Adidas
Description
Jesse Owens and Muhammad Ali broke records in their adidas athletic shoes. The heart of the adidas product line is athletic shoes, but the three-stripe logo appears on apparel and other jock accoutrements. Bankruptcy once had it on the ropes, but it made a comeback by shifting production to Asia and beefing up its marketing. The #2 maker of sporting goods worldwide, behind NIKE, it has inked deals with football and basketball athletes, as well as the New York Yankees. The firm won sponsorship rights to the 2008 Olympic Games in Beijing. Its purchase of Salomon, the French maker of ski and golf gear, was short-lived. It sold the unit to Amer Sports Corp. and bought Reebok in 2006 for some $3.8 billion.
Having already put its footprint on athletic shoe history and widely recognized for its expertise in engineering footwear, adidas has been missing two integral components: a brand as strong and as global as Nike's and a sturdy foundation in the US market. With its acquisition of Reebok, adidas now has the traction it needs to cross both components off its wish list. To boot, adidas, through its purchase of Reebok, has greatly expanded its portfolio of licensed brands, got a leg up on the urban market, and begun to chip away at Nike's long-running status as the world's #1 footwear firm that controls more than 20% of the US athletic shoe market. The deal also offers adidas and Reebok, as a combined entity, more bargaining muscle with suppliers and marketers.
The athletic shoemaker has plans for global expansion, particularly in China where adidas aims to overtake Nike by the 2008 Beijing Olympics. To one-up Nike in China the company plans to open an average of 1.5 new outlets a day there over the next two years. Currently, the company has about 2,500 adidas-brand stores in China.
Once the dust settled after its acquisition of Reebok, adidas began to share how it planned to market the new brand addition to its portfolio. adidas said it will retain its image as an athletic shoe engineering company (on the heels of its $250 intelligent shoe debut) and reposition Reebok as a performance brand in the casual footwear niche.
While adidas integrates the adidas and Reebok brands and streamlines operations globally, it's making deals that will eventually cost it some $256 million by 2009. As part of its integration strategy, adidas plans to buy out Reebok distributors and joint ventures worldwide to regain control over the brands.
The company secured a strong foothold in US professional sports in April 2006, when adidas inked an 11-year deal to be the official supplier of uniforms and other products to the National Basketball Association. The agreement includes providing the same to the Women's National Basketball Association and the NBA Development League. Looking to rev up its sales, adidas in July 2007 signed NASCAR's Dale Earnhardt Jr. for a multiyear partnership for a line of Dale Jr.-branded apparel, footwear, and accessories.
Seen as a more formidable competitor, adidas was sued by Nike in 2006 for patent infringement. Nike asserts that adidas has used elements of its SHOX cushioning technology in developing the adidas Kevin Garnett and A3 shoes.
adidas makes athletic clothing and gear such as TaylorMade golf clubs and Mavic bike components. (adidas products account for nearly 80% of sales.) adidas is also repositioning its adidas brand, marketing its products as both performance and lifestyle wear. In January 2003, in an effort to strengthen the adidas brand in sportswear and uniforms, adidas partnered with Betlin, Inc., for the manufacturing and selling of custom and stock uniforms. And the firm expects to boost brand awareness in Germany, as the country hosts the World Cup in 2006.
Although the purchase of Salomon was intended to create economies of scale and an advantage in emerging markets for trendy sports, integrating the company was difficult. adidas also was hurt by soft demand for TaylorMade's golf products in Asia and the US. However, at the end of 2002, TaylorMade acquired the Maxfi brand of golf balls and accessories from the Dunlop Slazenger Group. The move was meant to bolster the company's golfing products portfolio. However, the company sold its Greg Norman Collection of golf apparel -- excluding the retail outlets -- to MacGregor Golf.
In early 2003 adidas was delisted from the Paris Euronext exchange due to low trading volume. The company remains listed on the Frankfurt Stock Exchange. Later that year a senior executive in the US division pleaded guilty to conspiracy to commit fraud. Top sales executive Timothy McCool admitted to cooking the books for adidas by reporting to auditors that the company owed $2.2 million to footwear retailer Just For Feet, when the actual number was less than $50,000.
