As Adidas considers offloading Reebok, the future of the brand is coming into question.
It’s been nearly 15 years since the Germany-based sportswear giant snapped up the retro athletic label in a $3.8 billion deal that was followed by a period of decreasing revenues and expired licensing contracts with the NFL and NBA.
When he joined Adidas four years ago, CEO Kasper Rorsted helped launch a new business strategy for Reebok — with the goal of returning it to profitability by 2020. (The company shared yesterday that the turnaround plan allowed Reebok to return to profit in 2018 — two years ahead of schedule.) Through its renewed focus on women’s footwear and the resurgence of the ’90s as well as enlisting influencers like rap star Cardi B, the label has managed to reintroduce itself to a hipper generation of consumers.
However, the coronavirus pandemic has thrown a wrench in those revitalization plans: In the first nine months of 2020, Reebok’s currency-neutral revenues were down 20%. (The Adidas brand fell 18%.) It has a “lower exposure” to the running and outdoor categories, which is predominantly where the sportswear business has seen growth in recent months, Rorsted said during the company’s third-quarter conference call. What’s more, Reebok has a “high exposure” to North America — a market that has recovered more slowly than Europe.