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› Group Business PerformanceGroup Management Report ›
094 ANNUAL REPORT 2006 › adidas Group ›
TaylorMade-adidas Golf
Business Performance
In 2006, the TaylorMade-adidas Golf segment performed
well above Management’s initial expectations. Sales for
the segment in 2006 grew 22% on a currency-neutral basis,
above Management’s initial expectations of a mid-single-
digit increase. Growth was driven by strong sales increases
in North America and Asia and the inclusion of the Greg
Norman apparel business. In euro terms, this represents
an improvement of 21% to € 856 million in 2006 from
€ 709 million in 2005. TaylorMade-adidas Golf gross margin
declined 0.1 percentage points to 43.9% in 2006 from 44.0%
in 2005. This development was due to the inclusion of the
lower-margin Greg Norman apparel business, which was
largely offset by improvements in other product catego-
ries. As a result of the strong sales development, gross
profit grew 21% to € 376 million in 2006 from € 312 million
in 2005. Operating margin increased 1.4 percentage points
to 8.5% in 2006 from 7.1% in 2005 due to strong operating
expense leverage which more than offset the gross margin
decline. As a result, operating profit increased 44% to
€ 73 million from € 50 million in 2005.
Divestiture of Greg Norman Wholesale Business
As part of the Reebok acquisition, the Greg Norman Collection
(GNC) apparel business was transferred from the Reebok
to the TaylorMade-adidas Golf segment effective February
1, 2006. On October 24, 2006, the adidas Group announced
the divestiture of the GNC wholesale business to MacGregor
Golf Company which was completed on November 21, 2006.
As a result, the GNC wholesale business was consolidated
within the TaylorMade-adidas Golf segment until the end of
November. To increase transparency of the underlying busi-
ness development, segment sales are also provided excluding
the GNC business.
Currency-Neutral Segment Sales Up 22%
Currency-neutral sales at TaylorMade-adidas Golf increased
22% in 2006. This strong performance was driven by solid
revenue growth in nearly all major categories, in particu-
lar irons and adidas Golf footwear and apparel. In addition,
the GNC apparel business contributed sales of € 63 million.
In euro terms, revenues grew 21% to € 856 million in 2006
from € 709 million in 2005. Sales for the TaylorMade-adidas
Golf segment excluding the GNC apparel business increased
13% on a currency-neutral basis and 12% in euro terms to
€ 793 million in 2006 (2005: € 709 million).
Currency-Neutral Sales in Europe Decrease 9%
On a regional basis, currency-neutral sales in Europe
decreased 9%, mainly as a result of declines in the UK. In
euro terms, European sales decreased 10% to € 92 million
(2005: € 102 million). Currency-neutral sales for the segment
excluding the GNC apparel business decreased 13%. In euro
terms, sales declined by 13% to € 89 million from € 102 mil-
lion in 2005.
2006 2005 Change
Net sales 856 709 21%
Gross profit 376 312 21%
Gross margin 43.9% 44.0% (0.1pp)
Operating profit 73 50 44%
Operating margin 8.5% 7.1% 1.4pp
1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.
Excluding Greg Norman wholesale business from December 1, 2006.
TaylorMade-adidas Golf at a Glance1) € in millions
TaylorMade-adidas Golf Net Sales by Quarter1) € in millions
Q1 2005
Q1 2006
Q2 2005
Q2 2006
Q3 2005
Q3 2006
Q4 2005
Q4 2006
149
201
202
264
177
194
181
197
1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.
Excluding Greg Norman wholesale business from December 1, 2006.
TaylorMade-adidas Golf Net Sales by Product1)
Putters 2% Metalwoods 38%
Accessories2) 4%
Irons 20%
1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.
Excluding Greg Norman wholesale business from December 1, 2006.
2) Includes golf bags, gloves and other accessories.
Apparel 23%
Golf balls 6%
Footwear 7%