Reebok 2009 Annual Report Download - page 162

158 GROUP MANAGEMENT REPORT – FINANCIAL REVIEW Subsequent Events and Outlook
Greater China sporting goods
market continues to grow
In Greater China, the sporting goods
industry’s footprint is expected to con-
tinue expanding in 2010, albeit at con-
siderably lower rates compared to 2008.
While the first half year development will
still be depressed due to the clearance of
excess inventory at retail, growth is likely
to be more pronounced in the second
half. Rising income levels and growing
sports participation rates are expected
to support the trend. In addition, the
expansion of local brands will positively
contribute to industry development.
Other Asian markets sporting goods
sales mixed
In other Asian markets, sporting goods
sales development is expected to differ
from region to region. While sales in
Japan are forecasted to decline slightly
as a result of the negative effects from
low levels of private consumption and
consumer confidence, emerging Asian
countries such as India or Vietnam are
projected to post solid growth. This
mainly relates to rising income levels
in these countries as well as to govern-
mental programmes aimed at increas-
ing sports participation among the
population.
Latin American sporting goods industry
affected by higher import duties
In Latin America, growth of the sporting
goods industry is expected to continue in
2010, also fuelled by the positive impact
of sales related to the 2010 FIFA World
Cup™ in South Africa. Nevertheless,
higher import duties in key markets such
as Brazil are forecasted to dampen the
industry growth prospects for interna-
tional manufacturers see Risk and Oppor-
tunity Report, p. 140.
adidas Group sales to be at least in
line with economic growth rates
Based on our strength in innovation,
operational execution and regional
diversification, we are confident that the
Group’s net sales increase in 2010 will
be at least in line with the growth rates
of the global economy. We also expect
Group sales growth to be at least in
line with the overall development of the
sporting goods industry.
adidas Group sales to increase at a
low- to mid-single-digit rate in 2010
We expect adidas Group sales to increase
at a low- to mid-single-digit rate on a
currency-neutral basis in 2010. Despite
the projected global economic recovery,
sales development will be negatively
tempered by a slow turnaround in con-
sumer demand and continuing cautious
retailer behaviour. This will be a result of
sustained high unemployment rates in
many major markets and only moderate
improvements in consumer confidence.
However, positive impacts from the 2010
FIFA World Cup™, our high exposure to
fast-growing emerging markets as well
as improvements at the Reebok brand
are forecasted to more than offset these
negative effects.
Currency-neutral Wholesale revenues
expected to increase moderately
We project currency-neutral Wholesale
segment revenues to increase at a low-
single-digit rate compared to the prior
year. Order backlog development as
well as positive retailer and trade show
feedback support our growth expecta-
tions for 2010. Currency-neutral adidas
Sport Performance sales are forecasted
to increase, supported by strong football
sales in connection with the 2010 FIFA
World Cup™, for which adidas is an
Official Sponsor. Sales in other major
categories are expected to decline.
adidas Sport Style revenues are projected
to increase on a currency-neutral basis
as a result of increasing momentum in
new product lines, such as adidas Style
Essentials. Currency-neutral Reebok
sales are expected to increase due to
double-digit revenue growth in Women’s
Fitness as well as improvements in the
Men’s Training category.
Retail sales to increase at a
high-single-digit rate on a
currency-neutral basis
adidas Group currency-neutral Retail
segment sales are projected to grow at
a high-single-digit rate in 2010. Expan-
sion of the Group’s own-retail store
base will be the primary driver of the
revenue increase. The Group expects a
net increase of its store base by around
125 adidas and Reebok stores in 2010,
depending on the timing and availability
of desired locations. We forecast to open
around 150 new stores. New stores will
primarily be located in emerging mar-
kets in Eastern Europe. Approximately
25 stores will be closed over the course
of the year. Around 200 stores will be
remodelled. Comparable store sales are
expected to increase at a low-single-digit
rate compared to the prior year. Due to
ongoing high price sensitivity of con-
sumers, factory outlets are expected to
perform better than concept stores as a
result of lower average price points.
Currency-neutral sales of Other
Businesses to increase at a
low-single-digit rate
In 2010, revenues of Other Businesses
are expected to increase at a low-single-
digit rate on a currency-neutral basis.
TaylorMade-adidas Golf revenues are
projected to be stable compared to the
prior year. The positive effect from new
TaylorMade product launches in core
categories such as metalwoods and irons
will be offset by the non-recurrence of
prior year Ashworth sales from a licens-
ing agreement with a competitor that
was terminated in the first half of 2009.
Revenues at Rockport and Reebok-CCM
Hockey are forecasted to increase as a
result of improvements in the brands’
product portfolio and better consumer
reception.