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BRIEF HISTORY

Whatever happened to Reebok?

A photo of Reebok's retro Club C sneakers in front of a sunny beach
Reebok
Reebok's Club C sneaker, first introduced during the brand's peak in the 1980s.
  • Marc Bain
By Marc Bain

Fashion reporter

Published

For a brief period in the 1980s, Reebok was the biggest sneaker brand in the US.

The decade saw Reebok surge ahead of its competitors on a wave of demand for fitness and aerobics products. Reebok’s Freestyle sneaker, released in 1982 as the first fitness shoe designed specifically for women, became the hottest seller in the business. Workout guru Jane Fonda adopted them, and actress Cybill Shepherd wore a pair on the red carpet at the 1985 Emmy awards. By 1987, Reebok had surpassed Nike in the US.

But by 2005, when Adidas bought Reebok, the company was far from the force it used to be. It was still a formidable presence in the sneaker world, however, and the purchase had the potential to reshape the industry. The $3.8 billion buyout allowed Adidas, based in Germany, to roughly double its US sales and combine its strengths with Massachusetts-based Reebok. In theory, the deal gave the united companies the might to take on Nike in the valuable US market.

Yet 15 years and multiple false starts later, Adidas is putting Reebok up for sale. It realized the two companies could better reach their potential apart than together, it said in a statement that sounded like the announcement of a Hollywood divorce.

The decision was arguably overdue. The potential powerhouse the tie-up could have created never materialized, and investors had long since tired of Adidas’s attempts to return Reebok to some sustainable mix of growth and profit. It will now leave the task to another owner who has yet to be announced.

It won’t be simple. While Reebok has had some successes since its height, it has never been able to recapture its former glory, in part because of failure to keep up with changing tastes and missteps by management, Adidas’s included.

How Reebok lost its lead in the sneaker market

Officially founded in England in 1958 by Joe and Jeff Foster, whose family roots in the shoe business dated back even further, Reebok didn’t really have a substantial presence in the US until an entrepreneur named Paul Fireman secured the company’s US distribution rights in 1979 after seeing the shoes at a trade show. Five years later, he bought out the British parent company (paywall) and Reebok became American.

The brand gained incredible momentum throughout the 1980s as its shoes became the fitness and fashion sneakers of choice for many US shoppers. By 1988, it boasted about $1.8 billion in annual sales to Nike’s $1.2 billion, and controlled a greater share of the US market. But its sales were already starting to flag. That year, it recorded its first drop in earnings. Nike was growing ascendant again, attracting shoppers to its basketball and cross-training sneakers with the help of stars such as basketball’s Michael Jordan and dual athlete Bo Jackson, a football and baseball player.

Reebok didn’t give up. It introduced the Pump, a technology that let the wearer pump air into the shoe and inflate the interior so it shaped snugly to the wearer’s foot. Dee Brown, a rookie point guard on the Boston Celtics, helped launch it into the spotlight in 1991 when he stopped to pump his shoes before completing a “no look” dunk during that year’s slam-dunk contest. The shoe was a mega-hit and gave new energy to the brand.

Reebok
Reebok’s recently reissued Pump Omni Zone II sneakers, first introduced during the brand’s heyday decades ago.

On its own, though, it wasn’t enough to sustain Reebok. Through the 1990s, Reebok signed up athletes such as basketball players Shaquille O’Neal and Allen Iverson to sponsorship deals as it made a bigger push into a variety of sports. It introduced new cushioning platforms, such as its DMX Series 2000 sneakers. But its sneakers weren’t connecting with shoppers. The company appeared to have strayed too far from its core categories and was losing relevance in the eyes of shoppers. Its market share continued to slide, and by 1999, its image was suffering from its reliance on mass retailers such as Sears and JCPenney.

The brand was straining to keep its cool, even as it tried to address the issue. It won a big licensing contract with the National Football league in 2000, and signed rappers Jay-Z and 50 Cent to shoe deals in 2003. The initial limited releases of these shoes sold well with a niche audience, but that demand didn’t translate to the mass market.

By the time Adidas acquired it, Reebok’s star had fallen. Even so, the brand wasn’t beyond repair. Its global sales between 2000 and 2004 grew by nearly $1 billion, reaching $3.79 billion, including sales of about $1.1 billion in the US. The company may not have been keeping pace with its competitors, but Adidas saw the potential for a turnaround.

The Adidas era begins at Reebok

At the time, Adidas was strong on its home turf in Europe but had been struggling to gain a foothold in the US. Reebok would in theory allow it to do that. It had a solid roster of athletes and musicians, and still controlled a healthy portion of the American market.

After the deal, however, nothing much happened. Adidas didn’t seem to take any action, and Reebok’s sales slipped for years.

The beginnings of a revival emerged in 2008, when Reebok entered the toning market with its launch of EasyTone, a shoe that promised to work the wearer’s rear into shape just by walking. It was the company’s biggest hit in some time.

Still, the company struggled to match its rivals. It had fallen to fourth place globally, behind Nike, Adidas, and Puma. It was also hemorrhaging money. In 2009, Adidas restructured Reebok to get its financials under control.

Products aimed at shoppers with a casual interest in fitness were proving popular, and Reebok was in a position to take advantage. It pushed further into toning and walking shoes with styles including the JumpTone, RunTone, and ZigTech. Sales grew fast. On an earnings call in May 2011, Adidas’s then CEO, Herbert Hainer, said, “Now, that may have taken it longer than you and I hoped, but today I have every reason to state, with confidence, that we have achieved the turnaround with Reebok.”

As quickly as toning rose, however, it crashed back down as regulators said there was little evidence the products worked. In 2011, the US Federal Trade Commission ordered Reebok to pay customers back $25 million for “deceptive advertising.” Other challenges followed. Reebok’s licensing deal with the National Football League ended, and it came to light that Reebok’s management in India had been inflating its sales and profits.

Over the next several years, sales were on a rollercoaster as Reebok tried to find its footing. It grabbed a hold in fitness and activities such as CrossFit, a training program quickly gaining popularity. By early 2015, it had recorded several consecutive quarters of growth. But in the US, it was still playing catch up and losing shelf space at retailers. On earnings calls, Adidas executives admitted the company had been too slow in recognizing fitness as Reebok’s strength and maneuvering the brand accordingly.

Reebok’s stalled efforts to reset its brand in the US

As Reebok emphasized fitness products, it reduced its presence in other categories, such as team sports. It outlined a new strategy where it would go all-in on fitness.

But while sales ticked up slowly in other parts of the world, they continued falling in the US, where Reebok was trying to reset its brand and reduce its reliance on outlet stores. In 2016, with Hainer retiring, Adidas appointed Kasper Rorsted its new CEO. While Adidas thrived on sales of its own classic sneakers, Reebok languished. “For a given period of time, the brand was probably stronger than the products,” Rorsted said on a Nov. 2016 earnings call. “Right now I would argue our products are stronger than the brand.”

Reebok
CrossFit athlete Rich Froning Jr. at the 2015 Reebok CrossFit Invitational.

Investors had become impatient and were asking if it was time to sell Reebok. The brand was losing money.

In 2018, Reebok finally returned to profitability, and sales grew slightly at the end of 2019, including in North America, where the company has been partnering with musicians and fashion labels to appeal to young shoppers.

But if there was any momentum building at Reebok, the pandemic interrupted it. In the nine months through Sept. 30, Reebok’s sales plunged 22% (pdf).

At this point it appears Adidas feels it has done what it can to clean up Reebok and is choosing to sell rather than continue to invest. It intends to provide more details during a presentation on March 10. What Reebok’s future will look like after that remains to be seen.

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