Reebok 2012 Annual Report Download - page 182

adidas Group
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2012 Annual Report
Group Management Report – Financial Review
160
2012
Subsequent Events and Outlook
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03.4
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Retail sales to increase at a high-single- to low-double-
digit rate on a currency-neutral basis
adidas Group currency-neutral Retail segment sales are projected to
grow at a high-single- to low-double-digit rate in 2013. Expansion of the
Group’s own-retail store base and comparable store sales are expected
to contribute at a similar rate to revenue growth. The Group expects a
net increase of its store base by around 100 adidas and Reebok stores
in 2013. We plan to open around 250 new stores, depending on the
availability of desired locations. New stores will primarily be located in
emerging markets in Eastern Europe. Approximately 150 stores will be
closed over the course of the year. Around 150 stores will be remodelled.
Comparable store sales are expected to increase at a low- to mid-single-
digit rate compared to the prior year. As a result of the improvements in
concept store operations, we project concept store growth rates to be
slightly better than those of factory outlets.
Currency-neutral sales of Other Businesses to grow at
a mid- to high-single-digit rate
In 2013, revenues of Other Businesses are expected to increase at a mid-
to high-single-digit rate on a currency-neutral basis. TaylorMade-adidas
Golf currency-neutral sales are projected to grow at a mid-single-digit
rate compared to the prior year. Product launches in core categories such
as metalwoods and irons, new product introductions in footwear and the
first full year of consolidation of Adams Golf should support growth in
this segment. Currency-neutral revenues at Rockport are forecasted
to increase at a mid- to high-single-digit rate driven by a broadening
of the product assortment, particularly in lightweight and women’s, as
well as own-retail expansion. Currency-neutral sales at Reebok-CCM
Hockey are expected to grow at a low-double-digit rate, supported by
new product introductions in its key categories skates and sticks, as well
as the non-recurrence of negative impacts related to the prolonged NHL
lockout affecting the 2012/2013 season.
adidas Group sales expected to increase in all
geographical areas
We expect Group currency-neutral revenues to increase in all of our
geographical areas in 2013, however at varying growth rates. In Western
Europe, despite the non-recurrence of the UEFA EURO 2012 as well as
the London 2012 Olympic Games, which provided a positive stimulus
in the region in 2012, a gradual improvement in the macroeconomic
environment as well as the build-up to the 2014 FIFA World Cup in the
second half of the year will positively impact sales development in this
region, albeit at a very modest level. In European Emerging Markets, the
expansion of and increasing sophistication in our own-retail activities,
particularly in Russia/CIS, are forecasted to have a positive influence
on Group sales. In North America, we expect solid growth due to
continued momentum of the adidas brand as we further strengthen our
product offering and distribution scope as well as introduce consumer
engagement initiatives. Reebok sales are also projected to return to
growth, driven by new product introductions. In Greater China, we
expect further growth in line with our Route 2015 aspirations. This
development will be primarily driven by expanding and solidifying our
distribution footprint, including the further roll-out of adidas Originals
and the adidas NEO label. In Other Asian Markets, growth will be driven
by markets such as South Korea and Southeast Asia as well as the
non-recurrence of clean-up activities at Reebok India Company. Lastly,
in Latin America, despite trade barriers which will continue to weigh
on growth prospects and the timing of sales in certain markets, Group
sales development is projected to be positively impacted by the solid
momentum of the region’s sporting goods industry. Furthermore, the
2013 FIFA Confederations Cup as well as preparations for the 2014 FIFA
World Cup will be a positive stimulus to the region.
Group gross margin to improve in 2013
In 2013, the adidas Group gross margin is forecasted to increase to
a level between 48.0% and 48.5% (2012: 47.7%). Improvements are
expected in all segments. Group gross margin will benefit from positive
regional and channel mix effects, as growth rates in high-margin
emerging markets and Retail are projected to be above growth rates in
more mature markets and Wholesale. In addition, improvements in the
Retail segment as well as at the Reebok brand will positively influence
Group gross margin development. However, these positive effects will
be partly offset by less favourable hedging terms compared to the prior
year as well as increasing labour costs, which are expected to negatively
impact our cost of sales.