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SIGN OF THE TIMES? REEBOK REPORTS DIP IN '97 NET INCOME
Published December 12, 1997
Reebok yesterday "surprised Wall Street by predicting that 1997 would not ... be the year of the turnaround," according to Kimberly Blanton of the BOSTON GLOBE. Reflecting a "losing battle for market share" against Nike "in a soft athletic shoe market," Reebok "estimated" it would earn $2.25 to $2.35 per share in '97, translating into net income ranging from $131.5M to $137.5M for '97. The '97 estimate is below '96 earnings, and Blanton adds that Reebok earned "nearly twice as much" in '94. Shares of Reebok's fell 3 3/16, closing at 29, after hitting a 52-week low of 28 1/2 during the day (BOSTON GLOBE, 12/12). Per share earnings estimate were "as much as 10% lower than analysts' expectations" of $2.50 (WALL STREET JOURNAL, 12/12). FROM THE HOME OFFICE: Reebok CEO Paul Fireman: "As everyone in our industry is aware, there has been a recent softening in demand at retail for the athletic footwear and apparel market as a whole, which has resulted in a back-up in retail inventories. We expect this softening and inventory back-up to negatively impact our anticipated fourth quarter results and, accordingly, have reduced our expectations for the full-year 1997" (Reebok). PINCHING PITCHMEN? After the earnings report, Reebok said it "plans to cut the number of sports personalities on its endorsements roster" (AP/AKRON BEACON JOURNAL, 12/12). Reebok Dir of PR Dave Fogelson "won't say who, or how many ... athletes might go," adding, "We are in a position to work with fewer individual endorsers without diminishing our on-court presence" (Michael Hiestand, USA TODAY, 12/12). ONE ANSWER TO THE WOES: Sales of Reebok's new Allen Iverson shoe, "The Answer," have "fouled out," and analysts have blamed Reebok's drop in earnings on "poor sales" of the shoe, according to Davies & Moran of the PHILADELPHIA DAILY NEWS. PA-based Shin's Athletic Foot Wear Owner Mike Shin called the shoe "dead." Iverson's Reebok rep Henry Gaskins said that while the shoe is "selling below projections, he does not expect it to be a complete failure." Gaskins: "The shoes are doing pretty well, they are just not performing as good as we expected. Allen is still as popular as he was before. And we don't have any plans to change any of our advertising or marketing for Allen." Davies & Moran add that local sneaker store operators said part of the problem with Iverson's shoe is that "consumers think it is ugly" (Davies & Moran, PHILADELPHIA DAILY NEWS, 12/12). WHY THE SLUMP? Morgan Stanley's Josi Esquivel said Reebok "is still too dependent" on a few lines of sneakers, adding, "They don't have a breadth and depth of product" (WALL STREET JOURNAL, 12/12). In N.Y., Richard Wilner reports that Reebok expects a soft sneaker market "until at least" midway through '98 (N.Y. POST, 12/12).