Given Wall Street’s fascination with the swoon of Nike’s stock, down 33% since last May, one might never guess that as recently as a decade ago the company was running second in the sneaker race. The top dog at the time was a Massachusetts-based upstart named Reebok that saw its revenues balloon from $66 million in 1984 to $1.5 billion in 1987. Since 1994, Reebok’s market share has dwindled from 33% to 15% (while Nike’s has soared from 20% to 47%), and its per share earnings have fallen, to $2.30. What’s more, analysts have now anointed resurgent Adidas as Nike’s most formidable competition. How did Reebok fall from the summit?

For one thing, the company’s immense success derived from a relatively small line of comfortable, attractive shoes that sold well during the boom in aerobics and women’s fitness. But when hightop basketball sneakers ushered in the next era of fashion, and Nike launched a savvy marketing campaign using a fellow named Jordan, Reebok was caught out of position. Reebok introduced the infamous InstaPump line, which the younger set immediately sniffed out as a gimmick. “Just as Nike hit their stride as the hip sports and fitness company, Reebok had an unclear message,” says Faye Landes, a managing director at Salomon Smith Barney. “Was it a basketball company, or an aerobics company, or a woman’s fitness company?”

Then, after meting out millions of dollars in endorsement fees, Reebok learned the hard way that when it comes to pitchmen, quality trumps quantity. Though his relationship with Reebok has been rocky at best, Shaquille O’Neal is probably worth having on board, as is Allen Iverson, whose deal reportedly tops $50 million over 10 years. But are kids going to buy Reeboks because last year’s women’s French Open tennis champion, Iva Majoli, wears them? Reebok doesn’t think so. “We’re going to keep the serious icons, but we need to free up some of that [endorsement] money for more effective marketing and advertising,” says Reebok CEO Paul Fireman.

” Nike’s unsold inventory is flooding the market and taking up shelf space, so dollars-and centswise, I don’t think we’re going to enjoy a great year selling shoes,” concedes Fireman, who in 1996 vowed to resign if the company’s performance didn’t improve within two years. “By early 1999 I think we’ll be in a good position to move forward.” Reebok’s investors, who have seen the stock fall from a high of $52� on July 31, 1997 to $31� last week are hoping that Fireman is right.

Reebok’s biggest problem may simply be the misfortune of competing against one of America’s great corporate success stories. ” Nike is in the same league with Microsoft, Intel and Coca-Cola,” says John Horan, publisher of the trade newsletter Sporting Goods Intelligence. “By a lot of measurements, Reebok is still a pretty good company. It’s just that they’ve always been compared to Nike’s incredible success.”

she was young, she was beautiful

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