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Reebok blames slowdown on “soft” demand for high-end sports shoes

December 12, 1997

BOSTON (AP) _ Allen Iverson’s ``The Answer″ is the kind of sneaker every kid’s supposed to dream about buying.

Unveiled around Thanksgiving, Reebok International’s marquee shoe gleams black, white and gold. It has high-tech bells and whistles, a high-profile basketball endorser _ and a high price tag to match.

But while kids may be dreaming, not as many appear to be buying ``The Answer″ and other athletic shoes.

Reebok said Thursday it would make less money than projected this quarter, a slip-up the company blamed on a general letup in the demand for athletic footwear and clothing.

The drop-off has hit Reebok and competitors like Nike and Converse where they live _ in the high-end basketball shoes and cross-trainers that usually sell well this time of year, as students return to school and gear up at Christmas.

``Teen males tend to buy the most of that type of product, the marquees,″ said Bob McGee, editor of Sporting Goods Intelligence, a trade publication. ``They’ve just gone to other things. That’s the problem.″

Basketball shoes made up 16 percent of the $16.4 billion global market for athletic shoes last year, according to figures compiled by the publication. Cross-trainers were about 12 percent of the total.

In the United States alone, the two combined for a whopping 37 percent of manufacturers’ sales.

McGee said the sales slump began this summer and continued at least through the end of last month, when two of the country’s three largest sports footwear chains reported slower sales than in November 1996.

Behind the backed-up store shelves is the entry of fashion designers like Tommy Hilfiger and Donna Karan onto Reebok and Nike’s turf, and a move by teen-agers toward ``classic″ sneakers and even regular shoes.

``Kids are looking for a much simpler, cleaner look right now,″ Reebok spokesman Dan Fogelson said. ``To say that six months from now that will be the case, no one really knows.″

The $120 air-sole shoe associated with Iverson, the Philadelphia 76ers point guard, got off to a slow start in the weeks after its launch, several analysts said.

No. 2 manufacturer Reebok won’t talk specific numbers or products, but Fogelson said sales of basketball shoes and cross-trainers have not lived up to expectations.

In response, the Stoughton-based manufacturer plans to cut the number of sports personalities on its endorsements roster. The expense of restructuring marketing contracts is expected to cost the company $15 million to $20 million in the next financial quarter.

Reebok began buying up endorsements at the beginning of the decade in a bid to transform itself from a women’s fitness brand to an all-around competitor able to match up with industry-leader Nike. Now it is time to cull its herd of sports stars.

``We don’t need the sheer numbers of people that we have been working with in the past,″ Fogelson said.

Fogelson would not comment on which pitchmen and teams could get the boot. But he said it should not be a surprise if, in the next few months, a big name or two fell by the wayside.

Aside from Iverson, Reebok has a wide range of athlete endorsers, including Shawn Kemp, Shaquille O’Neal and Rebecca Lobo in basketball, Frank Thomas, Roger Clemens and Juan Gonzalez in baseball, Michael Chang and Venus Williams in tennis, and Emmitt Smith in football.

Even with all its acquisitions, Reebok lacks the kind of blockbuster endorser Nike has in Chicago Bulls superstar Michael Jordan.

The Beaverton, Ore.-based company said it could not comment about business issues because its earnings report was due out next week.

Like Jordan, Nike continues to soar over its competitors, controlling 32 percent of the world market last year, compared with 15 percent for Reebok and 10 percent for Adidas AG. In the United States Nike is more dominant, holding a 43 percent share, followed by 16 percent for Reebok and 7.4 percent for Fila.

Still, teen-ager Andy Diaz was not so much looking at the emblem on shoes Thursday as he was their price tags.

``One hundred and thirty dollars for a pair of sneakers is ridiculous,″ said Diaz, as he and a friend wandered through sports stores in downtown Boston. ``I’ll wait for the clearance sales.″

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