Nugget: Adidas CEO comments on Reebok in 2Q2011 Earnings Call

Adidas CEO, Herbert Heiner made some comments on the developments for Reebok in the recent 2Q2011 earnings call, which you can find on SeekingAlpha:

From the presentation:

Herbert Hainer:

“Toning footwear was a key driver of Reebok’s global growth, and despite double-digit declines in the U.S., global sales in that category are up double-digit year-to-date. Furthermore, I’m confident that the worst of the U.S. toning inventory issue with our main competitor in this space is coming to an end, and we have received good feedback from our U.S. retailers on the next generation of our toning footwear. Therefore, I’m confident that toning will stabilize into a sustainable, value-adding category as part of the larger trends towards exercise and healthy living.”

—-

From the Q&A session:

Herbert Hainer

“The next one is, as you said already, the revitalization of Reebok Classics where we had a big launch two weeks ago in New York with Swizz Beatz. All that I’ve heard so far has been very promising. So this will be the next category, which is down now below 20% of our total business and it was in the former time 30%, 35%. This gives us a big opportunity and a big potential.

And the other part is apparel business where we will come up building the apparel business above the license business which we have today into real apparel business, which Reebok is still lacking and this will be the three to four year view. And this is where we see the growth potential in terms of the product type. Besides of that we still have a lot of markets where we are not as good as we can be and therefore the growth potential is coming from two sides. On the one hand, the product side, as I just pointed out, and on the country rollouts as well.”

Observations:

– When competitors behave irrationally, you get hurt as well.

– Main competitor in toning in Skechers.

 

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Filed under Fundamental Finance, Nuggets, Sport Business

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