Rebound For Reebok

It's hard to imagine that Paul Fireman has much in common with Allen Iverson. Fireman is the fleshy 57-year-old entrepreneur who plays golf and goes deep-sea fishing in what spare time he has. Iverson is the prince of the National Basketball Association, a coiled, 6-ft.-tall 26-year-old who spends his spare time playing video games and barking out gangsta rap music.

The common cause is Reebok International Ltd., Fireman's shoe company, for which Iverson happens to be top pitchman. And the combination is just one reason why Reebok, written off two years ago as a dead maker of fad sneakers, is back. Since signing Iverson, Fireman has pulled down endorsement agreements from women's tennis giant Venus Williams, sponsored two seasons of Survivor and inked a deal with the National Football League to be its exclusive supplier of uniforms and sideline apparel. But the real victory came this month when Fireman and NBA commissioner David Stern announced a 10-year arrangement that makes Reebok the official outfitter and marketer of game uniforms and warm-up gear for the entire NBA. "It was amazingly foolish for Nike to lose the NFL," says Fireman. "But to lose the NBA--that's heresy."

For once in a long time, Fireman can afford to gloat--and even hint that Reebok might again have a shot at unseating Nike, the champion of footwear. The roster of top athletic talent and deals with the NFL and the NBA have turned Reebok from an also-ran into a contender for domination of the athletic-apparel market. Sure, Nike owns 36% of the U.S. sneaker business right now, compared with Reebok's 11%. But the league deals represent a long-term threat to the Swoosh. For one thing, it means that if Michael Jordan returns to the game, no matter what he wears on his feet, he'll be wearing a Reebok logo on his back. Such prospects have put Reebok in good favor with Wall Street; its stock is up more than 20% this year--and nearly 400% since January 2000.

Reebok's fall and rise are a classic tale of the wonders of the entrepreneurial world. Fireman was selling sports equipment for his father's business when in 1979, during a Chicago trade show, he became impressed by a hand-sewn leather sneaker called Reebok, named after a type of African gazelle and marketed by the heralded British athletic-shoe company J.W. Foster & Sons (a family-owned company that made the running shoes worn in the 1924 Olympics by the athletes celebrated in Chariots of Fire). Fireman bought the U.S. distribution rights to Reebok, and by 1984 had dropped out of college and was putting all his time into marketing his company's soft, brightly colored leather sneakers. His timing was perfect. Reeboks became standard equipment for the suddenly booming women's aerobics movement. And they became such a hip fashion icon that in 1986 Mick Jagger had to write Fireman directly to request a pair because they were sold out in London. And everywhere else.

But the late 1980s saw a backlash among management gurus against the idea of entrepreneurs running their own companies. Instead, professional managers came into vogue, so that at places like Apple, Lotus and even Ben & Jerry's, the founding fathers stepped, or were eased, aside. At Reebok, which had begun an aggressive push into foreign markets, the board feared that Fireman might finally be in over his head.

Reebok's woes began under the new cast of professional managers; there were five presidents in a decade. In an effort to broaden its customer base, Reebok in 1992 ventured out from its core recreational-fitness customers to make sneakers in more competitive sports categories like baseball, basketball and soccer, where such rivals as Nike, Adidas and New Balance were already slugging it out. "Women started feeling like we had lost track of them," says David Perdue, who was brought in by Fireman this year to run Reebok's main lines of business, sneakers and apparel. "And kids too found us not to be relevant." As declining sales forced the company to cut back on R. and D., the styling of Reeboks across the board fell out of favor. John Shanley, an analyst with Wells Fargo Van Kasper, puts it this way: "Reebok shoes started looking like they belonged on the shelf of an orthopedic patient."

Not anymore. Back in December 1999, Fireman--who with his wife Phyllis owns about a 20% stake in Reebok--won the board's approval for a turnaround plan. At the heart of his strategy was a return to the company's roots--sharp, provocative design. In addition, he began pushing innovation from his engineers. They came up with Reebok's DMX technology, a sole containing numerous air channels for cushioned comfort, and Traxtar, a line of shoes for kids that contain built-in computer chips and motion sensors that measure the wearer's running speed and jumping height. "Most people's view of entrepreneurs is that their business eventually outgrows them," says Reebok CFO Ken Watchmaker. "We've learned the hard way that Paul is the lifeblood of this business."