Adidas finally said “breakup” with Reebok.
On February 16, 2021, European local time, Adidas announced that it had completed the “Reebok Strategic Choice Assessment.” As part of the new five-year strategy, Adidas has decided to officially launch the process of divesting Reebok. It is expected that from the first quarter of this year, the Adidas Group will no longer publish Reebok’s performance report.
“We are in a sports industry where the long-term development opportunities are extremely attractive, especially for iconic sports brands.” Adidas CEO Sper Rost (Kasper Rorsted) said: “After careful consideration, we believe that adidas and Reebok will be better able to realize their respective growth potential as two independent brands. In the next few months, we will go all out to ensure that the Reebok brand and its team achieve long-term success.”
1 From “right-hand man” to “useless”
According to media reports, bank sources revealed that the deal is worth more than 1 billion euros. According to previous disclosures by German media, Adidas valued the sale of Reebok at more than 2 billion euros before the epidemic.
In 2006, when Adidas purchased Reebok, it spent US$3.8 billion. Reebok’s “highlight moment” made Adidas willing to spend heavily at that time: data shows that Reebok’s sales reached US$307 million in 1985, and tripled within a year, reaching US$919 million in 1986; In 1987, Reebok’s sales of US$1.4 billion surpassed Nike’s annual sales of US$900 million, becoming the world’s number one sports shoe brand; in 1991, the number rose to US$2.7 billion; in 2001, Reebok reached an agreement with the NBA Cooperated to become the exclusive manufacturer of NBA sportswear, and later won the clothing sponsorship rights of the NLF league; in 2006, Adidas acquired Reebok for US$3.8 billion; from buying it for US$3.8 billion to selling it for US$1 billion, the reason behind the “low sale” was Reebok. The role of “right-hand man” has gradually changed from “right-hand man” to “useless man”.
Back in 2006, the three major sports giants were Nike, Adidas and Reebok. At that time, Adidas acquired Reebok to compete with Nike, hoping to achieve “2+ 3>1” effect. This was indeed a brilliant move for Adidas at the time. After the acquisition of Reebok, Adidas Group’s sales once reached 10.1 billion euros, and the gap with Nike narrowed to 2 billion euros.
However, after the acquisition, Reebok’s development declined step by step. First, it handed over the jersey sponsorship rights of NBA and WNBA to Adidas. In 2010, Adidas again The last big contract was taken away from Reebok – the National Hockey League (NHL). The NFL’s revenue once accounted for two-thirds of Reebok’s total revenue.
This means that all three of Reebok’s performance chips have been captured by Adidas. In 2014, Reebok announced that it had changed its LOGO, changed its track, and focused on the fitness market. It was this year that news broke that Reebok would be sold off. In 2014, the Wall Street Journal stated that a consortium formed by investors from Hong Kong, China and Abu Dhabi proposed to the Adidas Group to acquire Reebok, with an asking price of US$2.2 billion. , but Adidas denied it at the time.
Wang Guoping, a member of Lianshang’s senior advisory group, pointed out: “The original positioning of Adidas and Reebok had a lot of overlap. After Adidas acquired Reebok, it integrated Reebok’s superior resources into In the hands of Adidas, Reebok has gradually been marginalized. In the later period, Reebok has been targeting the niche Lululemon. Now Reebok has no value to Adidas and does not pose a threat. It is an ideal time to sell it for money.” After Reebok was acquired The performance is indeed unsatisfactory.
When Reebok was acquired by Adidas in 2006, its sales accounted for approximately 20% of the group. But in 2019, Reebok accounted for only 7.4% of the group’s sales. Adidas CEO Sper Rossiter called the acquisition of Reebok “one of the most expensive mistakes in the company’s development history.” The performance not meeting expectations may be the main reason why Reebok was “divested”.
Sun Yulong, a special columnist of Lianshang and a senior retailer, told reporters: “Adidas acquired Reebok 15 years ago. The original strategic motive was to compete with Nike through Reebok’s operations. At the same time, Achieve the leading development of dual-brand sub-tracks. However, the operations of Reebok after being merged into Adidas not only failed to realize its strategic vision, but also became an operating burden for Adidas. In 2016, Adidas launched a series of changes and adjustments to Reebok. Reebok’s business situation turned around before the epidemic, but due to the sudden impact of the epidemic, Adidas’s main business has been greatly impacted. Under this background, it has become inevitable to focus on the main business to maintain the leadership of Adidas’s main brand. In this context, Reebok was sold at a “low price” ‘It’s also inevitable.”
