Reebok 2009 Annual Report Download - page 160

156 GROUP MANAGEMENT REPORT – FINANCIAL REVIEW Subsequent Events and Outlook
Subsequent Events and Outlook
In 2010, most major economies are forecasted to recover from the severe global recession in 2009. Although consumer spending
is expected to lag behind GDP growth, this development is projected to have a moderately positive impact on the sporting goods
industry and our Group. Based on our extensive pipeline of new product and marketing initiatives, we expect top- and bottom-
line improvements in our Group’s financial results compared to the prior year. We forecast adidas Group sales to increase at a
low- to mid-single-digit rate on a currency-neutral basis due to growth in the Wholesale and Retail segments as well as in Other
Businesses. Group gross margin is expected to increase to a level between 46% and 47%, primarily as a result of lower input
costs and less clearance sales. Operating margin is forecasted to be around 6.5%. As a result, we project earnings per share to
grow to a level between € 1.90 and € 2.15.
Subsequent Events
Memorandum of Understanding
signed with Pou Sheng International
(Holdings) Limited
In January 2010, adidas (China) Ltd.
signed a Memorandum of Understanding
for the business activities of the Reebok
brand in China with the Chinese sporting
goods retailer Pou Sheng International
(Holdings) Limited. Both parties intend
to enter into an agreement under which
Pou Sheng will co-design, manufacture
and become key distributor of Reebok
branded footwear and apparel in China.
A final agreement is expected to be
reached in the second quarter of 2010.
The new set-up will enable Reebok
to more effectively meet local market
tastes and accelerate time-to-market.
We forecast this strategic change to
support the brand’s turnaround in China
and project a positive medium-term
impact on Reebok’s market position and
profitability.
Lawsuit settled
In January, adidas Group settled a law-
suit. The settlement will have a positive
low-double-digit million euro impact on
the Group’s financial results in 2010.
Trademark divested
In January, adidas Group sold a trade-
mark. The divestiture will have a positive
low-double-digit million euro impact on
the Group’s financial results in 2010.
No other subsequent changes
Since the end of 2009, there have been no
other significant organisation, manage-
ment, economic, sociopolitical, legal or
financing changes which we expect to
influence our business materially going
forward.
Outlook
Economic uncertainties and risks
remain challenges to Group business
outlook
Expectations for the development of
the global economy and the sporting
goods industry in 2010 are subject to
a high degree of uncertainty. Although
economic indicators signalled an
improvement in the overall macro-
economic climate towards the end of
2009, the sustain ability of the recovery
is difficult to assess. According to some
market participants, recent growth
momentum was primarily built upon
fiscal and monetary stimuli packages
implemented by many countries rather
than a fundamental economic upswing.
As a result, economic forecasts provided
by various governmental bodies and
research institutes differ considerably
in their evaluation of global and regional
GDP development.
Moreover, due to record high unemploy-
ment rates in many countries, consumer
confidence and private consumption are
forecasted to remain subdued. Conse-
quently, the extent to which the adidas
Group will benefit from GDP improve-
ments is currently difficult to foresee.
Global economy expected to return
to modest growth in 2010
According to the World Bank, in 2010
growth of the global economy is projected
to return to a growth rate of approxi-
mately 2.7%, mainly attributable to a
strong upswing of industrial activity and
improving financial market conditions.
However, the potential for inflationary
pressures as a result of extensive
monetary easing measures implemented
by many governments poses a consider-
able downward risk to worldwide growth
prospects.