Adidas 2002 Annual Report Download - page 82

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80 REPORTING MANAGEMENT DISCUSSION & ANALYSIS /// adidas DEVELOPMENT IN ASIA
adidas DEVELOPMENT IN ASIA
SALES MOMENTUM CONTINUES FOR adidas IN ASIA /// From
a regional perspective, the adidas brand grew most vigorously
in Asia in 2002. Brand sales were up 20% to € 867 million
from € 726 million in 2001. On a currency-neutral basis, this
growth was 26%. Brand sales in the region have tripled in the
last four years. The largest component of this increase was
again sales improvement at adidas Japan which not only
gained substantial momentum from our sponsorship of 2002
FIFA World Cup™ hosts Japan, but also delivered over 20%
organic growth. In addition to these gains, South Korea, Hong
Kong, Taiwan and, in particular, China all delivered solid
improvements. Smaller markets such as New Zealand, India
and Malaysia also showed impressive growth rates, enabling
adidas to strengthen its leading position in these markets.
adidas SALES IN ASIA GROW IN BOTH FOOTWEAR AND
APPAREL /// The main growth driver of adidas sales in Asia
was footwear, which grew 19% from € 371 million in 2001 to
€ 442 million in 2002. Strongest performance was delivered
by the Sport Heritage division, where sales were up 40% year-
over-year, reflecting the high demand for such products in
Japan and Hong Kong. Solid growth also came in the Sport
Performance football category, where World Cup excitement
helped push footwear sales up 23% versus the prior year.
In apparel, sales grew 20% from € 316 million in 2001 to
€ 380 million in 2002 following the success of our World Cup
products. Sales in the football apparel category grew an
impressive 101% year-over-year. The only decline recorded
in footwear or apparel in the region was in the very small
tennis apparel category, as a result of lower participation
rates in Japan.
GROSS MARGIN FOR adidas IN ASIA GROWS STRONGLY ///
The gross margin for adidas in Asia improved by 1.0 percent-
age points from 44.5% in 2001 to 45.5% in 2002. This is the
highest regional gross margin, with improvements coming
from most major markets.
adidas IN ASIA SET TO DELIVER CURRENCY-NEUTRAL
GROWTH AGAIN IN 2003 /// In 2003, we are expecting contin-
ued strong growth from adidas in Asia. With two major sport-
ing events – the Men’s World Cup in rugby and the Women’s
World Cup in football – we expect to generate continued high
visibility for the brand in our major regional markets. This will
allow adidas to strengthen its performance image, following
the solid success of the 2002 FIFA World Cup™. The Sport
Performance running and basketball categories are expected
to generate the most vigorous growth in the region. In addi-
tion, double-digit increases in the Sport Heritage division are
also anticipated in Asia. Order backlog development supports
this vision, with orders up 11% in euro terms or 22% on a
currency-neutral basis. Footwear is again expected to be the
driver of growth for the region, with backlogs up 28% in euros
or 40% on a currency-neutral basis. Apparel backlogs, which
were down 2% in euros, grew at 7% on a currency-neutral
basis.
adidas ASIA € in millions
2002 2001 Change
Net sales 867 726 20%
Gross margin 45.5% 44.5% 1.0pp
Operating profit 107 93 15%
DEVELOPMENT OF adidas ORDER BACKLOG IN ASIA1)
35%
30%
25%
20%
15%
10%
5%
0%
–5%
Q1 2001 Q4 2002
Total in € 1) At end of quarter, change year-over-year
Total currency neutral