Reebok Celebrates Its 25th Anniversary with a Sales Increase of 12% and an Earnings Per Share Increase of 42% in the Third Quarter 2004

Business Wire, Oct 21, 2004

CANTON, Mass. -- The Largest Sales and Earnings Per Share Quarter in the History of the Company

Reebok International Ltd. (NYSE:RBK) today reported net income for the third quarter ended September 30, 2004 of $82 million or $1.36 per diluted share, an earnings per share increase of 42% when compared to net income of $63 million, or $.96 per diluted share in the third quarter of 2003.

Net sales for the 2004 third quarter were $1.165 billion, an increase of 12% from 2003's third quarter net sales of $1.041 billion. The acquisition of The Hockey Company, effective on June 30, 2004, favorably impacted sales comparisons as did foreign currency exchange rate fluctuations. The Hockey Company results are included in the Reebok Brand for the third quarter of 2004. On a constant dollar basis, third quarter sales increased approximately 9% over the prior year's third quarter sales. For the Reebok Brand, worldwide sales in the 2004 third quarter increased 12% to $1.003 billion compared to 2003's third quarter sales of $892 million.

In the U.S., sales for the Reebok Brand increased 4% in the third quarter as compared with 2003's third quarter. The Company's international sales of Reebok branded products amounted to $497 million in the quarter, an increase of 23% over 2003's third quarter sales.

Sales for the Company's other brands; Rockport, Ralph Lauren Footwear and The Greg Norman Collection, were $162 million in the third quarter of 2004 compared with 2003's third quarter sales of $149 million, an increase of 9%.

The Company reported that its total worldwide backlog of open customer orders (including those of The Hockey Company which was recently acquired) scheduled for delivery from October 2004 through March 2005 for the Reebok Brand increased 5% from the prior year's comparable amount. On a constant dollar basis, overall backlog for the Reebok Brand increased 2%.

Paul Fireman, the Company's Chairman and Chief Executive Officer said, "I am pleased with our overall financial performance for the quarter. We were able to increase our revenues and improve our operating margins despite some very challenging retail conditions in many of our key markets around the world. One of our key strategic objectives entering 2004 was to improve the operating margins of the Company and we have achieved our goal in both the quarter and on a year-to-date basis. Another goal for 2004 was to grow quality market share for our footwear business with those customers that support and enhance the essence of our Brand. According to NPD, an independent market research firm, Reebok has achieved positive market share comparisons in the critical athletic specialty and sporting goods channels of distribution for 18 consecutive months. As part of our strategy to grow quality market share, we continue to invest in three key product and marketing platforms: Performance, Rbk and Classic. These three platforms have been instrumental in helping us to improve our operating results during the year."

"The improvement in the Reebok Brand's Performance positioning around the world is a strategic priority of the Company and we are making steady progress. The Premier Series collection of Performance running footwear is an important element of this strategy. We launched Premier approximately two years ago and we have been successful in consistently improving our penetration into running specialty accounts around the world. Our success with running specialty accounts has allowed us to begin to expand Premier running products into the athletic specialty and sporting goods channels of distribution. And we are beginning to successfully execute our previously announced strategy to leverage the authenticity of Premier into other product offerings to reach multiple channels of distribution and a broader consumer base. As a result, during the quarter sales of Reebok running products worldwide increased by 46%," Fireman added.

"Our technology platforms also play a significant role in our performance positioning. We believe that consumers today are looking for technology and customization to improve the performance and fit of the products they purchase. Over the past twelve months we have introduced several new enhancements to our DMX technology platform such as DMX Max and DMX Foam. And we've introduced some new performance technologies such as Shear Strip. However, our recent announcement concerning the introduction of an entirely new Pump technology that we refer to as Pump 2.0, is both exciting and revolutionary. Pump 2.0 is self inflating and self regulating, providing the consumer with an incredible custom fit that enhances performance. You will see the new Pump 2.0 running product being used at the upcoming N.Y. Marathon in November. At the same time, we will make a limited number of pairs available at retail. In 2005 we will begin our initial roll-out of the Pump 2.0 product in both the running and basketball categories," Fireman said.

"Another important initiative in Reebok's global performance strategy is our relationship with Yao Ming and the impact he will have in the Asia market. We are working closely with The National Basketball Association ("NBA") to develop an integrated marketing plan for China that leverages our partnerships with Yao and the NBA. Last week, Reebok was a sponsor of the first ever NBA games in China where Yao Ming's Houston Rockets played the Sacramento Kings in pre-season games in Beijing and Shanghai. NBA All-Star Yao Ming also debuted at the China games his new signature shoe from Reebok, the NBA High Post. We are optimistic that our association with the NBA and Yao will help us achieve our long-term goal to strengthen the Reebok Brand's visibility and grow quality market share in Asia and throughout the world."