Coles aims to give Nike a run for its money

Business Profile: British-born chief scores deals for Reebok to steal market share from its arch rival

Martin Coles is surrounded by a media scrum. The chief executive of Reebok, the sportswear group, is holding a Liverpool football shirt and sat beside Rick Parry, the club's chief executive.

Photographers' flashbulbs are popping to record the group's £100m "global partnership" with Liverpool FC as it seeks to turn the club into a worldwide brand.

But the 47-year-old Brit, who has risen to the top of the US corporate ladder, looks completely unfazed. The reason is he's used to it. Today, it's Liverpool. Tomorrow, Mr Coles could be hob-nobbing with Venus Williams, Reebok's star tennis player. Or Allen Iverson, the American basketball hero who Reebok also sponsors.

"The business of sports is very exciting to be in," he says in an accent that is part Welsh, part Boston. "You're taking the values of sport and using them as a lesson. It's enlightening and invigorating."

Mr Coles, a father of four who prefers rugby to football, is certainly in the right place at the right time. Reebok is on a roll, winning market share from its archrival Nike.

Mr Coles personal career is back on track too. After a long stint at Nike where he ran the UK and European operations, he took a detour into the hi-tech boom which he prefers to gloss over. Brought back into sports by Reebok just over a year ago, he is now one of the most senior British-born businessmen in an American public company.

"Entering the Reebok family has been a tremendous upper for me," he says heading into American corporate-speak.

Technically, though, Mr Coles is no longer a Brit. "I took US citizenship some time ago," he explains. "I did an Anthony Hopkins, if you like. But I have never hidden my roots in the UK and as a Welshman. My Dad is still in Wales and a fierce Welsh rugby supporter. So am I. I grew up in the heyday of Welsh rugby, with JPR [Williams] and Gareth Davies. I'm waiting for the resurgence and I think it's coming."

Though he hails from Cardiff he is now more Yank than Brit with an American wife. "We met on a plane in Cincinnati," he says. "She's a ballerina and the inspiration that drives me forward."

The idea of a British-born businessmen climbing this far up the greasy pole of American business seems to mean relatively little to him simply because he's been there so long. "I've been there for 20 years. I first went to the US in 1980 as a production manager for Procter & Gamble."

Of course, Reebok was originally a British company where it was first called JW Foster & Sons. Founded in Bolton in 1895 by Joseph William Foster it made some of the first running shoes with spiked soles. By 1958, two of the founders' grandsons started a companion company known as Reebok, named after an African gazelle. Then came Paul Fireman. The American entrepreneur bought the US licence in 1979 and relocated it to Massachusetts.

Pentland, a British sports company run by Stephen Rubin, made what was then described as "the deal of the decade". It bought a 55 per cent stake in Reebok for $77,500 in 1981, selling out 10 years later for $771m.

A US-listed company since 1985, with Mr Fireman still in charge as chairman, Reebok is now seen as the up-and-coming brand. Reebok is regarded as more hip than Nike and with greater appeal to women.

"We have the capacity to be the biggest," Mr Coles claims. "We've got long-term deals with the National Football League and the National Basketball Association. Now we've got this new deal with Liverpool. We've got everything from disco shoes to track spikes." The figures bear him out. Reebok's fourth-quarter profits, announced two weeks ago, showed that profits trebled to $16.5m (£10.1m). Clothing sales jumped by 48 per cent, helped by the NFL and NBA tie-ups. Total Reebok brand product sales rose 21 per cent, helped by the Answer V1 shoes of the Philadelphia 76ers' Allen Iverson. Crucially, Reebok's share of the US sports shoe market was estimated to have risen 2 percentage points to 14.2 per cent (Nike has 30 per cent).

He insists toppling Nike is not Reebok's end-game. "We believe we can do it but our focus isn't Nike. That's a side issue. There is some market share gain there. But the strategy is about growing in other markets like clothing, leisure and fitness."

This explains Reebok's post-1992 diversification with acquisitions of Rockport, maker of walking boots, the Ellesse sports and clothing brand, and the Ralph Lauren footwear license.

Reebok has also opened health clubs in New York, Madrid and London's Canary Wharf, though these are franchise operations. Meanwhile, it is expanding in English football with sponsorship deals with Bolton and Crewe Alexandra as well as Liverpool. It also sponsors Sporting Lisbon and Athletico Madrid.

Mr Coles claims there is a big cultural difference between Reebok and Nike. "Nike's advertising slogan is 'You don't win silver, you lose gold.' What we are about is celebrating the participation. It's a celebration of sport.

"But I don't spend a lot of time focusing on Nike otherwise I'd end up executing Nike's strategic plan."

Even with its recent growth it striking just how small a company Reebok is. For all its global presence, it has sales of only $3bn and a stock market value of just $1.8bn. This would not even be enough to qualify for a place in the FTSE 100 on the London market. Even the mighty Nike has sales of only $9bn and a relatively modest market capitalisation of $11bn.

One reason for this low valuation is the high costs of sponsorship deals such as those awarded to the likes of Venus Williams and Iverson, who is seen as the new Michael Jordan (who wears Nikes). This is why full-year profits were just $132m (£80m) last year. But then growing further will depend on deals such as these as Reebok needs to win over the vital 12 to 18-year-olds market. This is where the Liverpool tie-up comes in. Reebok hopes to take football to the US youth market by opening Liverpool academies across the US as well as Liverpool-Reebok business units in the US and Asia.

Mr Coles says it is about much more than putting a name on a shirt. "Liverpool has an enormous fan base outside the UK and there is a real latent interest. We are seeing coaching clinics where kids go to the coach's house and watch Premier League games on television. And women's football is growing really fast. We are talking about growing grass roots football."

MARTIN COLES BEST FOOT FORWARD

Title: President and chief executive, Reebok Brand

Age: 47

Pay: Not yet disclosed (only appointed to the executive team in June).

Education: Swansea University (bio-chemistry).

Career record: 1977-80 Procter & Gamble in Manchester; 1980-87 production management roles in the US for P&G; 1987-91 PepsiCo vice-president (manufacturing, logistics, customer service); 1991-99 Nike Inc, general manager for Europe; 1999-2001 at small e-commerce start-up, followed by short spell at Gateway Computers; 2001 to present, Reebok.

Interests: Sport (including running), family.