Executive Summary – Reebok Analysis & Integration
Strengths Opportunities
- Strong financial position (slide 2) - Market: Pursue Merger / Acquisition partner to compete in a highly consolidated - Leaders in licensing sales (slide 3) market (slide 6, 7)
- #2 Mkt Share in a highly consolidated - Segment: Focus on women’s products to market (slide 3) drive volumes (slide 8)
Weaknesses Threats - 5-Year market share reduction (slide 4) - Nike’s Market Dominance (slide 9)
- 5-Year CAGR decline (slide 5)
Peter McNamara and Nick Profita Stoplight Chart Reebok’s strengths include their relationship with customers and their financial strength
New Nike Reebok Converse Balance Relationship with customers Relationships with suppliers Cost
Financial Strength Manufacturing technology Information technology
Peter McNamara and Nick Profita Marimekko Chart (3 of 3) Reebok has the second highest market share in the US as well as the highest licensing revenue share
Footwear Sales in $ Million
$8,135 $8,455 $1,633 Total = 18,223 100%
Others Others 80 Others
Fila Adidas ASICS 60 Fila Puma Reebok Adidas New Balance 40 Reebok Converse
Nike Adidas 20 Nike Reebok
0 U.S. Int'l Licensed
Source: Sporting Good Intelligence (www.sginews.com) Peter McNamara and Nick Profita 3 100% Stacked Bar Chart (3 of 5) Reebok’s share declined from 21% to 15% over the last 5 years
Footwear Sales in $ Million
$5,994 $6,375 $6,574 $7,215 $8,074 100%
26% 22% 22% 34% 32% 80 3% 8% 6% 6% 5% 6% 4% 5% 5% 5% 60 4% 5% 17% 15% 21% 21% 22% 40 Others Converse
45% 47% Fila 20 38% Adidas 33% 32% Reebok Nike 0 2008 2009 2010 2011 2012
In Millions of Dollars
4 Source: Sporting Good Intelligence (www.sginews.com) Peter McNamara and Nick Profita Area Chart Reebok’s sales have grown 1% less than the industry standard over the past 5 years
Footwear Sales in $ Million CAGR Industry $8,000 6.1%
Others -3%
6,000 Converse 1% Fila 14% Adidas 21%
Reebok -1% 4,000
2,000 Nike 14%
0 2008 2009 2010 2011 2012
5 Source: Sporting Good Intelligence (www.sginews.com) Peter McNamara and Nick Profita Cluster Bar Chart Adidas’ strong international presence would be a compliment to Reebok’s balance
Footwear Sales in $ Million
$4,000 $3,797
3,000
$2,640
2,000
$1,229 $1,172 $1,098 1,000
Licensed $490 International $308 $212 U.S.
0 Nike Reebok Adidas
6 Source: Sporting Good Intelligence (www.sginews.com) Peter McNamara and Nick Profita X Log Bubble Chart Adidas’ high return on sales would be another benefit for Reebok
Return on Sales
20.0%
15.0
Adidas
10.0 New Balance
Nike Fila 5.0 Converse Reebok ASICS $2B Puma Sales
0.0 0.1 0.2 0.5 1 2 5 10
Relative Market Share
Source: Sporting Good Intelligence (www.sginews.com). Return on sales data is fictitious.. 7 Peter McNamara and Nick Profita 2Y Cluster Bar Chart Reebok should focus on women’s shoes since more women’s footwear is sold
Pairs Sold (in millions) Average Price per Pair
200 $60
150 40
100 average price per 51.14 162.60 pair 41.10 20 119.00 50 30.41 22.23 48.70
10.50 0 0 Men's Women's Juniors' Infants'
Sales (in $ 6.09 6.68 1.48 0.23 billion)
Source: Sporting Goods Manufacturers Association (www.sgma.com) 8 Peter McNamara and Nick Profita 100% Stacked Bar Chart (1 of 5) Nike is a major threat as their market share continues to grow
Footwear Sales in $ Million Foot-Joy 2% ASICS 2% $8,074 100% Keds 2% Others 11% Airwalk 2%
80
Fila 6% Adidas 6% 60 Reebok 15%
40
Nike 47% 20
0 2010
Source: Sporting Good Intelligence (www.sginews.com)
9 Recommendations
1. Pursue Merger / Acquisition with Adidas
- Expand geographic sales – Leveraging Adidas’ strong internationally presence - Return on sales – Adidas’ high return on sales will complement Reebok’s mid-range return on sales - Combine strong licensing revenues – Combine strength of both - Offset declining growth – Adidas grew +21% (CAGR) over last 5 years vs. -1% for Reebok - Increase market share – Combing share will begin to close the gap on Nike
2. Focus on Women’s Sneakers
- Volume play – At a lower average price than men’s shoes, women’s show stronger sales volumes
Peter McNamara and Nick Profita