Reebok Int'l Chair Paul Fireman is "under siege from some of
his largest institutional shareholders," according to Pulliam &
Pereira of the WALL STREET JOURNAL. Some believe he should "step
aside" in the wake of three years of flat operating profits, a
"lagging share price, and more recently, disappointing results."
Reebok's shareholders are "irked" because expenses are up and
distribution "has stumbled." Some say Reebok needs a "strong
chief executive," but in an interview, Fireman says he has no
intention to step down. Fireman says "anxious shareholders
should consider bailing out or buying Nike." One problem in
competing with Nike has been that expenses "have gone through the
roof," in large part to athletic endorsements. Also, there is a
perceived "bad relationship" between Reebok and athletic footwear
retailers like Foot Locker, where "Reebok has typically received
less shelf space than Nike." Fireman admitted the company is
"working hard" to change its relationship with Foot Locker.
Management "turmoil has also alienated investors," as this year
two co-Presidents, John Duerden and Roberto Muller, both
resigned. Glenn Greenberg, of Chieftain, a major institutional
shareholders, said that "since Fireman came back, Nike has left
them in the dust. A different person is needed" (WALL STREET
JOURNAL, 9/14).
NOT ALL ROSY IN PORTLAND? The outlook for Nike is examined
by BLOOMBERG BUSINESS NEWS. Peter Russ, an analyst with Shelby
Cullom Davis, says Nike has "emerged as the second-best company
at building a franchise behind only Coca-Cola." But investors
"fret that Nike's shares are overvalued." Russ said his firm is
"holding" Nike now, and were only buying it when it was under
$50. Russ also believes Nike has other "problems on the
horizon," including the aging of some of their marquee endorsers,
like Michael Jordan, Charles Barkley, Bo Jackson and Cal Ripken.
Other worries include "over-exposure" and better performance in
Europe, where "distribution and identity problems" have slowed
sales (BLOOMBERG BUSINESS NEWS/DETROIT NEWS, 9/14).
