Reebok may not be the old man shoe for long. Adidas AG said that it had agreed to sell the brand —the maker of the Reebok classic that was briefly the most in-demand “Dad” sneaker around — to Forever 21 owner Authentic Brands Group Inc. The price could end up being 2.1 billion euros (close to $2.5 billion).
The sale was likely helped by the trend toward more casual wardrobes and comfortable shoes. L Catterton, the private equity group backed by LVMH Moet Hennessy Louis Vuitton SE founder Bernard Arnault, bought a majority stake in Birkenstock in February, valuing the clumpy sandal maker at about 4 billion euros. Dr Martens Plc, which listed in London at around the same, has a market capitalisation of $5.5 billion.
But Authentic Brands may also have other plans for Reebok. Could it be the next Gen Z retro fashion dream?
Adidas Chief Executive Officer Kasper Rorsted looks to have got a decent price for a business that, after its short period as a millennial fashion favorite a few years ago, has failed to thrive. Reebok had sales of 1.4 billion euros in the year to
December 31, 2020. Adidas bought the business for
$3.8 billion in 2005.
Reebok had returned to sales growth and profitability before the pandemic but Rorsted never got it firing on all cylinders. He sought to position Reebok as a fitness and athleisure brand,
rather than a more fashion-focused label. The latter is where Adidas has had more
success, with its Originals collection, its Yeezy collaboration with Kanye West
and its Ivy Park tie-up with Beyonce.
Authentic Brands, which recently filed for an initial public offering in the US, has the opportunity to make more of the intersection between style and sport, with an established if parental brand. Reebok became popular in the 1980s with the rise of aerobics and has an extensive back catalogue, which the owner of Frye boots and Juicy Couture can mine. Authentic Brands dropped hints, hailing Reebok’s “rich and storied fitness heritage” and its “deep ties to professional sports and pop culture.” Not too hard to see where this is going. Jamie Salter, Authentic founder and chief executive, said he’s had his eye on Reebok for many years. The group generated revenue of almost $500 million in 2020 and achieved an earnings before interest, tax, depreciation and amortisation margin of over 70%, so he has plenty of firepower.
There may be opportunities too for Reebok to collaborate with the more than 30 brands within the Authentic portfolio. The danger for Adidas is that Reebok — with the right star designer and a couple of new successful styles — may become a competitor with some of its shoe brands.