Reebok 2008 Annual Report Download - page 104

100 Group Management Report – Our Financial Year Business Performance by Segment — adidas Business Performance
2008 adidas net sales by region
2008 adidas own-retail sales by channel
Europe 50%
Factory Outlets 47%
Latin America 8%
North America 15%
Asia 27%
Internet 1%
Concession
Corners 2%
Originals
Concept Stores 6%
Sport Performance
Concept Stores 44%
Sport Performance up 15% on a currency-neutral basis
Sales in the Sport Performance division increased 15% on a
currency-neutral basis in 2008. The key categories identifi ed
by brand management as medium-term growth drivers see
adidas Strategy, p. 048 all grew at a double-digit rate with particu-
larly strong increases in the running and football categories. In
euro terms, Sport Performance sales improved 11% in 2008 to
€ 6.250 billion from € 5.608 billion in the prior year.
Sport Style increases 10% on a currency-neutral basis
Sales in the Sport Style division increased 10% on a currency-
neutral basis in 2008. Sales increased in both Originals and
Fashion (which includes Y-3 and Porsche Design). The launch
of Style Essentials see adidas Strategy, p. 048 also contributed
to this development. In euro terms, Sport Style sales grew 6%
to € 1.535 billion in 2008 (2007: € 1.455 billion).
Currency-neutral own-retail sales up 24%
In 2008, adidas own-retail sales increased 24% on a currency-
neutral basis. In euro terms, revenues grew 17% to € 1.432 bil-
lion from € 1.229 billion in 2007. This increase was driven by
new store openings and mid-single-digit increases in com-
parable store sales. adidas own-retail activities made up 18%
of adidas brand sales in 2008, up from 17% in the prior year.
At December 31, 2008, the total number of adidas stores was
1,332, representing an increase of 329 (2007: 1,003 stores). The
majority of new stores were opened in emerging markets with
under-developed retail infrastructure. The major opening in
2008 was the world’s biggest adidas store in Beijing. The store
base at the end of 2008 comprised 796 concept stores, 381 fac-
tory outlets, 150 concession corners and 5 e-commerce stores.
Full year gross margin improves to record level of 48.6%
The adidas segment gross margin increased 1.2 percentage
points to 48.6% in 2008 from 47.4% in 2007. This is the highest
annual gross margin in the adidas segment since the IPO in
1995. This development was in line with Management’s initial
expectation of a gross margin improvement. The increase
was primarily driven by an improving regional mix, further
own-retail expansion and a more favourable product mix. As a
result, adidas gross profi t grew 13% to € 3.802 billion in 2008
versus € 3.370 billion in 2007.
Royalty and commission income stable
In 2008, adidas royalty and commission income remained
stable at € 80 million (2007: € 80 million). Royalty and com-
mission income relates to items such as cosmetics, watches
and eyewear.