Reebok 2007 Annual Report Download - page 49

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ANNUAL REPORT 2007 --- adidas Group
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EXTENDING INNOVATION AND DESIGN LEADERSHIP We are
determined to address every consumer in a specifi c and unique
way – with product and communication initiatives that generate
trade and consumer interest. As a result, we believe that tech-
nological innovation and cutting-edge design are essential to
sustainable leadership in our industry.
Innovation plays a signifi cant role in differentiating our product
offering in the minds of consumers. By leveraging the extensive
R&D expertise within our Group,  see Research and Development, p. 072
we continuously challenge the boundaries of functionality and
performance. It is our objective to launch at least one major
new technology or technological evolution per year.
Through design partnerships and collaborations with Stella
McCartney, Yohji Yamamoto, Porsche Design and Rolland
Berry we are widening our design reach and imbuing our prod-
ucts with the excitement consumers demand. By continually
expanding our capabilities in R&D and design, we are able to
introduce new products at high price points, thus contributing
to Group margin improvement.
CUSTOMIZING DISTRIBUTION Our Group will drive future
success by engaging consumers with unique interactive prod-
uct approaches and rewarding point-of-sale experiences.
Our brands must be competitive in this environment where
consumers make their fi nal purchase decisions based on
availability, convenience and breadth of product offering. As
a result, we are continuously refi ning our distribution propo-
sition, concentrating on two areas: expanding controlled space
and improving retail relationships.
Controlled space includes:
- Our own-retail business
- Mono-branded stores run by retail partners
- Shop-in-shops that we establish with our key accounts
- Joint ventures with retail partners
- Co-branded stores with sports organizations or other
brands
These formats provide us with a high level of brand control
as we either manage the stores ourselves (i.e. own retail) or
we work closely with our partners (mono-branded stores,
shop-in-shops, joint ventures, co-branded stores) to ensure
the appropriate product offering and presentation at the point-
of-sale. Brand control helps us drive sales and profi tability
increases and expand our market positions. By 2010, we intend
to generate at least 30% of our Group’s revenues through con-
trolled space.
Going forward, we will also further differentiate and segment
our product offering to align our distribution more closely with
a given retailer’s customer base. In addition, we are partnering
with retailers to increase the level and quality of sell-through
information we receive. This creates a mutually benefi cial
relationship that will help us become a more valuable and
reliable business partner to our retailers.
CREATING SHAREHOLDER VALUE Sustainable revenue and
operating profi t growth are critical to our success.  see
Internal Group Management System, p. 056 Creating value for our share-
holders through signifi cant free cash fl ow generation drives
our overall decision-making process. For each of our brands,
we pursue the most value-enhancing avenues for growth,
with particular emphasis on continuously improving profi t-
abi lity. In addition, rigorously managing working capital and
optimizing fi nancial leverage remain key priorities for us. As
always, we are committed to increasing returns to share-
holders with above-industry-average share price performance
and dividends.