MacGregor and Ronda Rousey. Combat training has become another key segment for the Reebok brand.
Reebok finally began to reclaim some of the ground it has lost over the years towards the end of 2009 with the launch of Easytone trainers for women, which promise to offer additional toning for the upper legs and bottom. A range of endurance training shoes for men under the ZigTech banner were also well received, and in the final quarter of 2009, brand sales in North America rose reported a year-on-year quarterly increase for the first time since the business was acquired by Adidas. However Reebok's claims for its Easytone shoes came under intense scrutiny from consumer protection regulators. In order to avoid a lengthy legal battle with the US Federal Trade Commission the company agreed in 2011 to make a $25m settlement to resolve charges of deceptive advertising, while also denying the validity of those allegations. The Easytone brand was phased out in favour of a new line of Skyscape shoes. Endorsement partners include actress Eva Mendes and model Miranda Kerr.
Towards the end of 2016, new Adidias Group CEO Kasper Rorsted announced plans to accelerate growth, and especially profitability, of the Reebok business by cutting staff and relocating its HQ in North America.
For several years, Reebok has lent its name under license for Reebok Fitness home exercise equipment, as well as to other manufacturers for products ranging from eyewear and heart rate monitors to jogging strollers, bicycles and swimwear.
The group extended its sports range into ice hockey in 2004, acquiring The Hockey Company, later Rbk-CCM. It makes a wide range of clothing and equipment under brands including CCM, JOFA and KOHO, and is the exclusive supplier of jerseys to all US National Hockey League teams, and of apparel and protective equipment to the Canadian Hockey League. In 2007, it launched a new uniform system for all NHL teams under the RBk Edge banner. Revenues were €317m in 2015. In 2017, the group agreed to sell the CCM business for $110m to private equity investors.
Until 2015, the third arm of the business was Rockport, which markets a range of general leisure and walking footwear. Sales were $289m in 2013. However Adidas was reported to have begun seeking a buyer for the business in 2014. A deal was agreed in Jan 2015, with Rockport sold for $280m to private equity buyer Berkshire Partners, which is to combine it with Drydock, the casual footwear brand part-owned by New Balance.
Two other peripheral businesses have already been divested. Until 2006, the group also produced a range of apparel and accessories under license from well-known golfer Greg Norman. It was sold at the end of the year following Reebok's absorption into Adidas. Another unit, Ralph Lauren Footwear manufactured and marketed fashion-based footwear under license from Ralph Lauren Polo until 2005. It was bought back by Polo Ralph Lauren mid-year for around $110m.
In 2004, its last full year as an independent company, Reebok reported sales of $3.8bn, its best performance since 1997. After a 25% jump in 2003, net income rose by a further 22% in 2004 to $192m. Because of the acquisition by Adidas, full year results were not filed for 2005. For full-year 2007, Reebok contributed divisional revenues of €2.3bn to the Adidas Group, down by 6% on the comparable figure for 2006. Divisional sales were still falling in 2008, settling at €2.1bn. The biggest disappointment was a sharp decline in US sales. According to some estimates Reebok's share of the US sportswear market had fallen as low as 3% by the end of the year, from 9% in 2005. Gradually, though, there has been a recovery. For 2011, Reebok's brand sales crept up to €1.94bn. However, figures for 2012 were severely impacted by a scandal at the brand's operations in India, where two senior executives have been accused of a massive fraud, and also by a slowdown in US sales, and the loss of the NFL license. Reebok brand revenues slumped 14% in 2012 to €1.67bn, and then by another 4% in 2013 to €1.60bn, though the group claimed currency-neutral growth that year of 2%.
For the first half of 2014, despite various sporting events including the run-up to the World Cup, reported Reebok brand revenues declined by 3%. However, the company claimed a currency-neutral increase of 6%. Full-year revenues weighed in at €1.57bn. There was much stronger performance in 2015, with sales up 6% at constant exchange rates, and by 11% reported, to €1.75bn. That included €523m in North America; €347m in Western Europe; €298m in the Middle East, Africa & Asia ex Japan & China; €266m in Latin America; €170m in Russia & CIS; €80m in Japan; and €58m in China.
