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While Nike’s (NKE) stock sinks amid several quarters of disappointment, Reebok appears to be undergoing a revival of sorts.
“We do a wonderful job of content. We’re very careful of the players we select. One of our first selections was [WNBA star] Angel Reese … Her shoe has just been sold out,” NBA star Shaquille O’Neal told Yahoo Finance at the Milken Institute conference this week.
The former Laker is now Reebok’s president of basketball and the second-largest individual shareholder in its parent company, Authentic Brands Group.
“We just do things that are very, very strategic,” he added. “You know, for me it’s trying to reintroduce Reebok to the kids … We’ve doubled in business [just like Authentic Brands Group CEO Jamie Salter has said] and we plan on continuing to grow.”
Reebok’s state of play: Led by founder and CEO Jamie Salter, Authentic Brands Group officially completed its acquisition of Reebok from Adidas (ADS.DE) on March 1, 2022, for $2.5 billion (€2.1 billion). Since the takeover, the company has leveraged Shaq to spearhead a brand revival.
In 2023, Reebok named Shaq as its first-ever president of Reebok Basketball. In this role, he is responsible for the brand’s basketball strategy, player recruitment, and athlete relationship-building.
Under Shaq’s leadership, Reebok signed its first major NIL (name, image, and likeness) deal with then LSU star Angel Reese in late 2023, signaling a shift toward younger, culturally relevant athletes to compete with Nike and Jordan Brand.
Shaq has been the face of the "Return of the Classics" campaign, reissuing iconic silhouettes like the Shaq Attack and Allen Iverson’s signature shoe, the Question.
Salter said the Reebok brand is just getting started.
“And sure enough, we’re back in basketball, we’re back in soccer, we’re back in football, and now we’re actually going back into hockey,” Salter told Yahoo Finance at the conference. “So we’re getting back to the roots of where Reebok started.”
About Nike’s troubles: Shares of the athletic wear giant plunged 15.5% on April 1, the first trading session following the company’s latest earnings report and guidance.
Nike is currently trading at $43.09, bringing the year-to-date drop to 33%. The stock is down 67% in the past five years.
"Turnaround premium multiple likely to fade,” Evercore ISI analyst Michael Binetti said. “Nike’s efforts to stabilize the P&L through a tougher turnaround (vs. taking more EPS pain upfront in the early stages of the strategy) seem to be prolonging the turnaround beyond what the market is likely to bear.”
The company’s earnings day was littered with red flags as it battles through a restructuring and tougher competition from the likes of Adidas and upstarts such as On.
On top of that was continued pressure on the all-important China business. Sales in China fell 10% from the prior year, with digital sales down 21% and wholesale off by 13%.
The other point of contention was guidance.
For Nike’s fiscal fourth quarter (the current quarter), management reported it expects sales down 2% to 4% and gross profit margins down 25 to 75 basis points. Citi analyst Paul Lejuez calculated Nike’s guidance equates to fourth quarter earnings per share guidance of $0.05 to $0.15, below consensus forecasts at the time for $0.20.
Bottom line: It’s good to see Reebok back in the game and doing well. As for Nike, its comeback will likely have to wait a few more quarters.
Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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