Athletic Shoe and Reebok

Only available on StudyMode
  • Download(s) : 384
  • Published : December 6, 2012
Open Document
Text Preview
Reebok was founded in Bolton, United Kingdom and is currently headquartered in Canton, Massachusetts. I selected this firm for my report because Reebok manufactures athletic shoes, apparel and accessories some of which I utilize in my life. Reebok is a lesser-known company than a firm like Nike but still is powerful in it’s own right. Reebok produces everything from t-shirts to sneakers and is why I chose to do my report on this particular firm. Since 2005 Reebok has been a subsidiary of the German company Adidas. The company name comes from the Afrikaans spelling of rhebok, a type of African antelope or gazelle. The original name of the company is Mercury Sports. In 1960, two of the founder's grandsons Joe and Jeff Foster renamed the company Reebok in United Kingdom, having found the name in a dictionary won in a race by Joe Foster as a boy; the dictionary was South African edition hence the spelling. The company lived up to the J.W. Foster legacy, manufacturing first-class footwear for customers throughout the United Kingdom. In 1979, Paul Fireman, a United States sporting goods distributor saw a pair of Reeboks at an international trade show and negotiated to sell them in North America. He negotiated for the North American distribution license and introduced three running shoes in the U.S. that year. In 1958 the Reebok company was formed by Foster’s grandsons and in 1979, at the height of the running shoe boom, three models were introduced into the US market. Although they were the most expensive shoes on the market, demand soon outgrew supply. At $60, they were the most expensive running shoes on the market. Adidas plans to buy the outstanding shares of Reebok for $59 apiece in cash, valuing the transaction at $3.8 billion. Reebok's executive board has agreed to the deal. Adidas has said it will pay for the acquisition with a mix of equity and debt. It raised $795 million by selling new shares in November and has also secured a 2 billion euro revolving credit agreement, which might help as a back-up. Shares will be bought only after Reebok shareholders have given the go-ahead for the deal, according to Adidas. The deal will create a firm with combined annual sales of around $11 billion. Global market leader Nike posted sales of $13.7 billion in its 2004/05 fiscal year. Adidas expects the deal to boost net income by more than 10 percent in the medium term. Sales are seen growing at a mid- to high single-digit rate, while cost savings are expected to reach 125 million euros annually by the third year once the deal is done. Reebok will become a separate brand within the new group, supplementing the key Adidas and small golf sports units Taylormade and Maxfli. All brands will report to Adidas' executive board in the Herzogenaurauch headquarters near Nuremberg. The deal is set to enhance Adidas' position in the United States, which accounts for 50 percent of the sports footwear market alone. According to industry magazine Sporting Goods Intelligence, Nike holds an estimated 36 percent of the U.S. market, Reebok around 12.2 percent and Adidas 8.9 percent. In contrast, Reebok has a much better position in the lifestyle fashion market, where Adidas has been struggling to imitate the success of Puma. Reebok is also known for women’s wear, aerobic and fitness sportswear. In the year 1981, Reebok's sales exceeded $1.5 million, but a dramatic move was planned for the next year. In 1982, Reebok introduced the first athletic shoe designed especially for women. In the midst of surging sales in 1985, Reebok completed its initial public offering. In the late 1980s, Reebok began an aggressive expansion into overseas markets and Reebok products are now available in more than 170 countries and are sold through a network of independent and Reebok-owned distributors. In 1992, Reebok began a transition from a company identified principally with fitness and exercise to one equally involved in sports by creating several new footwear and apparel...
tracking img