[HN Gopher] Adidas ends Reebok era with $2.5B sale to Authentic ...
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Adidas ends Reebok era with $2.5B sale to Authentic Brands
Author : keiferski
Score : 60 points
Date : 2021-08-12 19:35 UTC (3 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| dotcommand wrote:
| And Nike is currently valued at $270 billion. Where did reebok go
| wrong? What did Nike do right? Crazy how much more successful
| Nike was.
| irrational wrote:
| Nike is the innovation leader. They have actual scientists and
| engineers on staff. The other companies mainly wait to see what
| Nike comes up with and then copy it. Or they just forego
| performance all together and just make lifestyle products.
| rabidonrails wrote:
| The Jordan brand itself is worth over 10B.
|
| Source:
| https://www.forbes.com/sites/kurtbadenhausen/2020/05/03/mich...
| S_A_P wrote:
| 1) I think that Nike is a brand that got endorsements right.
| Adidas was slow to jump on the big shoe deal and they have way
| fewer deals than Nike.
|
| 2) Adidas is a brand that I look to for more classic styles
| while Nike seems to always be pushing boundaries. Adidas did
| have a pretty good run with some modern takes(NMDs I liked a
| lot) but in general I dont like the new styles. Sometimes I
| like the new styles, but most of the time its just too much for
| me.
|
| 3) Nike was the first that Im aware of to do the user
| customized versions of their shoes. I think Adidas is doing it
| now, but IIRC it was less dynamic than Nike allowed.
|
| 4) Limited supplies- while this seems counterintuitive limiting
| the supply of the premium shoes encouraged the collectors to
| step in. Now instead of hoping the public accepts a $300 dollar
| sneaker, they jump out and buy as many as they can so they can
| list them on StockX.
| anonAndOn wrote:
| Adidas passing on Jordan was clearly a dumb move.[0]
|
| [0]https://www.nbcsports.com/chicago/bulls/michael-jordan-
| wante...
| paxys wrote:
| One word - branding.
| ardit33 wrote:
| no, it is product. Adidas soccer shoes have been
| underperforming because they honestly suck. Even their shirts
| are pretty bad compared to Nike's drifit.
|
| Their classical Samba and Copa mundial, are just too heavy
| for modern use, and their new fabric/material lightweight
| shoes are just not as good as Nike's.
|
| Nike has innovated material wise, while Adidas hasn't, and it
| just has only been catching up with inferior me to products.
| amelius wrote:
| Did reebok make a mistake?
| [deleted]
| antisthenes wrote:
| Well, Reebok was just an underperforming subsidiary of Adidas,
| a company that's currently worth ~$70bn. So I don't think it's
| fair to just compare the 2.
|
| What Nike did right, though, is fully embrace the influencer
| culture, I think. That, and actually having some cool and
| unique designs.
|
| Reebok always felt like "just another shoewear brand" and their
| clothing lines were completely generic and uninspired.
| majormajor wrote:
| "Where did Reebok go wrong" goes back long before Adidas
| bought them in the first place. Nike had won that battle
| before many influencers were even born.
| HeyLaughingBoy wrote:
| Wasn't Reebok, "the physics behind the physiques" way back
| when?
| antisthenes wrote:
| Adidas bought them for more in 2005 than they sold them for
| today. Accounting for inflation, that's one hell of a
| discount.
|
| Which means that wherever they went wrong before 2005,
| Adidas didn't really do anything to stop them from a
| downward trajectory.
|
| > Nike had won that battle before many influencers were
| even born.
|
| I wish I had your superpower of determining causality going
| back 30 years. Must be a hoot.
| ardit33 wrote:
| Product.... Nike is just innovating all the other legacy
| product makers, Rebook, Puma, and even Adidas. Especially in
| the soccer gear department, Nike is just outcompeting them.
|
| Adidas, should have been first, since it is a European company,
| but they just slacked and their product line stagnated. They
| thought it was just a marketing problem, which it was not. Just
| changing their logo to something cooler, didn't make their
| products any better.
