Reebok 2012 Annual Report Download - page 181

adidas Group
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2012 Annual Report
Group Management Report – Financial Review
159
2012
Subsequent Events and Outlook
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03.4
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In the USA, industry growth rates are expected to be ahead of the
economy’s overall growth, with lower fuel prices and a recovery
in property values supporting consumer sentiment and spending
expectations. From a category perspective, the trend towards basketball
styles is set to continue. Training and high-performance technical
footwear and apparel are also predicted to be significant sporting goods
drivers for the year. The US golf market is also expected to see modest
growth in 2013.
In Greater China, strong wage growth and domestic consumption
should propel sporting goods sales in 2013. The trend and market share
shift towards international brands is expected to continue. However,
oversupply and discounting are concerns for the industry, particularly
for local players.
In other Asian markets, the sporting goods industry is forecasted to
record strong growth in 2013, however with regional differences. Japan’s
sporting goods industry is expected to be challenging in 2013, given
that overall consumer confidence and spending are projected to remain
low. Most of the other major Asian emerging markets are expected to
see rapid sporting goods sales growth in 2013, as domestic demand
increases and rising wages continue to drive purchases of discretionary
items.
The sporting goods industry in Latin America is projected to record
robust growth in 2013, with a healthy labour market and wage growth,
as well as increasing access to credit, expected to promote consumer
spending and discretionary purchases. Furthermore, given the
importance of football in this region, the industry is expected to gain
significant momentum from the 2013 FIFA Confederations Cup and the
build-up to the 2014 FIFA World Cup.
adidas Group currency-neutral sales to increase at
a mid-single-digit rate in 2013
We expect adidas Group sales to increase at a mid-single-digit rate on
a currency-neutral basis in 2013. Currency translation is expected to
negatively impact our top-line development in reported terms. Despite
a high degree of uncertainty regarding the global economic outlook
and consumer spending, Group sales development will be favourably
impacted by our high exposure to fast-growing emerging markets
as well as the further expansion of Retail. In addition, our strength in
innovation will lead to major product launches throughout 2013, which
will more than offset the non-recurrence of sales related to the UEFA
EURO 2012 and the London 2012 Olympic Games. In terms of phasing,
sales growth is projected to be weighted towards the second half of the
year. Given these expectations for the year, we expect the adidas Group
to outperform global economic growth in 2013.
Currency-neutral Wholesale revenues expected to
increase at a low-single-digit rate
We project currency-neutral Wholesale segment revenues to increase
at a low-single-digit rate compared to the prior year. Our growth
expectations are supported by order backlog development as well as
positive retailer and trade show feedback. Currency-neutral adidas
Sport Performance sales are forecasted to increase at a low-single-
digit rate, driven by growth in key categories such as running, training
and basketball. adidas Sport Style revenues are projected to increase
at a high-single-digit rate on a currency-neutral basis, as a result of
continued momentum and expansion of adidas Originals and the adidas
NEO label. Currency-neutral Reebok sales are expected to increase at
a mid-single-digit rate, mainly due to growth in fitness training, fitness
running and Classics as well as the introduction of new categories such
as Studio.
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adidas Group 2013 outlook
Currency-neutral sales development (in %):
adidas Group mid-single-digit rate increase
Wholesale low-single-digit rate increase
Retail high-single- to low-double-digit rate increase
Comparable store sales low- to mid-single-digit rate increase
Other Businesses mid- to high-single-digit rate increase
TaylorMade-adidas Golf mid-single-digit rate increase
Rockport mid- to high-single-digit rate increase
Reebok-CCM Hockey low-double-digit rate increase
Gross margin 48.0% to 48.5%
Operating margin approaching 9.0%
Earnings per share € 4.25 to € 4.40
Average operating working capital as a percentage of sales moderate increase
Capital expenditure € 500 million to € 550 million
Store base net increase by around 100 stores
Gross borrowings decline