Adidas 2002 Annual Report Download - page 84

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82 REPORTING MANAGEMENT DISCUSSION & ANALYSIS /// SALOMON
Salomon /// 2002 MARKED AN IMPORTANT YEAR FOR
SALOMON BRAND AWARENESS WITH LEADING SPONSOR-
SHIP POSITIONS AT BOTH THE WINTER OLYMPICS IN SALT
LAKE CITY AND THE ALPINE SKI WORLD CUP. SALOMON
FIGURES, WHICH ALSO COMPRISE THE MAVIC, BONFIRE
AND CLICHÉ BRANDS, INCLUDE ARC’TERYX FOR THE FIRST
TIME IN 2002. DIFFICULT WINTER AND INLINE SKATE
MARKETS GLOBALLY PUSHED 2002 SALES FOR THIS
FAMILY OF BRANDS DOWN 4% TO € 684 MILLION VERSUS
€ 714 MILLION IN THE PRIOR YEAR. ON A CURRENCY-
NEUTRAL BASIS, THIS DECLINE WAS ONLY 1%. SALOMON’S
GROSS MARGIN DECREASED BY 3.1 PERCENTAGE POINTS
AS A RESULT OF A LOWER PERCENTAGE OF TOTAL SALES
BEING GENERATED BY HIGH-MARGIN WINTER PRODUCTS
AND HIGHER CLEARANCE ACTIVITIES IN BOTH OUTDOOR
FOOTWEAR AND INLINE SKATES. HOWEVER, OPERATING
EXPENSES AS A PERCENTAGE OF SALES COULD BE MAIN-
TAINED AT 35.1% THANKS TO STRONG RATIONALIZATION
EFFORTS AT SALOMON. AS A CONSEQUENCE, OPERATING
PROFIT DECLINED 38% FROM € 63 MILLION IN 2001 TO
€ 39 MILLION IN 2002. THE CONTINUED DEVELOPMENT OF
FOOTWEAR AND APPAREL ACTIVITIES IS EXPECTED TO
HELP SALOMON GROW SALES AND PROFITS IN 2003
DESPITE UNFAVORABLE CURRENCY EFFECTS AND THE
WEAK GLOBAL WINTER SPORTS MARKET.
ARC’TERYX CONTRIBUTES TO THE TOP LINE /// Net sales for
the Salomon brands decreased by 4% from € 714 million in
2001 to € 684 million in 2002. On a currency-neutral basis,
this decline was only 1%. Excluding the first-time inclusion
of € 26 million from Arc’Teryx, Salomon sales declined
8% (–5% currency-neutral) from € 714 million in 2001 to
€ 658 million in 2002.
NEGATIVE SALES DEVELOPMENT DRIVEN BY POOR INLINE
SKATE AND WINTER MARKETS /// Sales of winter products,
which currently make up 69% of Salomon sales (2001: 69%)
declined 5% (–2% currency-neutral) as a result of difficult
market conditions. Excess inventories at retail following a
difficult 2001/2002 winter market, combined with little snow
in Europe at the beginning of the 2002 /2003 season, hindered
Salomon winter sales. Summer products, which comprise
31% of Salomon sales (2001: 31%), also declined in 2002 as
anticipated, as a result of the extremely poor global inline
skate market and continued difficulties of the brand in Japan.
At Mavic, bike component sales grew 28%, faster than any
other part of the Salomon business.
SALOMON AT A GLANCE € in millions
2002 2001 Change
Net sales 684 714 (4%)
Gross margin 40.8% 43.8% (3.1pp)
Operating profit 39 63 (38%)
SALOMON NET SALES BY PRODUCT CATEGORY
1) Includes skis, boots, bindings and other related products
2) Includes inline skates and skateboards
3) Includes boards, boots and bindings
4) Includes wheels, rims and other related cycling products
45% Alpine1)
13% Outdoor Footwear
Nordic1) 6%
Apparel and Gear 10%
Cycling4) 11%
Snowboarding3) 8%
Skating2) 7%
SALOMON NET SALES BY REGION
58% EuropeLatin America 1%
Asia 12%
North America 29%