Reebok 2007 Annual Report Download - page 106

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ANNUAL REPORT 2007 --- adidas Group GROUP MANAGEMENT REPORT – OUR FINANCIAL YEAR -- Business Performance by Segment - TaylorMade-adidas Golf Business Performance
GNC DIVESTITURE AFFECTS REPORTED RESULTS Compared
to the prior year, 2007 results of the TaylorMade-adidas Golf
segment do not include results of the GNC apparel business.
This is due to the divestiture of the GNC wholesale business,
which was completed on November 21, 2006. In addition,
results of the GNC-related retail outlet operations, which were
excluded from the transaction, are now reported in the Reebok
business segment. These operations relate to the distribution
of GNC products via Reebok own-retail stores. The divestiture
had a negative impact on the segment’s sales development.
In total, the GNC apparel business contributed € 63 million of
sales to the TaylorMade-adidas Golf segment in 2006.
CURRENCY-NEUTRAL SALES INCREASE 1 % Currency-neutral
sales at TaylorMade-adidas Golf in 2007 increased 1 % despite
the divestiture of the GNC wholesale business. On a compara-
ble basis, excluding prior year GNC sales, revenues increased
9 %. This development was above Management’s initial expec-
tation of mid-single-digit growth. Underlying adidas Golf
apparel and footwear revenues grew signifi cantly. Hardware
sales, in particular in the metalwoods category, also increased.
 see TaylorMade-adidas Golf Strategy, p. 054 Currency translation effects
negatively impacted segment revenues in euro terms. Segment
sales decreased 6 % to € 804 million in 2007 from € 856 mil-
lion in 2006.
TAYLORMADE-ADIDAS GOLF BUSINESS
PERFORMANCE
I
n2007, sales
g
rowth in the
TaylorMade-adidas
G
olf se
g
ment exceeded
Mana
g
ement’s initial expectations. Pro
fi
tability
d
evelo
p
ed in line with ex
p
ectations. TaylorMade
-
ad
i
das
Go
lf r
e
v
e
n
ues
in
c
r
eased
1
%
o
n
a
currency-neutral basis despite the divestiture
o
f the Gre
g
Norman Collection
(
G
N
C
)
whole-
s
ale business in November
200
6. In euro
terms, segment sales declined 6
%
t
o
€
804
milli
o
n in 2007 fr
o
m
€
85
6
mil li
o
n in 2006
.
O
n a like-for-like basis, however, sales
i
ncreased
9
%
.
The se
g
ment’s
g
ross mar
gi
n
gre
w
0
.
8
per centage points to 44.7
%
(
2006
:
43
.9
%
)
as a result of higher margins in metal-
w
oods and irons. In euro terms,
g
ross profi t
dec
l
i
n
ed
4
%
t
o
€
3
60 m
i
ll
io
n
i
n
2007
f
r
o
m
€
3
76 m
i
ll
i
on
i
n the pr
i
or year. The segment’s
o
perating margin decreased
0
.
4
percen
t
age
points to
8
.1
%
(
2
006: 8.5
%
)
. This was due to
h
ig
her operat
i
n
g
expenses as a percenta
g
e
of
sales, which more than o
ff
set the
p
ositive
g
ross margin development. As a result,
o
perating pro
fi
t decreased
1
0
%
to
€
65 mil li
o
n
f
r
o
m€ 7
3
milli
o
n in
2
00
6
.
TAYLORMADE-ADIDAS GOLF AT A GLANCE
€
in million
s
200
7
20061) Change
Net sales
Gross profi t
Gross margin
Operating profi t
Operating margin
1
)
Includin
g
Gre
g
Norman apparel business from February 1, 2006 to November 30, 2006
.
804
4
856 (6 %)
3
6
0
0
376 (4 %)
44.7
%
%
43.9 % 0.8 pp
65
5
73 (10 %)
8.1
%
%
8.5 % (0.4 pp)
TAYLORMADE-ADIDAS GOLF NET SALES BY QUARTER 1)
€
in million
s
Q1 2006
Q
1
200
7
Q2 2006
Q2
200
7
Q3 2006
Q
3 2007
Q4 2006
Q
4
200
7
1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006
.
190
194
23
9
264
1
8
0
201
19
5
197
TAYLORMADE-ADIDAS GOLF 2007 NET SALES BY PRODUCT
1) Includes irons, putters,
g
olf balls,
g
olf ba
g
s,
g
loves and other accessories.
Apparel
1
8
%
4
2
%
MetalwoodsFootwear 9
%
3
1
%
Other
hardware 1)