Adidas to revive Reebok with re-branding to fitness equipment

reebok-live-with-fire-11Reebok is attracting sponsorship deals with prominent fitness groups to try to revive name that has faded since it became part of Germanys Adidas sportswear group eight years ago.

The sports shoe and clothing brand is winning followers among hardcore sports enthusiasts and aims to build on this support to make up ground it has lost to rivals such as global market leader Nike.

However, U.S.based Reebok has experienced some difficulties. It lost a contract to supply the U.S. National Football League and was hit by a lockout at the National Hockey League. Its toning shoes, intended to tone the body as you walk, werent a success.

After cutting the brands 2015 sales target by a third last year, Adidas also took a 265 million euro ($358 million) write-down on its fourth quarter 2012 results. Now the group is promoting Reebok as a fitness brand via a range of sponsorship deals and shoe launches.

For Reebok, the effort appears to be worth it. When Adidas warned on its profit last month, analysts were quick to note that Reebok was, for once, not cited as a problem.

“Its confirmation that Reebok is doing better,” Cedric Lecasble, an analyst at investment group Raymond James, told Reuters. “While its not really impressive yet, the strategy is more focused and I expect Reebok will be the strongest brand in terms of sales growth in the third quarter.”

Adidas CEO Herbert Hainer has predicted growth in coming years.

“Were getting more and more confident about what were doing. Slowly but surely its starting to pay off, as we can see in sales at our stores and in the acceptance of our collections from wholesalers around the world,” he added in August.

Reebok accounts for around 10% of Adidas sales, while Reeboks share of the global $245 billion sportswear market has slipped to 1.8% in 2012 from 2.1% in 2007, according to Euromonitor. Adidas is the world number two with a 9.5% market share, behind Nike on 13.6%.

Much similar to its rivals, Reebok is shifting to higher priced products that offer more performance elements to boost profitability. Once a highly dominant shoe brand, Reebok launched the ATV 19+ all-terrain running shoe, at around $140 a pair. The strange looking sole led reviewers to call the shoe bizarre and ridiculous but attracted attention which could help to secure shelf space in the big U.S. chains. The aim is get Reebok on consumers minds again with a steady stream of product launches.

Adidas share price rose by more than 20% on a year-to-date basis. The current consensus among 35 polled investment analysts is to buy stock in Adidas AG. This rating has held steady since September, when it was unchanged from a buy rating.

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News