|
| I was an Adidas fan, since they were the 'product of the west',
| of all the kids that were born under communism. They, and
| together with Puma made the best soccer shoes and gear. But
| over time, Nike started innovating hard, and releasing better
| engineered soccer shoes, and wear. (their Drifit Nikefit shirts
| are great).
| kache_ wrote:
| they're just shoes
| crysin wrote:
| Shoes that have lead to software being developed to
| purchase all available inventory as fast as possible.
|
| See exhibits A: https://www.nikeshoebot.com/ B:
| https://ganeshbot.com/ C:https://cybersole.io/
|
| And there's a lot more out there
| ardit33 wrote:
| Top soccer cleats cost $250+. At that price point user
| expect some innovation (material wise), and not just simple
| sneakers.
|
| Nike has been outcompeting Adidas/Reebok/Puma and others.
|
| Ps. You can buy cheap soccer cleats at $40-50 price point.
| They are good just for casual users, but for semi-serious
| players, they just don't cut it as they tend to have
| inferior materials, and tend to be heavy and not good for
| people that want some edge.
|
| Especially if you are an older player (35+ yo), the lighter
| shoes make a huge difference.
| nobrains wrote:
| ... thought Reebok and Adidas.
| beckman466 wrote:
| > What did Nike do right?
|
| Luck and paying the right celebrities for endorsements? Also
| using sweatshops in the global south to extract superprofits
| [1]?
|
| More and more I'm starting see branding as a way for big
| companies to slowly condition people to relate emotionally to
| some spectacle [2] (e.g. an exciting celebrity spokesperson in
| an advert), distracting them from an often exploitative and
| unsustainable production process.
|
| How many people know about Rana Plaza? [3]
|
| It's exciting to see new initiatives like 'Fixing Fashion'
| though (Alicia Minnaard and Dave Hakkens)[4].
|
| [1] https://anticonquista.com/2019/06/29/revolutionary-reads-
| rev...
|
| [2] https://en.wikipedia.org/wiki/The_Society_of_the_Spectacle
|
| [3] https://youtu.be/OaGp5_Sfbss?t=31
|
| [4]
| https://www.dazeddigital.com/fashion/article/52553/1/fixing-...
| - short intro: https://www.youtube.com/watch?v=buWRaffBdNM
| acomjean wrote:
| I always remember when I was young they released sneakers with a
| built in pump, to help them fit better.(inflatable bladder inside
| the shoe) I always wanted to try those out...
|
| It was different.
|
| https://en.m.wikipedia.org/wiki/Reebok_Pump
| dkarl wrote:
| I had a pair. They didn't fit any better than shoes tightened
| with laces.
| frogpelt wrote:
| That was back when Nike and Reebok were actually in
| competition.
|
| Here's an interesting read about it:
| https://www.retaildive.com/news/reebok-was-meant-to-be-a-nik...
| patorjk wrote:
| Those were the must have shoes when I was growing up in the
| early 90's. For some reason we thought they would help us play
| basketball better. I still remember showing up to school with a
| pair on and all of my friends being impressed.
| 3327 wrote:
| The bullying in the 90s was something else. Kids today would
| be blown away
| sdoering wrote:
| I fought so hard until my dad bought me a pair. Damn I
| thought that maybe once the bullying would stop in school.
|
| I still wore the wrong jeans and shirts, though.
|
| Nothing like a pair of shoes conjuring up memories.
| patorjk wrote:
| I picked up a pair of Shaq shoes when I was in middle
| school for that reason. Weirdly it did help. I remember a
| kid that would pick on me stopped because he thought my
| shoes were cool. Everyone thought they had to have been
| really expensive too (like Jordan shoes), but they weren't.
| I had found them at some discount retailer. I'm not even
| sure if they were legit, but they said Shaq and they looked
| cool. Eventually someone else found the shoes and brought
| up that they were inexpensive shoes, but by that time I'd
| already moved on to a different pair of shoes.
| adventured wrote:
| I too had the original Shaq Rebook pumps. Did you pick up
| one of these?