2 Self-help
In 2014, Reebok announced its entry into the fitness market , however, the fitness market is already dominated by Lululemon. In addition to Lululemon, Reebok is surrounded by powerful enemies. According to information from the Reebok Tmall flagship store, Reebok is currently divided into classic leisure, sports training and professional training series, and these categories are surrounded by experts – Nike, Adidas, Under Armor, China’s Anta, Li Ning, etc. With this in mind, it will be difficult for Reebok to break through.
Reebok, which had suffered losses for a long time, did not start trading until 2018.Although it was difficult to turn losses into profits, the good times did not last long. The epidemic in 2020 dealt Reebok another heavy blow. According to Caijing.com, Reebok’s global stores have been closed one after another since March last year, which also led to Reebok’s sales falling by 20% in the first nine months of 2020. In the second quarter, revenue fell by 42.3%, a slightly higher drop. The core brand of Adidas.
In addition, the founder of its cooperative brand CrossFit was boycotted across the United States for making racist remarks, which also put Reebok’s brand image in crisis. Of course, Reebok is also trying to reverse the crisis through joint branding and do business with Generation Z.
In 2020, Reebok has launched “Tom and Jerry”, Ultraman Mobile, Minions “Yellow Foot Series” and “Assassin’s Creed: Hall of Valor” co-branded, 2021 In the same year, the “Kung Fu Panda” collaboration and the “Peppa Pig” children’s shoe series were launched. However, these collaborations did not lead Reebok to “break the circle.”
Wang Bing, born in the 1990s, told reporters: “I have heard of Reebok, but I have never bought one.” Although I have seen it in the mall, I don’t like the style. “The key is It’s not famous yet, after all, many famous shoes are also ugly,” Wang Bing said with a smile. Cheng Qing, who is also born in the 1990s, said that although he bought a pair, he has not become a “fan”. “The feeling of wearing it is almost the same as PUMA,” Cheng Qing described it this way.
Fang Qiang, the person in charge of a shopping mall in Shanghai, told reporters: “The Reebok brand is aging seriously, and consumers in the Z era don’t know much about it, especially sportswear products that are popular among e-commerce companies and Otto. Affected by the accelerated store openings of Rice and City Outlets, sports goods in urban areas pay more attention to personalized new products. Large stores and flagship stores have become the direction for various merchants to actively strive to upgrade. There are not many stores visible on the market.”
Reporters Checking Reebok’s official WeChat account found that Reebok currently has only 41 stores in the Chinese market. Judging from the fan data of Reebok’s Tmall flagship store, as of press time, the number of Reebok fans is 3.81 million, far less than Nike’s 35.62 million and Adidas’ 32.36 million. Reebok seems to have become “insignificant” in the sports market. Wang Guoping told reporters: “The core value of shoes and clothing lies in design, not production lines and channels. Without high-quality designer resources, it is difficult for Reebok to get out of the industry.”
3 Where to go?
After Adidas announced the sale of Reebok, the successor has become the latest focus of the industry. It is reported that China’s Anta Sports and the American VF Corporation, which holds Timderland and North Face, as well as some private equity investment companies are potential buyers. In addition, former NBA basketball player Shaquille O’Neal publicly made remarks about acquiring Reebok.
Sun Yulong believes that Reebok’s current popular successors can basically be locked in China. Currently, only Chinese local sports brands have a strong willingness to expand in the world. Anta and Li Ning have been The transformation has shown strong explosive power, especially since Anta already has some experience in international brand mergers and acquisitions. At the same time, relying on its strong capital operation capabilities, Anta should have a strong strategic will to take over Reebok.
According to the monitoring of Fashion Business Express, the share price of domestic sportswear giant Anta Group has soared 107% in the past year, with a market value of HK$398.9 billion, which is three times that of Li Ning and is also the largest company in China. The profitable clothing company has surpassed lululemon to become the third largest sportswear group in the world. Wang Guoping believes that only by operating independently can Reebok control its own destiny. According to public information from Adidas, the specific details of the divestiture process will be announced on March 10, 2021. </p
