Adidas 1997 Annual Report Download - page 4

2
President’s Letter
DEAR
SHAREHOLDER,
In 1997, we made good prog-
ress in pursuing our goal to
become the best sporting
goods company in the world.
Although we will never equate
quantity with quality, we are
pleased that we are now the
second-largest global com-
pany in our industry – which
itself shows all signs of contin -
ued worldwide development.
This signif icant milestone was
reached in another successful
year in which adidas achieved
extraordinary
growth in both
sales and profit.
In 1997, the adidas manage-
ment decided to make a major
external acquisition to com-
plement our strong organic
growth. In December, with
your approval and support,
we acquired Salomon, one of
the world’s leaders in sporting
goods sectors in which we
previously had no significant
presence. Through
this acqui-
sition, we thus broadened the
spectrum of our prod
uct range
through the addition of three
leading sports brands – Salo-
mon for winter sports equip-
ment, Taylor Made for golf
equipment and Mavic for
cycle components.
The ‘fit’ of Salomon and
adidas is truly excellent. Both
draw on a unique heritage of
providing athletes with high-
quality products for top perfor-
mance based on innovation
and new technology. Our prod -
uct lines have practically no
overlaps, and our two com-
panies will profit from each
other’s respective expertise. As
a combined group, adidas and
Salomon are well balanced in
terms of major product groups
(footwear, apparel and equip-
ment), as well as with respect
to the seasonal aspects of our
business and regional focus
on the major sporting goods
markets.
Our industry will continue to
experience a process of con-
solidation. In the long term,
only the largest, integrated
companies with a solid finan-
cial base will have sufficient
strength, market penetration,
and opportunities for diversify-
ing risk to assure continued
success. We are committed
to being among this group,
without ever losing sight of
our dedication to quality and
to our own specific identity.
With the acquisition of Salo-
mon, we
have taken another
major step
toward this goal.
In 1997, we not only achieved
record sales volumes and
broadened our product lines;
we also reached new levels of
success in the key US mar-
ketplace. In the United States,
the world’s largest sporting
goods market, we achieved
more than one billion dollars in
gross sales for the first time.
This means that we are also
well on the way to becoming
the second-largest in Ameri-
ca’s
sporting goods sales.
Our US
order book is contin-
uing to grow rapidly, while
the American sporting goods
market as a whole shows only
moderate growth. We believe
that it is not unrealistic to
expect that our US market
share, which currently stands
at around six per cent, will
grow to more than ten per
cent in the next two years.
The basic foundation for this
growth is already in place –
brand acceptance, product
quality, trade-marketing,
ad-
vertising
, and sponsorship
agreements with American
athletes and teams. We have
opened the door to the world’s
largest sporting goods market;
now we must make the most
of our strong competitive
positioning there.