Reebok 2007 Annual Report Download - page 63

059
ANNUAL REPORT 2007 --- adidas Group
02
TARGETS VERSUS ACTUAL KEY METRICS
2006 2007
200
7 2008 2009
Actual Initial Target
Ac
t
ual
Target Target
G
roup sales growth
(currency-neutral) 53 % mid-
7
%
high- high-
single- single- single-
digit digit digit
adidas segment sales growth (currency-neutral) 14 % mid- 12
%
high-
single- single-
digit digit
Reebok segment sales growth (currency-neutral) (6 %)1) low-
0
% low- to
single- mid-
digit single-
digit
TaylorMade-adidas Golf segment sales growth (currency-neutral) 13 % 1) mid-
9
%
1
)
mid-
single- single-
digit1)
digit
G
roup gross margin
44.6 % 45 – 47 %
47.4
%
4
7.
5
– 48 % 46 – 48 %
adidas segment gross margin 46.2 % increase 47.4
%
increase
Reebok segment gross margin 35.0 % increase
3
8.7
%
increase
TaylorMade-adidas Golf segment gross margin 43.9 % increase 44.7
%
increase
G
roup operatin
g
expenses
(
in % of sales
)
36.7 % increase
3
9.2 %
increase
adidas segment operating expenses (in % of sales) 35.4 % stable
35
.6
%
increase
Reebok segment operating expenses (in % of sales) 32.8 % increase
3
5.8 % increase
TaylorMade-adidas Golf segment operating expenses (in % of sales) 33.5 % increase
3
4.4
%
increase
G
roup operatin
g
mar
g
in
8.7 % approx.
9.2 %
at least approx.
9 % 9.5 % 11 %
adidas segment operating margin 11.9 % increase
1
2.9
%
increase
Reebok segment operating margin 3.5 % increase 4.7 % increase
TaylorMade-adidas Golf segment operating margin 8.5 % decrease
8
.1
%
increase
N
et income growth
(
attributable to shareholders
)
26
%
≤
1
5
%
14
%
at least double-
15 % digit
O
perating working capital
(
in % of net sales
)
25.8 % < 25 %
25
.2
%
further further
reduce reduce
C
apital expenditure
(
€
in milli
o
n
s
)
2
)
277 300 – 400
289
300 – 400 300 – 400
N
et debt
(
€
in million
s
) 2,231 < 2,000
1
,766
maintain
o
r reduc
e
1)
On a like-for-like basis
.
2
)
Excludin
g
g
oodwill and fi nance leases.
MANAGEMENT APPRAISAL OF 2007 PERFORMANCE AND
TARGETS FOR 2008 AND 2009 We communicate our Group’s
fi nancial targets on an annual basis. We also provide updates
throughout the year as appropriate. In 2007, we achieved all
key fi nancial targets within the focus of our Internal Management
System. We outperformed global industry and macroeconomic
growth, increased our earnings at a double-digit rate, and made
strong debt reduction progress during the year.  see Economic and
Sector Development, p. 078
By segment, development at adidas and TaylorMade-adidas Golf
exceeded our initial sales expectations while the Reebok seg-
ment performed marginally below initial expectations. At
Reebok, strong sales increases in the emerging markets,
particularly in Asia and in Eastern Europe, could not fully
compensate lower than anticipated revenues in North America
and the UK. The deliberate limitation of sales to mall-based
customers in North America contributed to this development.
Management took this decision to reduce product discounting
at retail and protect brand image.
For 2008 and 2009, we have again committed to ambitious
targets which will help us optimize our Group’s free cash fl ow
development going forward. Despite lower expected global
economic growth in 2008, we believe the current trading
environ ment will not negatively impact these expectations
given the high percentage of growth we expect to come from
emerging markets and the positive impetus of the major sport-
ing events during the year. We believe our targets are realistic
within the scope of the current trading environment, and no
material event between the end of 2007 and the publication of
this report has altered our view.  see Subsequent Events, p. 117