Oh how things change in the sneaker business. Reebok, for a brief moment the kingpin of the athletic footwear industry, is now being cast off by a rival that couldn’t turn the brand around.
Adidas said Tuesday that it will sell Reebok after the hoped-for synergy between the two brands never materialized.
“It’s a brand that lost its purpose,” said Steve Wynne, who headed Adidas America from 1995 to 2000. “Reebok produced that beautiful white aerobics shoe that took the market by storm.”
The brand spent the next 30 years trying to replicate that magic, without success.
“It was kind of like an LA Gear,” Wynne said, referring to the 1990s brand that won over a generation of kids with a heel that lit up. “If you asked people what Reebok stood for no one could give you answer.”
It’s unclear whether the sale will have any impact in Portland, home of Adidas North America. Company officials could not be reached for comment.
The decline of the Reebok brand has been spectacular. Adidas paid $3.8 billion for Reebok in 2006. It may get $1.2 billion for it now, according to anonymous investment banking sources quoted in industry publications.
But those numbers fail to capture the actual scale of the brand’s descent. For a brief moment in the 1980s, Reebok actually surpassed Nike to become the biggest brand in the industry. Powered by a simple, massively popular aerobics shoe, Reebok actually topped Nike in sales and market share for a brief period in the late 1980s.
Ric Long, a veteran shoe dog now retired, worked at Reebok in those years.
“It was crazy,” he said. “It was management by chaos and panic.”
The brand was so hot with consumers, retailers would buy just about whatever a Reebok rep put in front of them in large volumes.
Reebok asked Long to lead their entry into the basketball shoe business.
“I questioned why we would do that,” he said. “We were so popular in fitness and with women, what did we want with basketball?”
As far as Long is concerned, it was bad marketing that propelled Reebok’s decline. Near its peak, the brand unveiled its “UBU” ad campaign, which equated Reebok with non-conformist individualism.
The campaign made one thing clear: It wasn’t a sports brand, Long said.
Reebok recognized it needed to earn its sports bona fides. In 1987, it paid $180 million for Avia, a fast-growing sneaker startup in the Portland area.
But it never clicked, just as the Adidas acquisition never worked two decades later.
Reebok’s moment in the sun was brief. Nike came back quickly, retook the industry lead and never looked back.
Nike has surpassed $40 billion in annual sales. Reebok’s are in the neighborhood of $2 billion.
Adidas is expected to reveal more about its divestiture plan in March when when Adidas reveals its annual financial results.
“Adidas and Reebok will be able to significantly better realize their growth potential independently of each other,” Chief Executive Kasper Rorsted said in a statement.