Reebok brand revenues continued to climb in 2016, reaching €1.77bn. At constant currency rates, the increase would have been 5.7%.
Established as an American business since the 1980s, Reebok was originally a British company, with roots dating back to the 19th century. In 1895, Bolton-based Joseph Foster made himself a pair of the first spiked running shoes. He was soon in business handmaking more pairs for other runners; and before long his fledgling company, JW Foster and Sons, developed an international clientele of distinguished athletes. Foster's running shoes became an established brand, moving beyond athletics to the rugby and football pitch. By the 1940s Liverpool, Newcastle United, Manchester United and Bolton Wanderers football teams all wore Foster's boots. It remained a family business, with Joe Foster's sons and grandsons all growing up in the firm.
In 1958, grandsons Joseph and Jeffrey Foster decided to break the tradition after serving their apprenticeship, and set up their own company, named after a South African antelope, the reebok. They eventually took over the family business a few years later, absorbing it into Reebok. In 1979, American sporting goods distributor Paul Fireman negotiated the North American license for the brand, and introduced three models into the US retailing at $60. Despite what was then an extraordinarily steep price, demand was enormous, but Fireman needed additional financing, so sold a controlling share in his company to another British manufacturer, Pentland Industries. The same year, Reebok introduced the Freestyle, a brightly coloured exercise shoe designed specifically for women which caught the first wave of the aerobics craze. Sales rocketed, leaping from $13m in 1983 to $2.2bn by the end of the decade. During that surge, Reebok overtook arch-rival Nike to become the leading maker of athletic shoes in the US, a position it held until 1989.
Reebok made a public offer in 1985, absorbing the British Reebok business the following year and buying out Pentland in 1991. The company also snapped up a series of other leisure shoe businesses, including Rockport in 1986. In 1992, Reebok followed Nike's example and began to branch out into sports sponsorship, signing key deals with players and teams in American and British football, baseball, basketball and tennis. In the UK, a £16.5m sponsorship deal with Liverpool FC in 1995 led to sales of replica kits and boots valued at over £40m. At the same time, Reebok sold off its Ellesse sportswear business in 1993 and Avia shoes in 1996, but instead acquired the license to make footwear for Polo Ralph Lauren.
However in 1996 and 1997 all sports shoes companies were sideswiped by a sudden change in consumer taste, which left them sitting on huge inventories of unsold product. Reebok reported best-ever net income of $139m in 1996, and record sales a year later of $3.6bn. By 1999, both had collapsed, as the company reported net income of just $11m on sales of $2.9bn. Worse still, that year Reebok lost its global #2 position to Adidas, and Fireman stepped back into the hotseat to take full control of the main brand. In a bid to save costs, the company rationalised its portfolio of sporting endorsement contracts, closing out several major athletes, and also consolidating production facilities.
Yet also in 1999 the group formed a key alliance with tennis player Venus Williams, locking her into a five-year $40m contract, which made her at the time the highest-earning female athlete in history. In 2001 the group bolstered its revival with long-term contracts to produce sportswear and merchandise for the US NFL and NBA, and bought up failed college sportswear manufacturer LogoAthletic. In a surprising but interesting marketing alliance, the company also licensed its name to a new brand of bottled water, produced by Clearly Canadian Beverages. Enhanced beverage Reebok Fitness Water launched in the US in 2001.
Gradually the company began to turn the corner, reducing its reliance on footwear with a stronger range of apparel and accessories. Reebok was a little embarrassed in 2002 when one of its star endorsements, basketball player Allen Iverson, was brought up in US courts on gun charges. In the end however the charges only served to boost Reebok's profile with an urban US audience. Building on that harder edge, in 2003 Reebok signed up rap stars Jay-Z and 50 Cent - no stranger to gun culture - creating signature footwear collections for each performer. This marked a turning point for footwear manufacturers, the first time any of the main brands had moved beyond the sports industry for endorsements. Sales of the Jay-Z and 50 Cent footwear ranged rocketed during 2004, more than doubling in volumes. Nevertheless, performance outside North America remained disappointing. The merger with Adidas was a clear route towards enhancing both businesses profile in the fight against Nike. Following its acquisition by Adidas, Paul Fireman stepped down as chairman & CEO of the group.
Last full revision 20th September 2016
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