Reebok Turns to ‘Race From Hell’ to Revive Former Glory

Sept. 20 (Bloomberg) –- Reebok has a plan to pump up its declining share of the athletic apparel market: they want the trainers who teach cross fit to sport their shoes and gear. Bloomberg Television International Correspondent Hans Nichols looks at the strategy. (Source: Bloomberg)

(Corrects story that ran Sept. 19 to clarify in third and fifth paragraphs that sponsorship is of CrossFit Games and since 2011)

When he reached his late 20s, Ryan Meade watched his friends get “kind of fat” as they married and settled down. To fight the pudge, he took up obstacle racing -- endurance contests where he slogs through deep mud, scales walls and slithers under barbed wire.

“The races on the weekend are a reason to go to the gym and wake up at 5 a.m. and get a workout,” said the 30-year-old financial executive from West Chester, Pennsylvania.

When he wades through the muck at this weekend’s Spartan Race world championships in Vermont, Meade will be wearing $30 Reebok calf support sleeves, good news for a brand that’s seeking to remake itself as a leader in group fitness. The growing industry encompasses everything from the Spartan Race to CrossFit Games to Les Mills Body Attack classes -- all of which Reebok now sponsors.

This year for the first time, Reebok’s name will be on Spartan’s championship, the culmination of a race series that will attract some 500,000 athletes in 2013. The sporting-goods company, a unit of Adidas AG (ADS), signed a multi-year partnership with Spartan in January.

Photographer: Victor J. Blue/Bloomberg

A customer walks in front of a Reebok International Ltd. display at a Dick's Sporting Goods Inc. store in Paramus, New Jersey. Close

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Photographer: Victor J. Blue/Bloomberg

A customer walks in front of a Reebok International Ltd. display at a Dick's Sporting Goods Inc. store in Paramus, New Jersey.

Last month, Reebok signed a similar deal with Les Mills, a New Zealand company that sells branded fitness routine classes. And since 2011 it has sponsored CrossFit Games.

With a first prize of $250,000, the Spartan championship is billed as the “obstacle race from hell.” The 13-mile Spartan Beast event, on trails around the Killington ski resort, offers participants the option of ducking out after three miles should the course defeat them.

Fittest Woman

Reebok will start selling products developed for Spartan next year, prominently featuring the race circuit’s brand in addition to Reebok’s. Details remain under wraps.

“If they introduce a Spartan Race version of the Pump, I will buy them right away,” said Remi Moulox, who participated in a race in Toronto, referring to Reebok’s Pump line of athletic shoes. “I’ve always liked the brand,” said the 31-year-old recruitment consultant. “It’s positive for Reebok to have its name associated with these races.”

By joining with events such as the Spartan Race and the CrossFit Games -- a competition that claims to find the “world’s fittest man and woman” -- Reebok is seeking to revive its former glory. Since helping make step aerobics a staple in gyms around the world two decades ago, the brand has fallen on hard times.

Personal Trainers

Reebok controlled 1.8 percent of the $246 billion sportswear market last year, down from 2.1 percent in 2007, according to Euromonitor International. Adidas’s market share rose to 9.5 percent from 7.8 percent in that period, while Nike Inc.’s (NKE) climbed to 13.6 percent from 11.9 percent. Asics Corp. (7936) and Under Armour Inc. (UA) have also gained share, while Reebok has posted sales declines for four of the six full years since Adidas bought it for $3.8 billion in 2006.

A focus on group fitness routines tailored by personal trainers, combined with more innovative products, may help turn the tide back toward Reebok, according to Andreas Inderst, an analyst at Exane BNP Paribas.

Reebok is putting fewer resources into basketball and football, “and left them to Adidas and Nike,” Inderst said. Group fitness “is an attractive segment in the sports market.”

Adidas gained 1.4 percent to 82.58 euros in Frankfurt trading today for a gain of 23 percent this year.

Reebok is already showing signs of revival, according to Fabio Fazzari, an analyst at Equita SIM SpA in Milan. The brand posted its first revenue growth in almost two years in its most recent quarter.

Sandy Beaches

“Focusing on lifestyle and fitness is the right strategy as it is in the brand’s DNA,” Fazzari said. “They still have a lot of work to do, but they are grabbing consumers’ attention.”

Reebok has also introduced innovations such as ATV 19 footwear, which has a carbon-fiber grip similar to that of tires on all-terrain vehicles and is designed to handle runs across snow, sandy beaches and tall grass. And the brand this year announced a partnership with singer Alicia Keys, who signed a limited-edition sneaker collection.

“The next step for them to be successful is having people wear Reebok on the street because they are proud to wear the brand,” said Suzanne Stahlie, managing director at retail consultancy FutureBrand in Paris. “They are not there yet.”

The five-year partnership with Les Mills will promote Reebok at 15,000 fitness clubs in 80 countries that offer the New Zealand company’s workouts. The 1,000 Les Mills staff who train instructors will wear Reebok-branded clothing on the job, according to Phillip Mills, chief executive officer of Les Mills and son of founder Les Mills, an Olympic athlete.

100,000 Trainers

Reebok will produce and distribute products bearing both the Reebok and Les Mills brands and offer 100,000 instructors a 25 percent discount on clothes and shoes.

“We are jointly spending money trying to promote the modern group exercise category,” Phillip Mills said in an interview. “Reebok has committed millions to achieving this.”

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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