Reebok 2012 Annual Report Download - page 60

adidas Group
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2012 Annual Report
To Our Shareholders
38
2012
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01.2
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Interview with the CEO
Given that there have been some challenging recent trends in
North America, what is your view on the Group’s prospects in
this key market?
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I am very bullish on our prospects in North America. While 2012
was not a good year for Reebok in the region, adidas and TaylorMade-
adidas Golf had very strong results. TaylorMade-adidas Golf enjoyed the
fastest growth, with sales increasing 25% in the period. adidas brand
sales are up 9% currency-neutral, and have increased one third since we
began Route 2015, which is well ahead of market growth. In fact, when
we dig deeper into the adidas numbers, our business with our key high
school kid relevant retail partners was up over 20% in 2012. As already
outlined, for Route 2015, we are focused on quality growth, which is
crucial to securing long-term, sustainable success for the adidas brand
in this market. Through Originals and basketball, we have created a
great base to build on and, quite frankly, when I look at our plans for
running, we are only at just the beginning to exploit the tremendous
opportunities this market has to offer our Group. This year, we intend
to push very aggressively into the back-to-school period with adidas and
Reebok. And bearing in mind another comprehensive year of product
launches for TaylorMade-adidas Golf, I am confident all of our brands
will grow in 2013 in North America.
Controlled space initiatives remain one of the cornerstones to
your Route 2015 strategy. Can you tell us what progress you
are making in these areas?
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Looking across the Group, there are some very notable
highlights in relation to controlled space, and the biggest of these is
that we have already hit our initial Route 2015 ambition to achieve 45%
of sales from these activities. All of our channels have been very active
pursuing this strategy, whether through shop-in-shops and franchise
stores with our wholesale partners, or through our own consumer-
direct initiatives. With Retail, in particular, we are making significant
strides. In 2012, we saw strong comparable store sales growth of 7%,
as important retail store KPIs such as traffic, average ticket value and
full price sell-through continued to improve. In addition, we also saw
higher levels of store operational efficiency and productivity, which was
a major driver in leveraging our Retail segment operating expenses as
a percentage of sales by 1.9 percentage points. I am also happy that the
structural improvements we have been implementing in our eCommerce
operations are now beginning to take meaningful commercial shape.
Key to our efforts in 2012 was the launch of our fully integrated brand
and store site, providing a single destination for each of our brand’s
consumers. While we have been among the industry leaders in digital
brand activation, particularly in leveraging our iconic assets, such
as the world’s greatest footballer Lionel Messi, basketball superstar
Derrick Rose or teen idol Selena Gomez, we are now starting to make
rapid progress in converting this online buzz and activity into traffic to
our e-shops. This is clearly evident in the 68% currency-neutral sales
growth we generated last year through our own e-commerce sites, with
sales from the channel now up to € 158 million. This means we are well
on the way to our target of € 500 million net sales from this channel
by 2015.
2013 is a so-called in-between year. How confident are you
that you can grow globally despite the non-recurrence of
major sporting events?
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I am very confident. Even though there will be some phasing and
timing impacts from the prior year event-related sales, and bearing in
mind the consumer and retail environment are, on balance, no better
in 2013, our product pipeline and marketing plans are packed with
game-changing innovations, be it in running, basketball, football,
lifestyle, fitness or golf. In fact, I believe when we look back in hindsight
at the end of Route 2015, 2013 will be judged as the year we changed the
course of innovation in our industry. Let me give you a few examples why.
At adidas, in the running category, where all great footwear innovation
starts, we will introduce two breakthrough innovations, Energy Boost
and SpringBlade. I am certain they will be the catalyst for multi-year
growth and market share gains globally. Boost has, already in only a few
short weeks, seen higher levels of engagement and enthusiasm from
the most experienced industry experts than any running product we
have ever brought to market before. Together with our partner BASF,
the world’s leading chemical company, we created a completely new
foam cushioning material. With its distinctive and unique midsole cell
structure, it provides more energy return than any other foam cushioning
material in the running industry, combining soft comfort with responsive
energy for the ultimate running experience. In the heat, in the cold and
after countless kilometres, it performs more consistently and doesn’t
lose its cushioning properties like standard EVA foam.
Beyond products, we will also raise the game in icon building
and brand activation. This year, we will build core signature collections
around several of our superstars, including Derrick Rose and Lionel
Messi. We have also major campaigns planned for the brand to support
our product launches and to ensure a deeper consumer connection,
such as a new impactful women’s campaign, myGirls, and a global
Originals campaign, Unite all Originals.
And it will be the same at our other brands. Reebok we spoke
about before. At TaylorMade-adidas Golf, our fast pace of new launches
will also continue. The new RocketBladez irons have already sent our
market share skywards to over 30% since launch. With new, longer
metalwoods such as the R1 and RocketBallz Stage 2, a major offensive
in golf footwear with the adizero range, and the first full year of Adams
Golf, I fully expect our golf business to further stretch the distance
between ourselves and our nearest rivals.
We are therefore very well positioned to again achieve record
sales in 2013. For the full year, we expect currency-neutral sales to
increase at a mid-single-digit rate, with growth across all brands,
regions and channels. In terms of phasing, sales growth is expected to
be weighted towards the second half of the year, mainly mirroring our
product launch schedule as well as the build-up to the FIFA World Cup
in 2014.