18 Jan NRF Big Show: Reebok On Path To $10 Billion In Retail Sales
In an interview at the 2023 NRF Big Show, Nick Woodhouse, president and chief marketing officer, Authentic Brands Group (ABG) described Reebok as a “super brand” that it expects will reach $10 billion in retail sales in a few years.
ABG acquired Reebok from Adidas in February 2022 for $2.5 billion, representing the brand development, marketing and entertainment platform’s largest acquisition since its founding in 2010.
”Reebok is a super brand,” said Woodhouse in an interview with the Wall Street Journal’s Lauren Thomas. “If you have a list of brands around the years, the Top 50 or 100 brands, whatever they may be, there’s Apple, there’s Tesla, there’s FedEx, there’s American Express, there’s Rolex, and there’s perennially, Nike, Adidas, Reebok. Reebok with Paul Firemen and his team as one of the originals who started the sports marketing revolution. Of course, Phil Knight won that revolution, but it was an amazing acquisition for us.”
Woodhouse said the Reebok acquisition had been “transformational” for ABG, enabling the company to surpass $23 billion in global retail sales across the 40 lifestyle brands and entertainment properties it owns. Reebok brought the number of global stores and shop-in-shops operated by brands across ABG’s licensing network to more than 9,300, global point of sales to more than 356,000 and global partners to more than 1,200. ABG’s brands now reach more than 150 countries.
Reebok also proved to Wall Street and the investment community that ABG could tackle a major deal. Said Woodhouse, “We say this was a big boy or big girl transaction for us. All of them were big, but this was a gigantic transaction with another super brand, Adidas. And we were able to do the deal and ingest the business into our company in one year, and that’s a tremendous testament to our team.”
Woodhouse also talked up Reebok’s growth potential as ABG has secured licensing partners across categories and regions to drive growth. He listed “tag words” that demonstrate Reebok’s extensive reach—Irreverent, Transformational, Innovate, Sports, Luxury, and Collaboration.
“Reebok is one of a handful of brands in the world that can sit at the intersection of fashion, athletic and technology,” said Woodhouse. “It’s very, very rare that you can do more than one, two or three of those, like a Nike or a North Face, where Reebok has permission to be technical. We make a technical running shoe, but we also have permission to play in streetwear.”
As an example of Reebok’s streetwear potential, he called out ABG’s recently announced collaboration with Allen Iverson, the Hall of Fame guard and long-time Reebok sponsor. Woodhouse said, “He’s a legend. He’s a king. He’s one of the originals.”
Woodhouse also noted Iverson was among the first athletes to be known more for what he wore off court than what he wore on court. Woodhouse said, “Allen Iverson, at the time, started that revolution and, the interesting thing for us about Reebok and why we love this brand, is because you’re comfortable wearing the shoe on a basketball court, in a fitness gym or running a 10k or marathon. But, then, you’re also comfortable wearing it to go get Starbucks.”
Woodhouse, who was wearing Reebok’s BB 4000 from the late ’80s/early ’90s, which are being re-released, said the sneaker is expected to sell 20 million pairs in 2024. He talked up the appeal of the iconic brand’s history.
He said, “What’s amazing about Reebok and Nike and Adidas for that matter is, because it’s a super brand with its history of the styles and silhouettes, there’s a thirst and a demand for something that is real. I have great respect for digitally native or startup brands that are out there with fantastic brands and fantastic ideas. But, generally, we bank on this in ABG. Our customer loves the legacy of a brand that they know and trust for a long, long time, and that’s what Reebok was, and is, for us.”
Woodhouse inferred Reebok was on its way to reclaiming its spot among the top-tier global sports brands. He said, “When we bought Reebok, it was doing around $3 billion in retail sales. We should do $5 million by the end of 2023, and we have a path to $10 billion that I’m very confident we will hit in the next three years, which will allow us to surpass other terrific athletic brands, bringing Reebok back to the glory of where she was.”
Beyond Reebok, ABG’s brand portfolio in the active space includes Eddie Bauer, Spyder, Volcom, Airwalk, Izod, and Prince. Other brands include Marilyn Monroe, Elvis Presley, Muhammad Ali, Shaquille O’Neal, David Beckham, Dr. J, Greg Norman, Neil Lane, Thalia, Sports Illustrated, Nautica, Brooks Brothers, Barneys New York, Judith Leiber, Ted Baker, Hervé Léger, Frye, Juicy Couture, Vince Camuto, Lucky Brand, Aéropostale, Forever 21, Nine West, Jones New York, Tretorn, Van Heusen, Arrow, Hickey Freeman, Hart Schaffner Marx, and Thomasville.
Woodhouse spent much of the interview discussing ABG’s business model.
He said ABG has acquired the NIL (name, image, likeness) rights to icons, including David Beckham and Shaquille O’Neal, as well as past icons Elvis Presley, Marilyn Monroe and Muhammad Ali to diversify the business. The entertainment business makes up about 25 percent of sales.
Woodhouse said ABG’s licensing model works by enabling ABG to focus on brand development, marketing and website development while securing licensed partners to manage design, production, distribution, and other details.
“We’ve been able to do this at scale to where we went to $23.5 billion in sales with 350 employees,” said Woodhouse.
He noted that its licensed partners “have more employees,” but also considered them to have similarly asset-light models because they did not have to acquire the intellectual property rights.
Woodhouse also said ABG keeps certain aspects in control of the licensor, including design, to ensure the “DNA of the brand” continues; however, he said the licensed partners also benefitted by tapping the brands development, marketing and digital acumen that ABG provides.
He believes many brands face challenges as they expand and tackle logistics, e-commerce operations, stores, and other aspects on their own. Said Woodhouse, “Some can do it, but when you get to a certain scale, you probably want to get the best in the business to do each of those pieces.”
He offered an example of the hosiery or sock category, where many apparel and footwear brands decide to license rather than bring it internally. He said, “There’s probably five great companies, or great factories, that make great socks. Rather than invest in cotton fields and make socks, ABG will go to the experts and tell them to make us great Nautical socks and they can pay us for our brand name because our job is to make that brand name powerful and sustainable.”
Asked for advice on how to manage the uncertain climate over the next year, Woodhouse said, “My advice would be ‘Don’t believe what you read about being a micromanager.’ I would be a micromanager. I would look at every facet of your business. I would examine everything everyone’s doing within reason. I wouldn’t worry about it. If someone says ‘that’s not the way to manage people.’ If you do it correctly, you need to know what’s going on in all facets of your business because time and time again, the brands that we purchased, it’s because someone somewhere took their eye off the ball.”