|
| https://i.imgur.com/MLtw137.jpg
|
| Another gimmick to mess around with. The instant
| inflation tool (has a CO2 cartridge in it). Circa 1992 it
| seemed cool as a young kid, fun to mess with for a couple
| of weeks during school - up to the point where you had to
| buy the replacement cartridges for something entirely
| unnecessary.
| coryrc wrote:
| They were probably legit and intentionally more
| affordable: https://www.blackbusiness.com/2016/07/shaq-
| affordable-shoes-...
| moltar wrote:
| I had one of those pairs. Never used it. But apparently it was
| targeted at basketball players. I don't play.
| rollschild wrote:
| I remember those shoes. I bought one pair of Yao Ming signature
| shoes with that pump on. Those were nice, the only issue was
| that they had holes on the sole. I think the holes were
| designed for better ventilation and keeping your feet cool and
| dry, but the reality is if I walked on some water/rain my feet
| would immediately get wet.
| dep_b wrote:
| I had them. They were sold at Aldi for some reason, while they
| were still popular shoes. Didn't dislike them but the pump
| gimmick wore off quickly...
| tclancy wrote:
| Dee Brown!
| superfrank wrote:
| I didn't have the original pumps, but I wanted a pair growing
| up. In '05 or '06 when they did a re-release I got a pair of
| the Pump 2.0s.
|
| Never meet your heroes. Maybe the 2.0s were a different design,
| but they were incredibly disappointing. The pump pretty much
| didn't do anything. You could pump them while wearing them and
| not feel anything.
| rabidonrails wrote:
| Just to preface this was I too was young when these came out
| but for some reason I never thought this was about making the
| shoes fit better...I thought the pump was there to make you
| JUMP higher.
| launchaway wrote:
| For reference, Nikola Motors, a fraudulent electric truck
| manufacturer, has a Market Cap of $4B
| paxys wrote:
| What is the relevance of this comparison?
| launchaway wrote:
| upvotes
| toomuchtodo wrote:
| They have ~$1B cash on hand, so it's only ~75% fraudulent at
| current valuation.
| antattack wrote:
| The SPAC has >500mln in Private Investment in Public Equity
| (PIPE) commitments.
| jjeaff wrote:
| Except stock price is supposed to indicate discounted future
| expectations of value. I expect that they will spend that $1B
| in the future with little to show for it.
| vasco wrote:
| The 25% keep enough people fooled to get enough time to spend
| the ~$1B.
| hn_throwaway_99 wrote:
| For comparison, though, "Reebok" is really just the Reebok
| _brand_. I mean, I 'm assuming all of the production of the
| actual shoes is outsourced to some sweatshops like all the
| other shoe manufacturers. Even the article refers to Reebok as
| "the U.S. brand management firm".
| SheinhardtWigCo wrote:
| I think that refers to ABG.
| gnicholas wrote:
| Interesting that Adidas didn't have more success with Reebok. I
| wonder if it's because they didn't want to cannibalize their main
| brand.
|
| In my mind (as someone who grew up in the late 80s and 90s),
| Reebok made great shoes -- better than Adidas and wider than
| Nike. Most of my tennis shoes growing up were Reebok cross
| trainers, and I would be more likely to try on a pair of Reeboks
| than a pair of Adidases. I do like Adidas apparel, and I own a
| pair of their iconic Sambas.
|
| Seems like a missed opportunity. Hope the new owner can turn it
| around, and not just let it slowly fade into obscurity.
| conductr wrote:
| Growing up in the 80s/90s. In my kid social groups. This is how
| I categorized the brands;
|
| * Nikes were fashion mixed with athletics and performance and
| also high quality manufacturing. Add to it what they did with
| the branding and it's no wonder they are king of the hill. It
| was my preference then and now.
|
| * Reebok was a Nike knock off with gimmicks like pumps. Pumps
| were awesome and super hyped at the time. It's the only Reebok
| I've ever owned and it popped while playing basketball at
| school :(
|
| * Adidas were pure fashion. I have had a lot of Adidas in my
| life. But I've had way more Adidas clothing than shoes. Even
| within the shoe category, it's like the same pair I've had 20
| times in different colors (you know the ones). I've had about 2
| pairs of shoes that were not those.
