Adidas 2002 Annual Report Download - page 80

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adidas DEVELOPMENT IN NORTH AMERICA
DOUBLE-DIGIT CURRENCY-NEUTRAL SALES GROWTH IN
NORTH AMERICA /// adidas sales in North America grew 4%
from € 1.3 billion in 2001 to € 1.4 billion in 2002. Restated on
a currency-neutral basis, sales increased by 10%. In 2002,
adidas was again confronted with a difficult retail market in
North America. Nevertheless, the basketball category grew
strongly, led by the number one selling T-MAC (February) and
T-MAC 2 (November and December). These were the brand’s
first and second top selling shoes in the USA in over six years
(according to the SportsScan data provider), highlighting
the growing support for the brand and the category within
North America. Additionally, the brand’s two new footwear
technologies – ClimaCool®and a3® – also drove strong per-
formance in the running category. Own-retail sales grew
solidly in the region, in particular at concept stores and on
the Internet. Clearance activities were down substantially in
2002, reflecting significantly improved inventory management
in the region.
BASKETBALL FOOTWEAR SALES IN NORTH AMERICA GROW
45% /// By product category, adidas footwear sales increased
8% from € 818 million in 2001 to € 884 million in 2002 (+14%
currency-neutral). Sales grew most strongly in the Sport
Heritage division, where revenues increased 19% year-over-
year. Strong sales were also recorded in the Sport Perfor-
mance basketball and running categories, which grew 45%
(+56% currency-neutral) and 10% (+18% currency-neutral)
respectively. On a currency-neutral basis, only training and
kids sales declined versus the prior year, where the product
offering has yet to prove its competitive positioning in the
broader market.
CURRENCY-NEUTRAL adidas APPAREL SALES IN NORTH
AMERICA GROW FOR THE FIRST TIME SINCE 1998 ///
adidas apparel sales in North America declined 2% from
€ 489 million in 2001 to € 480 million in 2002. Currency-
neutral, apparel sales grew 3%. The Sport Performance
basketball category led sales growth with revenues up 118%
year-over-year (+128% currency-neutral), reflecting excellent
response to the new apparel line. Tennis also grew strongly,
with apparel sales growing 24% versus the prior year. The
Sport Heritage division also delivered solid double-digit
growth, albeit from a very low base. On a currency-neutral
basis, only training sales declined versus the prior year. This
reflects the impact of the strong licensed apparel market in
the USA and the extremely promotional environment for kids
products.
IMPROVING PRODUCT MIX AND LOWER CLEARANCE
SALES DRIVE GROSS MARGIN IMPROVEMENTS IN NORTH
AMERICA /// The gross margin in North America improved
1.1 percentage points to 35.9% in 2002 versus 34.8% in 2001.
Lower clearance sales at higher margins, improving margins
at own retail and a better product mix were all important
contributors to this development.
DOUBLE-DIGIT CURRENCY-NEUTRAL SALES GROWTH
EXPECTED IN NORTH AMERICA IN 2003 /// Sales in 2003 will
again grow at double-digit rates. Footwear will continue to be
the primary growth driver, with particularly strong gains in
the athletic specialty channel. Both basketball and running
will be solid growth categories for adidas in North America.
Year-end backlogs for the region were down 3% in euro
terms, but up 15% on a currency-neutral basis, highlighting
the strong devaluation of the US dollar over the last year. This
represents the fifth consecutive quarter of positive currency-
neutral backlog growth in the region. On a product basis,
footwear orders were down 2% in euro terms (+16% currency-
neutral). Apparel backlogs were down 6% but actually grew
12% on a currency-neutral basis. As a result of this backlog
development, we are confident that we will continue to grow
at double-digit rates on a currency-neutral basis in North
America.
78 REPORTING MANAGEMENT DISCUSSION & ANALYSIS /// adidas DEVELOPMENT IN NORTH AMERICA