SBD/April 8, 2011/Marketing and Sponsorship

Adidas Chair Hainer: Reebok Required "More Cleanup Work Than We Thought"

Herbert Hainer says the biggest challenge is the rising cost of raw materials
adidas Group Chair & CEO Herbert Hainer discussed his company's acquisition of Reebok in '06 with BLOOMBERG BUSINESSWEEK. Hainer said when adidas acquired Reebok, “we saw it as a way to expand” in the U.S., but “we had to do much more cleanup work than we thought.” Hainer added, “I felt we could position Reebok as a premium American fitness and training brand and use it to build our market share.” But he noted “there were surprises.” He said Reebok was “over-distributed: We didn't want to be in places like Wal-Mart or Tesco anymore.” Hainer: “About 30 percent of the revenue was at price levels of $39 and below. You earn neither image nor money with those prices.” Hainer said of the relationship between adidas and Reebok, “There was also jealousy left and right. When you've been competitors for 20 years, it's hard to suddenly be friends. We wanted to give some leverage to Adidas, so we took over the NBA sponsorship from Reebok. That did not get us a lot of applause at Reebok, of course.” Hainer: “If I could do it again, I would have managed expectations better. We didn't give a time frame for how long this would take, and I didn't replace people fast enough. Still, Adidas and Reebok are both growing.” He said, “Right now, our biggest challenge is the rising costs of raw materials. We'll have to increase Reebok's prices, which will take trial and error. We have to protect our margin, but we also don't want to lose too much volume. We want to build on our success” (BLOOMBERG BUSINESSWEEK, 4/11 issue).
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