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Hip-Hop News: Reebok Leading Sole in Hip Hop
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Posted by Robert
Rap News Network
10/19/2003 7:35:36 AM

Tags and topics realted to this article include Eve, Jay-Z and 50 Cent.

 The onetime aerobics queen has tapped into the lucrative hip-hop market to fuel a comeback - and exploited a rift between footwear giants Nike and Foot Locker to squeeze onto store shelves.

"Reebok came in with a different angle on the market, but appealing to the same kids who make up the core of the athletic footwear market in this country," explained John Shanley, Wells Fargo Securities' senior athletic industry analyst, who has a "buy" rating on Reebok.

In just over a year, the shoemaker has inked deals with pop stars Shakira, Fabolous, Eve, Jay-Z and 50 Cent, with Jay-Z's "S. Carter Collection," a hot seller this fall.

Reebok is slated to announce earnings on Thursday. Analysts estimate quarterly earnings of 90 to 95 cents per share.

Second-quarter sales of the Reebok brand rose 14 percent in the second quarter, accounting for $381 million of the company's net sales of $803 million. (Other company brands include Ralph Lauren footwear, Rockport and Greg Norman.)

Reebok declined to comment for this article, saying it was in a quiet period.

In 1991, Reebok sold $2.23 billion in athletic shoes, according to Sporting Goods Intelligence, taking a respectable second to Nike's $2.67 billion. In 2002, however, Reebok sold only $1.6 billion in the category, behind Nike's $5.8 billion and Adidas' $2.8 billion.

Over the last year, however, Reebok has been ratcheting up its cool factor. In addition to its music deals, the label is reported to be near an endorsement deal with Houston Rockets hot shot Yao Ming.

It also has the exclusive apparel license with the National Football League, and is close to sewing up apparel deals for the entire National Basketball Association - two efforts that Shanley notes have bolstered Reebok's revenue and operating profits.

According to Reebok's last annual report, Reebok branded footwear sales were essentially flat in 2002 - but its apparel leapt almost 38 percent to $461.2 million.

When Foot Locker began squabbling with Nike last year over distribution, Reebok offered the retailer a welcome alternative, observers note.

And even though the two sneaker kings now seem ready to make up, industry sources think Reebok will be able to hold its ground.

"I think Reebok has performed well for Foot Locker, and I don't think any retailer wants one brand to be 60 percent of its business," noted Sporting Goods Intelligence Publisher John Horan.

Fireman has also been working to bolster his management team, tapping retail veteran Jay Margolis (formerly of Liz Claiborne and Tommy Hilfiger) and former Nike European chief Martin Coles.

Earlier this month, Reebok hired Sonny Vaccaro, the sports marketer who engineered the Nike-Jordan juggernaut and hooked up Adidas with then-untainted Kobe Bryant.

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