While there is no shortage of tried-and-true athletic labels — and an influx of designers and more mainstream brands diving into the sector — Reebok is looking to capitalize on its long standing in the field.
In an interview Thursday afternoon, Reebok brand president Matt O’Toole and global head of creative direction Karen Reuther mapped out the company’s strategy as they move forward in the third year of a four-year plan intended to build the brand’s $1.85 billion net sales. In 2018, currency-neutral Reebok brand sales were down 3 percent versus 2017, as double-digit sales growth in Classics was offset by a decline in Sport.
But earlier this week, Adidas, Reebok’s parent company, reported that the division had returned to profitability in 2018 and sales in the third quarter had risen 2 percent overall. In North America, Reebok posted a 17 percent jump in sales but its performance in other regions was more challenging with an 11 percent decline in Asia Pacific and a 9 percent drop in Europe.
To further fuel its growth going forward, Adidas chief executive officer Kasper Rørsted said the company will “reunite the Reebok brand under one logo, the Vector. The Vector was first introduced nearly 30 years ago, and the Vector still remains Reebok’s most recognizable symbol and will help us truly realize the potential of the brand.”
O’Toole said the Vector and drop-R logo, which was introduced in 1992 and had previously been used only on the brand’s heritage and lifestyle products, will now be used on its performance product as well. An early release of product featuring the logo will begin this month with a full rollout planned for 2020.
Reuther said that having a “unified banner” will allow Reebok to “tell a single story that is clear and consistent.”
Whether that resonates with consumers — especially Millennials — remains a question mark. Reebok ranked 10th on Forbes’ “Fab 40” Most Recognizable Sports Brands — with the top three being Nike, ESPN and Adidas, respectively. Despite linking with high-profilers like Ariana Grande, Gigi Hadid and Lil Yachty, Reebok lacks the buzz that some of its rivals have generated.
O’Toole said for the past several years, “we have been on this journey trying to reclaim our fitness roots” but since Reuther joined in July 2018, the push has been more about bringing fitness and lifestyle merchandise together to address customer demand for product that can take them seamlessly from the gym to lunch.
The pair spoke about how to attract women in particular to the brand, which is two-thirds footwear and one-third apparel. Although 60 percent of Reebok’s sales are currently men’s merchandise, O’Toole said the goal is to be 50-50 “in the not so distant future.” This will be propelled by an enhanced focus on digital because women are more inclined to shop online.
These initiatives are all part of the larger picture for the brand. After Rørsted became Adidas’ ceo in 2016, he instituted a far-reaching plan to return the struggling brand to profitability. O’Toole said that for the first two years, the brand “evaluated every revenue stream,” which resulted in the closure of nearly 200 freestanding doors globally. “The footprint of some of these doors — when you go back to when Reebok had the NFL, NBA and Rockport shoes — was just too big, so the efficiency of a lot of these stores was not too great,” O’Toole said. The brand has opened around 50 stores in that time, but their size is better suited to the brand today.
In the U.S., Reebok operates 68 full-priced freestanding and outlet stores and plans to open five more this year. The company has approximately 1,000 stores worldwide, which includes franchised locations in India and China among other locations.
Reuther, who joined Reebok after a 12-year run at Nike, said she was tasked by O’Toole to look “holistically across the brand. We were being successful in our lifestyle business and our fitness and sport business but we were showing up in the market as two distinct brands. Our ability to unify under one logo really allows us to cover the entirety of our brand,” she said. “Comfort, mobility, performance — that’s made its way from the gym to the runway. There’s not so much of a to-from, it’s just the way it is.” And it’s no longer gender-specific with male consumers “increasingly of the same mind-set.”
Integral to the brand’s growth plans are collaborators like Kerby Jean-Raymond, who serves as Reebok’s artistic director, as well as Victoria Beckham.
Jean-Raymond is increasingly interested in fusing the sport and performance side with fashion. In a conversation at the WWD Apparel & Retail CEO Summit last week, the designer said that when he first came on board, he told Reebok management: “I don’t like anything you guys are doing here and I need my own division, so that was part of my new contract: I’m not staying unless I get to sign other acts and bring in other people.”
What that translates into is the New York-based designer scouting young talent — from both inside and outside the company — to create product under the Reebok umbrella. He said there’s “a huge barrier of entry” for young designers today, “so I wanted to create a division where I can sign talent, give them these collaboration deals, give them sponsorship deals so that they can have money to grow their companies. Reebok has some internal assets that they’re trying to elevate and I have options to bring them into Reebok Studies — but also we’re working on talent acquisition to bring in people outside, too.”
