Reebok 2012 Annual Report Download - page 92

adidas Group
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2012 Annual Report
Group Management Report – Our Group
70
2012
Group Strategy
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02.1
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adidas Group reconfirms strategic goals
from 2010 to 2015
In November 2010, the Group unveiled its 2015 strategic business
plan named “Route 2015”, which defines strategies and objectives for
the period up to 2015. This plan is the most comprehensive the adidas
Group has ever developed, incorporating all brands, sales channels and
Group functions globally. Based on its strong brands, premium products,
extensive global presence and its commitment to innovation and the
consumer, the adidas Group aspires to grow its business significantly
until 2015.
According to our plan, total Group sales are targeted to grow 45% to
50% on a currency-neutral basis over the five-year period, thereby
outperforming total market growth (both GDP and sporting goods
industry). In addition, we aim to grow our bottom line faster than the
top line. It is targeted to grow annual earnings at a compound annual
growth rate of 15% and to reach an operating margin of 11% sustainably
by 2015.
In September 2012, Management confirmed its Route 2015 aspirations
for the Group. It also provided an update on its targets by segment
and by brand in light of the Group’s performance in the first two years.
For the adidas brand, the 2015 goal was increased by € 600 million
to € 12.8 billion. adidas Sport Performance sales are now projected
to reach € 8.9 billion (previously: € 8.5 billion), with the increase in
expectations driven by record-breaking football sales and momentum
in the running and basketball categories. Additionally, sales
expectations for adidas Sport Style were increased to € 3.9 billion, up
from € 3.7 billion, due to the continuing strong global resonance of
adidas Originals and the solid performance of the adidas NEO label.
At the Reebok brand, taking into account the strategic decisions to
discontinue the NFL contract, reduce exposure to lower-profit markets
such as India and Latin America, as well as shift the reporting of
US-related NHL sales to Reebok-CCM Hockey, Management now
expects sales of € 2 billion in 2015, compared to its previous goal of
€ 3 billion. The reduction of expectations for Reebok, which is partly
offset by the projected increases at adidas, results in a reduction in
the Wholesale segment revenue target to € 10.2 billion (previously:
€ 10.6 billion). Retail segment sales expectations remain unchanged
at € 4.6 billion. In Other Businesses, which achieved its Route 2015
sales target of € 1.8 billion already in 2012, 2015 goals were raised
to € 2.2 billion. This is driven by an exceptional performance so far
at TaylorMade-adidas Golf and the growth opportunities expected with
the acquisition of Adams Golf
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TABLE 02.
In order to reach our Route 2015 strategic goals, we have defined clear
strategic priorities. These include:
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Clear brand positioning and prioritisation: We believe that we have
significant growth potential to exploit from our portfolio of brands. The
majority of our targeted growth will come from Global Brands, which
we anticipate will contribute over 80% of the Group’s expected revenue
increase over the period
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SEE GLOBAL BRANDS STRATEGY, P. 78. Areas
within the adidas and Reebok brands that have been identified as key
contributors to sustainable growth for the adidas Group include:
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adidas Sport Performance: gaining sales and market share in the
running and basketball categories.
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adidas Sport Style: expanding in the fast-fashion business with the
adidas NEO label and maintaining the strong momentum of adidas
Originals.
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Reebok: establishing Reebok as the leading fitness brand.
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Leading the industry in the fields of customisation and interactivity.
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Expand presence in key growth markets: We have identified North
America, Greater China, Russia/CIS, Latin America, Japan and the UK
as key growth markets. Of those markets, the three ”attack markets”
North America, Greater China and Russia/CIS are expected to contribute
around 50% of the total Group growth under the Route 2015 plan,
with each market targeting a double-digit compound annual growth
rate
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SEE GLOBAL SALES STRATEGY, P. 72. In the USA, the Group’s brands
have enormous potential to gain market share by focusing on improved
distribution and allowing a higher share of products to be specifically
designed for that market. In emerging markets such as China and
Russia/CIS, rising standards of living, increasing disposable income,
positive demographic trends and growing sports participation should
support demand for sporting goods.
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Intensify controlled space focus: We intend to increase the portion of
sales that comes from controlled space initiatives to over 50% of Group
sales in the coming years (2012: 45%). This includes new openings
of adidas and Reebok own-retail stores, the further extension of our
mono-branded franchise store base in markets such as China, as well
as new shop-in-shop initiatives with retail partners around the world.
In terms of our own retail, we intend to open at least 550 adidas and
Reebok stores over the five-year period, as well as grow significantly
our eCommerce business, which we project to increase to € 500 million
by 2015
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SEE GLOBAL SALES STRATEGY, P. 72.