Thursday, April 27, 2006

Adidas, Reebok CEOs: Reebok will remain a performance athletics brand

By Mark Jewell, AP Business Writer

CANTON, Mass. --The top executives at Adidas-Salomon AG and the German company's newly acquired Reebok brand said Friday that Reebok will continue to target the athletics market, and may ease away from the sneaker brand's recent hip-hop marketing geared toward consumers favoring style over performance.

"We've been a little bit too lifestyle-focused maybe over the past couple years, and we want to shift actually more toward the performance side of our business," Paul Harrington, president and CEO of Reebok, said in an interview with The Associated Press at Reebok's Canton headquarters.

Harrington and Herbert Hainer of Adidas said that Reebok will continue to strike endorsement deals with individual athletes, but leave it to Adidas to reach such deals with entire teams, in soccer and other sports.

Since Adidas' $3.8 billion acquisition of Reebok International Ltd. closed on Jan. 31, industry analysts have speculated as to how the one-time athletics sneaker and apparel rivals would position the two separately managed brands to avoid competing against one another in the same market niches.

Some analysts suggested the bigger Adidas name would likely continue targeting serious athletes willing to pay a premium for performance-oriented shoes, with Reebok largely relegated to lower-priced sneakers and apparel targeting more fashion-conscious consumers.

Hainer on Friday sought to dispel that notion about the Reebok acquisition, which he hopes will double Adidas' U.S. business and narrow Beaverton, Ore.-based Nike Inc.'s market leadership.

Adidas' chairman and chief executive said he has "no doubt" that Adidas "will bring Reebok more into the performance area, which we all believe has lacked a little bit over the last season. They have great products."

Reebok lost some of its athletics prominence on April 11, when Adidas announced in London that it had signed an 11-year deal with the National Basketball Association to make the German company the official uniform provider for the U.S. league. Reebok has been the NBA's uniform and apparel provider since 2001.

However, Reebok continues to maintain that role in football and hockey through apparel deals with the NFL and NHL.

"Those will remain with Reebok -- our contracts are in place," Harrington said.

Reebok also has a large stable of individual athlete endorsers, including the NBA's Allen Iverson, baseball's Curt Schilling and hockey's Sidney Crosby.

Reebok also has some deals in soccer, traditionally a bigger strength of Adidas, whose sponsorships include soccer star David Beckham and the Spanish team Real Madrid.

Hainer said there's plenty of room for both brands in soccer, with its global following. But the two brands will stake out separate turf in some respects.

"Adidas will be more on the teams, and Reebok will be more on the individual athletes," Hainer said.

The acquisition also offers a chance to reposition the brands in the youth market, which Reebok has aggressively wooed in a campaign that has seen the brand stray beyond its athletics roots. Four years ago, Reebok introduced its street-inspired "RbK" line, and the brand last year launched an edgy "I am what I am" marketing campaign featuring athlete endorsers alongside rappers such as 50 Cent and Jay-Z. In November, Reebok announced it would begin producing Reebok-branded TV programs for a new Comcast Corp. on-demand hip-hop channel.

Some analysts have suggested such moves could alienate athletically inclined customers who value performance, Nike's traditional strength.

Harrington said Friday that the "I am what I am" campaign will continue, although it will subtly shift away from entertainers and focus more heavily on athletes.

"We'll evolve it, but it will still be the pillar of our brand position," said Harrington, who took over for Reebok's longtime CEO Paul Fireman after the brand was acquired by Adidas.

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