06/30/2019 | Press release | Distributed by Public on 06/30/2019 09:08
Brett Hershman 6/30/2019 9:16:13 AM
Shaquille O'Neal buying Reebok from Adidas AG (OTC: ADDYY)? It could be just what the struggling footwear brand needs to reinvigorate itself.
The NBA Hall of Famer recently told CNBC he would 'love to buy Reebok,' the first brand to endorse him during his playing days. Although Reebok saw growth in April, 'it certainly is not lighting the world on fire,' in the words of NPD Group's Matt Powell.
Reebok's Lack Of Identity
Reebok's brand has been suffering an identity crisis in recent years in a crowded footwear space.
When Adidas initially took over the brand, they positioned it for the workout enthusiast, effectively turning it into a niche brand with a focus on getting into the CrossFit community and signing a deal with the UFC.
'Adidas has absolutely rebranded it toward a particular set of consumers that Reebok had not been going after in CrossFit and the workout enthusiast community, but by way of involving someone like Shaq, you are rebranding Reebok to go after a larger segment of consumers,' sports attorney Darren Heitner told Benzinga.
'The key would be: how do you balance that and not alienate the workout consumer?' he said. '[It] brings up an interesting dilemma.'
Sale Could Help Bring Back Vault Of Retro Gold
Although O'Neal said he would like to bring Reebok back to fitness and basketball, NPD Group's Powell said he absolutely would not advise the brand to get back into basketball.
The Reebok brand has a treasure trove of beloved retro product on which it has not fully capitalized, despite the fact that trends are matching up perfectly for potential re-releases, he said.
'Clearly there is a huge vault to bring back on the retro side. Reebok may not have the prominence it once did, but look at what happened with Fila : it clicked on the product side and is smoking hot right now.'
Adidas has systematically sold off most of their holdings in recent years, including TaylorMade, Adams Golf and Ashworth, leaving Reebok as the company's last holding.
Adidas would be open to selling Reebok if the price was right, in Powell's view, but he said it will not garner the $3.8 billion adidas initially paid for the brand.
'Brands are typically selling for one times sales and 10 times earnings, and they are certainly not a $3.8-billion brand.'
Shaq Could Take Reebok Downmarket
O'Neal said the purchase would likely come via Authentic Brands Group.
When a well-known brand like Reebok is acquired, it's often brought downmarket, Powell said.
'Shaq's involved with a company that has bought a lot of brands and ... in some cases has taken them downmarket,' he said.
'They have taken them to Walmart Inc (NYSE: WMT) and Target Corporation (NYSE: TGT). That's typically the strategy with brand management firms; they take brands that have had prior credibility and retool them to the masses.'
Although the old adage is that 'big men don't sell shoes' as signature endorsers, we have yet to see what a big man can do at the helm of a shoe company.