Reebok 2006 Annual Report Download - page 95

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091
» adidas Business Performance
» Reebok Business Performance
Development by Segment ›
Reebok Business
Performance
In the period from February to December 2006, Reebok
made important progress in consolidating distribution in
North America to align it with the new positioning of the
brand. Currency-neutral sales for the Reebok segment
decreased 9% versus the prior year with declines in North
America, Europe and Latin America which could not be off-
set by double-digit revenue growth in Asia. In euro terms,
revenues also declined 9% to € 2.473 billion in 2006 from
€ 2.718 billion in 2005. On a like-for-like basis, currency-
neutral sales decreased 6%, in line with Management’s
expectation of a mid-single-digit decline. Reebok’s gross
margin was 35.0%, including negative effects of € 76 million
from purchase price allocation. Gross profit for Reebok in
the period from February to December 2006 was € 865 mil-
lion. Reebok’s operating margin was 3.5% including nega-
tive effects in a total amount of € 89 million from purchase
price allocation. Operating profit was € 86 million. Exclud-
ing these purchase price allocation effects, Reebok’s gross
margin was 38.0% and the operating margin was 7.1% in the
period from February to December 2006.
Reebok Results Not Comparable with Prior Year
The business of Reebok International Ltd. (USA) and its
subsidiaries is consolidated within the adidas Group as of Feb-
ruary 1, 2006. The segment includes the brand units Reebok,
Reebok-CCM Hockey and Rockport. Reebok’s results are not
comparable with 2005 reported results, because only eleven
months of Reebok’s 2006 results are consolidated. Further,
the NBA and Liverpool licensed businesses were transferred
to brand adidas in an effort to best utilize promotion partner-
ships. Similarly, the Greg Norman Collection (GNC) apparel
business was transferred to the TaylorMade-adidas Golf seg-
ment. The GNC wholesale business was consolidated in the
TaylorMade-adidas Golf segment until the end of November
when it was sold to MacGregor Golf Company. The results
of the GNC-related retail outlet operations, which were not
part of the transaction, will be reported as part of Reebok’s
own-retail activities from January 1, 2007, onwards, as Greg
Norman product will be sold at Reebok factory outlets.
2006 2005 Change
Net sales 2,473 2,7182) (9%)
Gross profit 865 — —
Gross margin 35.0% — —
Operating profit 86 — —
Operating margin 3.5% — —
1) Only includes eleven months of the twelve-month period.
2) Not consolidated within the adidas Group. Reebok prior year results are based on
US-GAAP and not IFRS.
Reebok at a Glance1) € in millions
Reebok Net Sales by Quarter € in millions
Q1 20051)
Q1 20062)
Q2 20051)
Q2 2006
Q3 20051)
Q3 2006
Q4 20051)
Q4 2006
504
454
648
595
819
778
747
645
1) Not consolidated within the adidas Group. Reebok prior year results are based on
US-GAAP and not IFRS.
2) Only includes two months of the three-month period.