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Sales of Reebok's fashionable sneakers still run at sprinter's pace
Despite lingering doubts attached to the faddish aspect of some of Reebok's business,[link widoczny dla zalogowanych], securities analysts concede Reebok management is remarkably adept at discerning consumer desires and capitalizing on them.
``They've proven they are very powerful marketers,[link widoczny dla zalogowanych],'' says Matthew Reich,[link widoczny dla zalogowanych], a shoe industry analyst with Drexel Burnham Lambert. ``They provide the consumer with what they want.''
Says Jack A. Sullivan, a senior vice-president of Van Kasper Co.,[link widoczny dla zalogowanych], a San Francisco brokerage firm: ``It's a brilliantly run company, but they are not sanguine about staying in place. They can't be. These [huge successes] are things that will go away - at least the intensity of the success will pass because what you're talking about, more than anything else, is fashion.''
But to make sure Reebok thrives beyond fad or fashion, the company has been diversifying. Although its line of fashion apparel wasn't a big success,[link widoczny dla zalogowanych], the company bought Rockport shoes for $118 million last November and recently started a line of brown leather walking shoes. Arch-rival Avia, whose shoes were stealing away Reebok followers,[link widoczny dla zalogowanych], was purchased by Reebok last November for about $180 million. There was a failed attempt to buy Stride-Rite,[link widoczny dla zalogowanych], the children's shoemaker. Now, Reebok has an eye on the Frye Company, a Marlboro, Mass., bootmaker.
Reebok also is looking overseas, with factories in Taiwan and South Korean cranking out shoes for Europe,[link widoczny dla zalogowanych], Britain,[link widoczny dla zalogowanych], Japan,[link widoczny dla zalogowanych], and the Pacific Rim. Sales abroad make up about 10 percent of revenues.
But as Reebok moved into making running and court shoes,[link widoczny dla zalogowanych], it encountered some problems. Reebok may have ``a little bit of an image problem'' among some amateur sports enthusiasts, says Michael Kennedy, owner-manager of City Sports, a Boston sporting goods store. ``It isn't a spectacular performance shoe,'' he says. ``It's not known to last a long time or be tremendously supportive.''
When sales of the shoe first took off, Mr. Kennedy says his store was getting 30 pairs a month returned because they ``blew out,[link widoczny dla zalogowanych],'' or tore apart during heavy athletic use. Because of that,[link widoczny dla zalogowanych], he thinks some people might not buy another pair. Despite that problem, the name ``Reebok was magic'' in 1986,[link widoczny dla zalogowanych], says Kennedy. He cites as proof the flood of people coming into his store at that time ``saying `give me Reebok' without knowing anything about them.''
Now, supply has caught up with demand and the torrid pace of sales has slowed a bit. But Reebok is still one of two solid sellers in the store.
``I think the company has realized the problems, and they've been making the shoes stronger and more supportive,'' Kennedy says.
Having corrected much of the durability problem, analysts say the company now has such momentum it will continue to be a major player in the industry.
``Reebok management has open ears to the consumer,[link widoczny dla zalogowanych],'' says Drexel's Mr. Reich. ``They're the ones providing the fashion-oriented product, the comfort - they've given the consumers what they really want and that's what's driving sales.''
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