| [deleted]
| sdoering wrote:
| I still semi regularly bought Rebook shoes for R'n'R training.
| My SO and myself find them to be the perfect combination of
| stability, lightness and flexibility when doing rock and roll
| with acrobatics.
| is_true wrote:
| I was a fan of Reebok, they had really good price/quality
| items. But a couple of years ago they merged their ecommerce*
| with the one from Adidas and they increased the prices so
| almost everything was almost at the same price between the two
| brands.
|
| *in argentina
| ngokevin wrote:
| There's a video about how Reebok became the sole sponsor of
| UFC, forced every athlete to wear them for pennies on the
| dollar (making them drop their more lucrative endorsements).
|
| Their store would have clothing with the athletes' names
| misspelled, combine two athletes' names together, wrong faces,
| sell clothes on the wrong section of the store (men's/women's),
| have wardrobe malfunctions during female fights, feature a map
| of Ireland for Conor McGregor but completely cut off northern
| Ireland. And they'd misspell giant words on the screen during
| their big press conferences.
| sngz wrote:
| as someone who trains, that is one of the main reasons I
| stopped buying reebok. Most of my shorts and shoes were
| reebok prior to that deal, they were good for the price.
| riffic wrote:
| Unless the page hasn't been kept up to date, the founder of
| Reebok is still alive at the age of 86:
|
| https://en.wikipedia.org/wiki/Joseph_William_Foster
|
| some more info on the origins of the brand over there.
| Rapzid wrote:
| Dang, I just bought a pair of Legacy Lifter IIs.. Maybe I should
| spring for a backup pair if they work out.
| gnicholas wrote:
| When I found out Wilson was discontinuing my favorite tennis
| shoes, I bought eight pairs of them. I still have two pairs
| left, a decade later. No regrets!
| admn2 wrote:
| Does anyone know much about Authentic Brands? They own all these
| stagnant or struggling brands like Brooks Brothers, Barney's,
| Sports Illustrated, Lucky Brand, Prince, etc., but I can't tell
| what they actually do with the IP or existing business?
| peytoncasper wrote:
| I think they do what other private equity groups do with medium
| sized tech businesses. These companies are usually profitable
| to some degree, but don't really have a pathway to growth.
|
| This generally makes the unattractive to most investors.
| However, companies pick up these brands, remove redundancies by
| combining core aspects of different businesses, try to increase
| profit margin and just ride it out.
|
| Rinse and repeat and you build a portfolio. Once one dries up,
| you pick up another. A bit like combining good and bad loans
| together. As a package the good ones can support the bad ones
| to a degree.
| CPLX wrote:
| That's a highly charitable take on what private equity
| actually does with legacy businesses.
|
| In reality they feast on them like bloodsucking leaches. The
| usual playbook is to load the companies down with as much
| debt as they possibly can, and use the loan proceeds to pay
| themselves lucrative fees and dividends. Then they cut
| expenses to the core and demolish the quality of the product
| or service and see how long it takes people who aren't paying
| attention to realize that the 100 year old brand with a
| reputation for quality doesn't really exist any more.
|
| Once that's done they leave the loan underwriters and current
| employees holding the bag and abscond to a vacation
| destination of their choice with the money and discuss their
| next target over Aperol spritzers.
| peytoncasper wrote:
| I don't technically disagree with you, but I do think this
| is just a bit hyperbolic.
|
| If you just spent $2B on a company, you probably did it to
| make money at the end of the day. After all, business is
| rarely charitable.
|
| The company you just acquired likely has a declining and
| unhealthy cash flow and little to no cash reserves. You're
| unlikely to go and then infuse it with more of your
| capital. As a result, you're going to turn to outside
| capital to finance whatever plans you have.
|
| These plans are used as justification to creditors with
| which to take out these loans at whatever interest rate
| they deem appropriate.
|
| Additionally, you're likely going to reward yourself for
| any profits or turn around that does happen at the company.