Jean-Raymond is also helping Reebok with other big-picture initiatives. “His superpower is identifying where the pockets of opportunity are,” Reuther said, and this includes sustainability.
Forty percent of materials in all Reebok footwear and apparel are currently made from recycled polyester, O’Toole said, and as is the case with its brother brand, Adidas, the goal is to be 100 percent recycled polyester by 2025. “There is a lot of work to get there. It’s always the last 25 percent that’s going to be the hardest, because there is some componentry that is tougher to make out of recycled polyester,” he said, adding that Reebok is working toward having non-petroleum elements in its footwear.
Reebok recently renewed its deal with Jean-Raymond for another three years, O’Toole said, and there are still “several seasons” left on its contract with Beckham, too. Her passion about fitness and health in her own life, as well as her athletic family (namely her soccer-playing husband, David), were upsides for Reebok, who believe her “great eye” can be mined to enhance footwear models in the future, as well as apparel.
“We’ve definitely seen some great movement as far as what sportswear can look like,” O’Toole said. “She’s a creative person. Sometimes the real work is to make sure we’re accommodating her creativity and ultimately deliver it to our customers in a timely manner. But we have that tension internally, too — creative folks want to keep designing and we have to tell them, ‘Stop. We have to start making the stuff.’”
Having worked with a lot of designers over the years, who preferred to send intermediaries to visit the archives or work with Reebok designers, O’Toole gave Beckham “a lot of credit” for coming to Boston to spend whole days with the team. “She’s always pushing the envelope, asking. ‘Well, why can’t we do that?’ which is exactly what we need her to be doing.”
Asked about reports that another potential collaborator, Beyoncé, had allegedly walked out on a Reebok meeting dissatisfied about the prospective team that she would be working with, O’Toole said the story was untrue. “What did happen was we had Beyoncé come to our offices for what was scheduled to be a few hours and it ended up being the whole day,” he said. “We had great discussions with her about what’s important to her, where our industry and particularly Reebok is going. And what’s lost on a lot of people is we are part of the same company that she ultimately signed with. There were some discussions about where the better fit was for the company. Someday someone can ask her, but I think she had a great experience.” O’Toole added that executives continued to speak with her for four or five months after the initial visit about the potential collaboration.
While the Beyoncé collaboration didn’t work out, there are other ways to ring up quick sales, notably “drops,” which many companies including Amazon are banking on. But for Reebok, it’s more about telling a consistent story, one that resonates with consumers.
“My analogy is always think about our consumer scrolling through his or her Instagram feed. You stop when something is connecting with you from a storytelling point of view,” O’Toole said. “I do think the idea of telling great stories is going to be important for us, but you can get it wrong,” he said. “The idea of freshness and unique drops will be out there, but we’ve got to get the story right.”
That story will continue to center around the “Sport the Unexpected” campaign, which was spearheaded by former marketing chief Melanie Boulden who exited the brand unexpectedly in June after a little over a year. O’Toole said the sentiment behind the campaign, which included a series of short films, blends performance and lifestyle. “We’re going to be continuing with that.”
O’Toole also took on the question of whether Adidas plans to continue to hang onto the brand. Jamie Salter, chief executive officer of Authentic Brands Group, has said publicly that he would be interested in buying Reebok and O’Toole said, “Jamie is not alone. There are a lot of companies that see value in the Reebok plan.”
In May 2017, shareholders first called on Rørsted to sell the then loss-making Reebok brand. Adidas, which acquired Reebok for $3.8 billion in 2005, was reportedly considering divesting the brand last year.
Although he said Rørsted would be the one to ask if any parties have approached him about selling the brand, “my understanding is no. When you think about it from Adidas’ perspective, there’s only a handful of global sports brands that you can show up in Australia, China or Latin America and be a recognizable sports brand. Reebok is one of those. The energy and effort of the company at large is to maximize the value of that.”
While there’s still work to be done, O’Toole is confident that Reebok will continue to move forward. That includes everything from expanding the brand’s reach in China, where distribution is “quite small,” to improving its performance in other overseas markets.
Currency-neutral Reebok sales increased 2 percent for the third quarter. While he was in “no means celebrating” the third-quarter performance, O’Toole described it as a small step in the right direction. “It’s a small step forward and a reason for optimism,” he said.