Adidas 2000 Annual Report Download - page 45

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adidas-Salomon ANNUAL REPORT 2000
41
Management Discussion & Analysis
In 2000, the golf industry as a whole improved only
slightly, but TaylorMade-adidas Golf was able to take
advantage of some economic opportunities. With further
stabilization in the Asian economy, good weather condi-
tions more conducive to playing golf in the United States
and an expanding interest in the game, everything was in
place to make 2000 a successful year. With sales up 35%,
TaylorMade-adidas Golf delivered the highest percentage
improvement in the Group, positively influenced by
the strong US dollar. After a successful launch of the
SuperSteel collection, the introduction of the 300 SeriesTM
metalwood in September led the brand to its highest
fourth quarter sales ever.
Group-Leading Sales Increase of 35%
In 2000, sales increased in every major product category.
Metalwood sales were up 41% as the result of high sell-throughs
of the FireSole and SuperSteel lines as well as the introduction
of the 300 SeriesTM driver in September. Iron sales increased
22% as the result of our very successful introduction of
SuperSteel irons. adidas Golf products also contributed
strongly, with
apparel up 231% and footwear up 32%. This
provided evidence
of the synergies of combining the global
golf activities into one unit, which completed its first full year
of combined operations in 2000.
On a regional basis, the largest revenue growth in percent in
2000 came from Asia, where sales were up 97%. This is a
result of strong sales growth in Japan and the very successful
introduction of TaylorMade products in Korea. Sales in Japan
also profited from the strong yen. In America, the largest golf
market in the world, sales were up 28%. In Europe, sales
increased 14% despite adverse weather conditions.
Gross Margin at Record Level
TaylorMade-adidas Golf’s gross margin came in at 49.5%,
up 1.1 percentage points from the previous year. Gross profit
increased 38% to reach c221 million. This improvement was
driven by increased demand for the company’s new products
and technologies in 2000. It also reflected strong efficiency
gains in the production of TaylorMade clubs as well as newly
negotiated contracts with vendors.
Operating Profit up 46%
Operating profit for TaylorMade-adidas Golf increased 46%
in 2000. This occurred despite sizable operating expense
increases as a result of the Growth and Efficiency Program’s
focus on sales and marketing for the brand. As part of this
program, we increased our sales force by one-third to allow
us to better focus on pro shops, where top golf players are
most likely to make purchases.
Double-Digit Sales Growth Expected for 2001
TaylorMade-adidas Golf has made significant changes over
the last two years, which have repositioned the brand for
strong growth going forward. Further, as a result of the new
300 Series™ metalwoods and irons, which are being launched
as a full collection in 2001, TaylorMade-adidas Golf expects
double-digit sales increases in 2001.
TaylorMade-adidas Golf TaylorMade-adidas Golf at a Glance
(euros in millions) Change year-
2000 1999 over-year
Net sales 441 327 35%
Gross margin 49.5% 48.4% 1.1pp
Operating profit 44 30 46%
TaylorMade-adidas Golf Sales by Region
(euros in millions) Variance
2000 1999 in %
Europe 66 58 14
North America 289 226 28
Asia 85 43 97
Total* 441 327 35
* Difference in total due to HQ/Consolidation
TaylorMade-adidas Golf Sales by Product
(in %)
Irons 28
Putters 3
Golf Balls 4
Footwear 7
Apparel 7
Other Hardware
(incl. Bags) 8
Metalwoods 43