| After all, you do have $2B tied up in this company.
|
| I agree, these companies are now more than likely walking
| corpses. As an employee, I probably wouldn't want to be
| stuck there as there is likely going to be little spent on
| employee retention and growth.
|
| However, it also does provide extended life to these brands
| that with a declining cash flow and no outside leadership
| change would likely meet the same fate and likely much
| quicker at that.
|
| As with everything, there is a spectrum. There are likely
| examples that did exactly what you just said. And there are
| also probably examples where the business turned around and
| went public again some day. The vast majority are going to
| sit in the middle, with no sinister plan and slowly fade
| away as the last customers stop giving them money.
|
| I think it's unfair to paint the companies being acquired
| as perfect companies. They have likely already lost
| customer confidence and as I mentioned in my first post
| can't find a path to growth. After all, that is why they
| are in this position to begin with.
|
| The morality of this process can certainly be debated, but
| I think it's fair to say that most people don't invest a
| lot of money into a business just to run it into the ground
| as quickly as possible. It does exist, no doubt, but
| running a firesale is far from the most profitable way earn
| money on your investment.
| tehjoker wrote:
| Can you clarify something that I never understood about
| this process, are they literally using the loan money to
| pay themselves?
| mattlondon wrote:
| I think (don't know) that they license the brand name out to
| various people. So now you'll start to see "Reebok" branded
| stuff being made and sold by random stores that wouldn't
| usually sell "real" sports gear. So you'll see it being made
| and sold by the Walmart/Tescos of the world etc. People will
| vaguely recognise the brand for years/decades to come.
| admn2 wrote:
| I think this is definitely true for some of their other
| brands especially, they own the right to use all these
| celebs: Elvis, Marilyn Monroe, Shaq, etc. However, it does
| look like many of their other brands continue operating -
| Forever 21, Brooks Brothers, Aeropostal (maybe?), Lucky Brand
| icegreentea2 wrote:
| Lucky for you, they just filed for IPO, so you can read their
| prospectus!
| https://www.sec.gov/Archives/edgar/data/0001666054/000110465...
|
| I think their strategy is right there on page one:
|
| ABG is responsible for brand identity and strategy, and
| marketing. ABG has approval rights over product design. Their
| partners (licensees) do everything else (including product
| design).
|
| Presumably for this strategy to work at all, people believe
| that ABG is sufficiently skilled at branding and marketing (as
| well as having the ability to synergize across brands... before
| you laugh, ABG owns the rights to likeness of Marilyn Monroe,
| Mohummad Ali, Shaq and Elvis) that people who like to be just
| "operators" will partner with them.
| lotsofpulp wrote:
| They bet they can cut costs (and hence quality) faster than
| customers lose trust in the brand.
| moolcool wrote:
| They own some brands which are still quite prominent as well,
| like Forever 21, Eddie Bauer, and Volcom
| lowkey_ wrote:
| I'm unfamiliar with Volcom, but both Forever 21 and Eddie
| Bauer can be classified as stagnant or struggling along with
| the rest mentioned in the prior comment. (Additionally, both
| companies have also gone through bankruptcy proceedings).
| gnicholas wrote:
| As part of the acquisition, the buyers (Authentic Brands and
| Simon Malls) agreed to continue operating Brooks Brothers
| stores across the country. Not sure what they've done in other
| cases.
|
| https://www.cnbc.com/2020/08/12/brooks-brothers-enters-purch...
| CobaltFire wrote:
| Interesting note here is that as of last year the US
| manufacturing of Brooks Brothers was closed.
|
| They had been the manufacturer of the top quality of Naval
| Dress Uniforms (optional), but now it's only what's left in
| stock due to uniform items not being authorized for wear
| unless they meet a bunch of requirements (Berry Amendment),
| of which made in the US is one.
| [deleted]
| racl101 wrote:
| End of an era.
|
| Best pair of basketball shoes I owned were the 1st Reebok Shawn
| Kemp Kamikaze shoes. They were such a good deal and such awesome
| shoes.
| [deleted]
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