In a page one piece in this morning's WALL STREET JOURNAL,
Joseph Pereira looks at the challenge Reebok faces in catching
Nike. Reebok Chair Paul Fireman, "apparently contradicting
statements he made last week," now says he "isn't opposed" to
bringing on a new COO or CEO. Fireman said the company is
looking to cut costs and "overhaul its order and information-
tracking system." But the "toughest fight" for Reebok is being
fought with Woolworth's Foot Locker chain, whose 2,800 outlets
account for 23% of U.S. sneaker sales. Nike is seen as having
better relations with Foot Locker, as Reebok hasn't consistently
given the retailer "early looks at new models and speedy
shipments." Foot Locker's Nike sales are expected to hit $750M,
while Reebok's sales will drop to $172M, accounting for a
"whopping 58% of the expected $1 billion domestic sales gap"
between the two companies. Some Reebok officials admit the
company has "been sloppy" with Foot Locker, but Fireman insists
he is trying to improve relations. One "hurdle" Reebok faces is
that Foot Locker's customers "aren't Reebok core clientele" --
Foot Locker attracts teens and Gen-X customers "often willing to
pay $80-90 for shoes." Another potential problem for Reebok is
that Shaquille O'Neal is reportedly "unhappy" with his $3M a year
deal, and "has been shopping himself around for bigger money."
His signature Reeboks, "hampered by design problems, have been
only moderately successful" (WALL STREET JOURNAL, 9/22).
