Reebok 2009 Annual Report Download - page 137

GROUP MANAGEMENT REPORT – FINANCIAL REVIEW BUSINESS PERFORMANCE BY SEGMENT Wholesale Business Performance 133
Currency-neutral adidas Sport
Performance sales decline 11%
In 2009, adidas Sport Performance
wholesale revenues decreased 11% on
a currency-neutral basis. Revenues
declined in all major categories. In
particular, the football category was
strongly impacted by the non-recurrence
of strong prior year sales in connection
with the UEFA EURO 2008™ in the first
half year. Currency translation effects
positively impacted revenues in euro
terms. In 2009, adidas Sport Perform-
ance sales decreased 9% to € 4.706 bil-
lion from € 5.184 billion in the prior year.
adidas Sport Style sales increase 7%
on a currency-neutral basis
Currency-neutral adidas Sport Style
wholesale revenues grew 7% in 2009.
The increase was driven by strong
momentum in the Style Essentials
collection, whereas Originals sales
declined. Currency translation effects
negatively impacted revenues in
euro terms. Sport Style sales grew
6% to € 1.225 billion in 2009 (2008:
€ 1.151 billion).
Reebok sales decline 10% on
a currency-neutral basis
In 2009, Reebok wholesale revenues
decreased 10% on a currency-neutral
basis. This was a result of declines in
Classics and Men’s Training, which were
partly compensated by a double-digit
sales increase in Women’s Fitness. In
euro terms, Reebok sales also decreased
10% to € 1.265 billion in 2009 from
€ 1.410 billion in 2008.
Gross margin negatively impacted
by higher input costs
Wholesale gross margin decreased
2.1 percentage points to 41.6% in 2009
from 43.7% in 2008. This was mainly due
to higher input costs and a highly promo-
tional retail environment. adidas whole-
sale gross margin decreased 1.6 percent-
age points to 44.4% in 2009 (2008: 46.0%).
Wholesale gross margin of the Reebok
brand decreased 4.6 percentage points to
28.4% in 2009 versus 33.0% in the prior
year. As a result, Wholesale gross profit
declined 12% to € 2.981 billion in 2009
versus € 3.387 billion in 2008.
Segmental operating costs as
a percentage of sales down
0.1 percentage points
Segmental operating costs in Wholesale
primarily relate to sales working budget
expenses as well as expenditures for
sales force, administration as well as
logistics. Segmental operating costs as
a percentage of sales decreased 0.1 per-
centage points to 8.9% (2008: 9.0%).
This was primarily due to declines in
personnel expenses as a result of cost
control measures taken during the year.
In euro terms, segmental operating costs
decreased 9% to € 635 million in 2009
from € 695 million in 2008.
N °-
03
WHOLESALE NET SALES BY REGION
12% Latin America
14% Other Asian Markets
12% Greater China
18% North America
37% Western Europe
7% European
Emerging Markets
N °-
04
WHOLESALE NET SALES BY DIVISION
17% adidas Sport Style
18% Reebok
65% adidas Sport
Performance
N °-
05
N °-
06
WHOLESALE GROSS MARGIN BY QUARTER
IN %
WHOLESALE OPERATING PROFIT BY QUARTER
€ IN MILLIONS
Q1 2008
Q1 2009
Q2 2008
Q2 2009
Q3 2008
Q3 2009
Q4 2008
Q4 2009
Q1 2008
Q1 2009
Q2 2008
Q2 2009
Q3 2008
Q3 2009
Q4 2008
Q4 2009
45.0
42.6
43.3
39.6
45.3
42.1
40.5
41.6
722
615
590
492
822
704
558
535
Segmental operating profit
decreases 13%
In 2009, segmental operating margin
decreased 2.0 percentage points to
32.7% (2008: 34.7%). This was a result
of the gross margin decline which more
than offset lower segmental operating
costs as a percentage of sales. Segmen-
tal operating profit decreased 13% to
€ 2.346 billion in 2009 versus € 2.692 bil-
lion in the prior year.
Number of Wholesale employees
decreases
At year-end 2009, the Group employed
4,881 people in the Wholesale segment,
which represents a decrease of 8%
versus 5,303 employees in the previous
year. This development is mainly due to
reorganisation initiatives as well as the
implementation of a hiring freeze for all
non-retail-related functions in 2009. On a
full-time equivalent basis, the Wholesale
segment employed 4,662 at year-end
2009. This represents a decrease of 9%
versus the prior year-end level of 5,133.