In 2004 adidas' US headquarters introduced the first computerized footwear: a running shoe with a chip embedded that allows the shoe to change its support level according to the impact placed upon it by its wearer. The company also opened its newest concept store: Performance. The new chain is not meant to become adidas' version of widespread mall retail outlets, but instead to promote brand awareness for the company.
Later the same year adidas bought collegiate and pro athlete apparel maker Valley Apparel Company. Valley Apparel holds licenses for some 140 colleges and universities and for an additional 100 athletes and was previously an adidas licensee. The company also set up new manufacturing facilities in India, hoping to gain a competitive production edge over Nike.
October 2004 was a busy month for the company, seeing the start of a 10-year, $100 million sponsorship deal of Major League Soccer in the US focused on cementing its dominance in the national soccer market. adidas additionally launched the T-MAC 4 -- a laceless basketball shoe -- using the same closing mechanism as ski boots.
At the close of 2004, the company's Salomon division announced a 10% reduction in its French workforce as production moved to Romania and China.
To return to its core competencies and focus on its more profitable apparel, footwear, and golf sectors, adidas sold its Salomon division to equipment maker Amer Sports Corp., a unit of Amer Group, in late 2005. The deal included the Arc'Teryx, Bonfire, Cliche, Mavic, and Salomon businesses. The company changed its name, as a result, in May 2006 to adidas Group.
Louis Vuitton
Description
LVMH Moët Hennessy Louis Vuitton is the world's largest luxury goods company, with brands that are bywords for the good life and everything showy. LVMH makes wines and spirits (Dom Pérignon, Moët & Chandon, Veuve Clicquot, and Hennessy), perfumes (Christian Dior, Guerlain, and Givenchy), cosmetics (Bliss, Fresh, and BeneFit), fashion and leather goods (Donna Karan, Givenchy, Kenzo, and Louis Vuitton), and watches and jewelry (TAG Heuer, Ebel, Chaumet, and Fred). LVMH's retail division includes Sephora cosmetics stores, Le Bon Marché Paris department stores, and 61% of DFS Group (duty-free shops). Chairman Bernard Arnault and his family, through Groupe Arnault, own about 48% of LVMH.
The company has been focusing on controlling as much of its distribution as possible. LVMH has more than 1,850 retail outlets, including 360-plus Vuitton stores, some 150 DFS Group duty-free shops, Le Bon Marché, and hundreds of designer boutiques. Its Sephora self-serve cosmetics and fragrance chain boasts more than 600 stores worldwide.
Good economic times in the US -- the world's leading luxury goods market -- has sparked strong demand for LVMH's pricey products. Sales of jewelry and watches are particularly strong. The company's joint venture with De Beers (De Beers LV), formed in 2001, sells fine jewelry in Japan and in the US in New York and Los Angeles.
Competition in the UK from department stores and upscale retailers, though, has been more difficult than the firm had anticipated. LVMH exited the UK altogether in mid-2005 by closing all nine of its Sephora shops. In 2000 the company had launched its first store in Kent, with plans to open some 50 others within a few years.
The luxury goods firm has bid about $328 million to acquire the French newspaper Les Echos from publisher Pearson. LVMH controls Les Echos rival La Tribune. The deal includes the newspaper, Web site, business magazine Enjeux, and other financial information services.
Though the company denies rumors that it wants to unload DFS and Sephora, it has sold its teen-targeted Hard Candy and Urban Decay cosmetics brands. LVMH shed several of the less productive of its 50 brands in 2003, including auction house Phillips, de Pury & Luxemborg and fashion brand Michael Kors. In 2004, Bliss spas was sold off, followed in 2005 by fashion design house Christian Lacroix SNC.
The company nonetheless maintains one eye on growth. In 2005 LVMH was the winning bidder for whisky-maker Glenmorangie PLC, for which it paid £300 million. In 2006 the company announced that its star brand, Louis Vuitton, had the most potential for growth and that Sephora could become a "little Vuitton."
In 2005 Japanese designer Kenzo Takada filed a lawsuit in Paris alleging that LVMH, which owns Kenzo SA, does not have the right to use the brand name in any language. Takada, who is suing for 18.4 million euros (or about $24.4 million at the time of the filing), says he has had the right to use his first and last names since 1996. LVMH says that the designer was given the right to use his full name in Latin letters under certain circumstances.
In late 2005 LVMH opened its largest store to date on the Champs-Elysées in Paris and is developing a Web site that will support e-commerce functions.