Reebok International Ltd. said last week it was eliminating about 65 positions at its Canton, MA headquarters as part of a global reduction of 150 jobs.
The reorganization included the closing of its European office in Amsterdam and its Asia-Pacific office in Hong Kong. Some workers at regional offices will transfer to the Canton headquarters.
Overall, Reebok has 8,000 global employees globally, including 1,000 in Canton. The loss of 150 jobs represents around 2 percent of its workforce.
In a statement, Matt O’Toole, Reebok’s chief marketing officer, said, “Earlier this year we announced the reorganization of the Reebok Brand team into six core Business Units (Training, Running, Walking, Studio, Classics, and Kids), designed to deliver against our ambition to become the leading fitness brand. Today, we continued this reorganization with the implementation of a new global-direct operating model between the global organization in Canton and our markets, and a streamlining our satellite creation activities. These changes, which will go into effect January, 2013, will increase our effectiveness, our speed to market and our efficiency.”
He added, “Approximately 65 Reebok employees at our Canton, MA headquarters were unfortunately impacted by this restructure. While I am convinced Reebok will emerge a stronger organization and ultimately a more desirable brand for our fitness lifestyle consumer following today’s announcement, this is a difficult day for all of us. I want to publicly thank our employees for their years of service and dedication to the company.”
At an investor meeting in September, Adidas slashed its 2015 revenue target for Reebok, to €2 billion from a €3 billion target set in November 2010.
About one third of the reduction at Reebok relates to NFL- and NHL-related sales related to the loss of its NFL contract as well as the revised reporting of NHL-related license sales to the Reebok-CCM Hockey division. Nike’s NFL deal was first announced in October 2010.
The rest of Reebok’s forecast reduction was attributed to the brand’s focus on “margin and operational efficiency” as Reebok reinforces its positioning around fitness categories and shifts its focus to profitability rather than size in lower profit markets like India and Latin America.
At the time, Herbert Hainer, Adidas Group CEO, said recent successes with EasyTone, ZigTech and RealFlex helped the brand re-engage with consumers but had not established a sustainable platform for growth. And while Reebok’s focus on fitness, marked by its CrossFit sponsorship, has potential to provide that platform, “the approach towards commercialization can still be considerably improved.”
With the lower revenue target, Reebok’s gross margins are expected to improve in the low 40’s by 2015, an improvement of at least 500 basis points from levels reached in the third quarter.
In reporting third-quarter results in November, Adidas lowered its revenue forecast for the current year due to declines at Reebok as well as the NHL lockout. Reebok’s revenues in the third quarter dropped 25.3 percent on a currency-neutral basis. Excluding the impact from its cleanup of Reebok India as well as NFL and NHL licensed sales, revenues declined 6 percent in the quarter.
