Reebok 2013 Annual Report Download - page 150

adidas Group
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2013 Annual Report
Group Management Report – Financial Review
146
2013
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03.3
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Business Performance by Segment
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Retail Business Performance
Retail Business Performance
Retail full year results
In 2013, Retail revenues increased 8% on a currency-neutral basis as
a result of high-single-digit sales growth at adidas. Currency-neutral
sales at Reebok grew at a low-single-digit rate. Concept stores,
factory outlets and concession corners were all up versus the prior
year. eCommerce grew 64% on a currency-neutral basis. Currency
translation effects negatively impacted segmental revenues in euro
terms. Sales grew 2% to € 3.446 billion from € 3.373 billion in the prior
year
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TABLE 08. Currency-neutral comparable store sales decreased 1%
versus the prior year, as growth in most regions was more than offset
by sales declines in Russia/CIS. This development was mainly due to a
challenging consumer environment in Russia/CIS as well as distribution
centre issues during the year.
Gross margin in the Retail segment increased 1.3 percentage points to
62.2% from 60.9% in 2012. The positive effect from a more favourable
pricing and product mix contributed to the margin increase. By brand,
the adidas gross margin was up 1.0 percentage points to 63.1% (2012:
62.1%) and Reebok’s gross margin increased 2.3 percentage points to
57.4% (2012: 55.1%). Retail gross profit rose 4% to € 2.143 billion from
€ 2.055 billion in 2012
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TABLE 08.
Segmental operating expenses as a percentage of sales grew
3.0 percentage points to 42.5% (2012: 39.5%). Segmental operating
expenses in Retail primarily relate to personnel and rent expenses
as well as the sales working budget. Segmental operating expenses
increased 10% to € 1.465 billion from € 1.331 billion in 2012. This
was mainly a result of higher expenses related to the expansion of the
Group’s store base, particularly in European Emerging Markets.
Segmental operating profit decreased 6% to € 678 million versus
€ 724 million in the prior year. Segmental operating margin decreased
1.8 percentage points to 19.7% (2012: 21.5%)
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TABLE 08. This was a
result of higher segmental operating expenses as a percentage of sales,
which more than offset the increase in gross margin.
Retail development by region
Currency-neutral Retail sales increased in all regions. Retail revenues
in Western Europe grew 8% on a currency-neutral basis, mainly due
to double-digit sales increases in Germany, the UK and Italy. Sales in
European Emerging Markets rose 2% on a currency-neutral basis, as a
result of growth in most of the region’s major markets. Currency-neutral
Retail sales in North America grew 10% due to double-digit growth in
the USA and Canada. Retail revenues in Greater China increased 11%
on a currency-neutral basis. Sales in Other Asian Markets grew 8% on a
currency-neutral basis, mainly driven by growth in South Korea, Japan
and Australia. In Latin America, currency-neutral Retail sales grew 31%,
with double-digit sales increases in most of the region’s major markets,
in particular Brazil, Argentina and Colombia. Currency translation
effects had a negative impact on regional sales in euro terms
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TABLE 09.
Retail development by brand
In 2013, adidas Group Retail sales increased at both adidas and Reebok.
Currency-neutral adidas Sport Performance revenues grew 7% in the
08
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Retail at a glance (€ in millions)
2013 2012 Change
Net sales 3,446 3,373 2%
Gross profit 2,143 2,055 4%
Gross margin 62.2% 60.9% 1.3pp
Segmental operating profit 678 724 (6%)
Segmental operating margin 19.7% 21.5% (1.8pp)
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Retail net sales by region (€ in millions)
2013 2012 Change Change
(currency-neutral)
Western Europe 544 507 7% 8%
European Emerging Markets 1,297 1,346 (4%) 2%
North America 639 599 7% 10%
Greater China 216 198 9% 11%
Other Asian Markets 406 436 (7%) 8%
Latin America 344 287 20% 31%
Total 1) 3,446 3,373 2% 8%
1) Rounding differences may arise in totals.