Reebok 2008 Annual Report Download - page 21

How do you see 2009 shaping up from a fi nancial point of view for the entire
Group?
Entering 2009, the market is clearly challenging. There is so much interdepen-
dence between economies these days that the effects of economic slowdown will
be felt everywhere and not just in isolated regions like we have seen in the past.
Therefore, the impact this is going to have on consumers and our retail partners
alike is diffi cult to judge today. Nobody can tell how severely rising unemployment
rates and lower consumer confi dence will affect private consumption but it is
clear the consumer will be spending less in 2009.
In light of these factors, we forecast full year sales to decrease at a low- to
mid-single-digit rate on a currency-neutral basis. Gross margin will be under
pressure given the promotional retailer landscape in mature markets as well as
expected higher sourcing costs in particular in the fi rst half of the year. While we
will be very disciplined in managing our operating cost base, earnings per share
will decline this year. The magnitude of the decline will to a large extent depend
on how currencies move over the year. Currencies such as the Russian ruble, the
British pound and several currencies in Latin America have signifi cantly depreci-
ated against the euro. I personally see this as our biggest risk in 2009.
Nevertheless, I am convinced our Group enters this period stronger than
ever and we are doing all the right things to keep our company on its long-term
growth path. We have the resources and the energy to tackle the challenges that
come. And don’t forget the 2010 FIFA World Cup™ is just around the corner – an
event that plays to the very strengths of our Group and which will already start
positively impacting our business later this year.
You have been quoted as saying the sporting goods industry is more resilient
than other consumer segments in macroeconomic downturns. What are
the reasons for that and how do you see the adidas Group positioned in this
respect?
I believe our industry and our Group in particular have a good chance to decouple
from at least some of the negative macroeconomic trends. Sport is part of the
fabric of society – right from the professional athlete to the Sunday sports fan.
Individuals and governments place increasing importance
on health and fi tness. Sport participation rates will continue
to grow particularly in the emerging markets as personal
wealth increases. In addition, we address young consumers
– a target audience that is less susceptible to economic
downturns as they do not suffer the fi nancial constraints of, for example, mort-
gages or car leases. And don’t forget we are talking about fairly low-ticket items
relative to many other consumer goods segments.
Within our industry, we enjoy a leading position with a well-balanced and
extensive product offering spanning performance and lifestyle. Today, no matter
on which playing fi eld – there is no doubt our Group leads the industry when
it comes to innovation, design and service. We are present in all major sports
categories. We have a partnership portfolio that is second to none. And we are
following a controlled space strategy that will ensure we stay right in front of
the consumer. Although we cannot control the macro environment or currencies,
we are in control of our business. And that is why we will continue to execute
our “game plan” to build a long-term growth company for the benefi t of all our
stakeholders.
Herbert, thank you for this interview.
adidas Group Annual Report 2008 017