SIGN OF THE TIMES? REEBOK REPORTS DIP IN '97 NET INCOME
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).