Adidas 2000 Annual Report Download - page 43

adidas-Salomon ANNUAL REPORT 2000
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Management Discussion & Analysis
2000 was another very successful year for the Salomon
brand. Net sales grew 19%, with consistently strong
growth in all the regions. Salomon improved sales of
winter sports products by 19%, proving that the product
innovations we introduced were positively accepted by
the market. Sales growth of summer products was 20%.
The operating result increased 82% to g57 million. Going
forward, we anticipate double-digit sales growth for
Salomon and continued margin strength.
Significant Improvements for Winter and
Summer Product Sales
Net sales for the Salomon brand increased by 19% from
c543 million in 1999 to c648 million in 2000. Sales in winter
sports increased by 19% to c492 million, confirming Salomon’s
c lear leadership in this market. In the winter products, the
strongest improvements were made in the alpine ski and snow-
board categories. Alpine ski equipment (skis, bindings, boots and
snowblades) grew 21%, due largely to the success of several
high-end products such as the Pilot ski and the X-Wave ski boot.
The 2000 snowboard range was also extremely well received.
Summer products enjoyed another strong year, increasing sales
20% to c156 million. Inline skate sales grew 19%, despite the
1999 legal settlement in the United States which virtually took
our product off this market in 2000. In 2001, this line will be
back on the market with new products. Salomon continues to
hold the number two position in the high-end segment of this
market globally. As a result of this improvement and a healthy
20% increase in the outdoor footwear category, summer prod-
ucts now comprise 24% of the total Salomon sales. It is the
medium-term goal of Salomon to create a nearly equal split
between summer and winter products to balance the season-
ality of the business.
Strong Growth in All Regions
Net sales grew at 21% in Asia, 18% in North America and 17%
in Europe. In Asia and in North America, strong currencies
helped to bring about these impressive figures. Europe con-
tinues to be the most important market for Salomon, account-
ing for 50% of net sales, although we expect North America to
have the strongest growth rates going forward.
Gross Profit Outpaces Sales Growth
The gross profit increased 27% to c276 million. This is the
result of impressive gross margin improvements at Salomon.
The margin came in at 42.6%, up 3.0 percentage points from
the previous year. This positive development came as a result of
productivity improvements in the production of winter products,
increased average net selling prices and better close-outs.
Operating Profit at Record Level
The operating profit for Salomon increased a notable 82% to
c57 million, as operating expenses increased more moderately
than net sales and gross profits. This improvement was achieved
despite increased expenditures for research and development
as well as marketing to sustain future growth.
Further Sales and Profitability Improvements
Expected for 2001
Net sales of Salomon brand products will continue to increase
in 2001, as we expand our successful Pilot ski system pro-
gram, re-introduce our inline skates to the American market
and launch our new functional apparel line. Positive develop-
ments, particularly in the US market, will ensure double-digit
sales growth in 2001. Operating profit will continue to grow,
despite increased operating expenses associated with higher
marketing expenses to further extend the brand positioning.
Salomon Salomon at a Glance
(euros in millions) Change year-
2000 1999 over-year
Net sales 648 543 19%
Gross margin 42.6% 39.6% 3.0pp
Operating profit 57 31 82%
Salomon Sales by Region
(euros in millions) Variance
2000 1999 in %
Europe 325 278 17
North America 175 148 18
Asia 142 117 21
Latin America 2 – n/a
Total* 648 543 19
* Difference in total due to HQ/Consolidation
Salomon Sales by Product
(in %)
Alpine Bindings 12
Outdoor Footwear 16
Inline Skates 8
Snowboards 10
X-Country 6
Apparel 5
Others 1
Alpine Boots 17
Alpine Skis 25