Reebok 2014 Annual Report Download - page 153

Group Management Report – Financial Review
149
2014
Subsequent Events and Outlook
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03.4
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adidas Group
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2014 Annual Report
adidas Group currency-neutral sales to increase at a mid-single-digit rate in 2015
We expect adidas Group sales to increase at a mid-single-digit rate on a currency-neutral basis in
2015. Despite a high degree of uncertainty regarding the economic outlook and consumer spending
in Russia/CIS, the positive sales development will be supported by rising consumer confidence in
most geographical areas. In particular, Group sales development will be favourably impacted by a
significantly improved top-line development at TaylorMade-adidas Golf as well as ongoing robust
momentum at both adidas and Reebok. This, as well as the further expansion and improvement of
our controlled space initiatives, will more than offset the non-recurrence of sales related to the 2014
FIFA World Cup. Currency translation is expected to positively impact our top-line development in
reported terms, given the recent strengthening of major currencies such as the US dollar and the
Chinese renminbi versus the euro.
Currency-neutral combined sales of adidas and Reebok expected to increase
in most geographical areas
In 2015, we expect currency-neutral combined revenues of adidas and Reebok to increase in all
our geographical areas except Russia/CIS. In Western Europe, despite the non-recurrence of the
2014 FIFA World Cup, which provided a positive stimulus in the region during the year, the gradual
improvement in the macroeconomic environment as well as the build-up to the UEFA EURO 2016
towards the end of the year will positively impact sales development in this region. As a result,
we forecast currency-neutral combined sales of adidas and Reebok in Western Europe to grow
at a mid-single-digit rate, with both brands contributing to the sales increase. In North America,
currency-neutral combined sales of adidas and Reebok are projected to grow at a low- to mid-single-
digit rate. We expect robust top-line improvements at adidas, as the brand will strengthen its
visibility in the marketplace by stepping up marketing investments as well as improving the overall
product offering in major categories such as running, basketball and Originals. Currency-neutral
Reebok sales are projected to be below the prior year level as a result of Reebok’s efforts to further
streamline the brand’s factory outlet business in North America. In Greater China, currency-neutral
combined sales of adidas and Reebok are forecasted to increase at a high-single-digit rate, as we
expect the strong sales momentum to continue in 2015, with both brands contributing to the increase.
This development will be supported by further expanding and solidifying our distribution footprint in
the market. In Russia/CIS, the low level of consumer confidence and consumer spending will weigh
on the overall sales development in the region and the adidas brand in particular. In addition, sales
performance will be negatively impacted by a reduction of the store base in the market. As a result,
currency-neutral combined sales of adidas and Reebok in Russia/CIS are expected to decline. In
Latin America, the robust positioning of the adidas and Reebok brands is expected to more than
compensate for the non-recurrence of the positive impetus from sales associated with the 2014
FIFA World Cup. As a result, we project currency-neutral combined sales of adidas and Reebok in
Latin America to increase at a low- to mid-single-digit rate, with both brands contributing to this
development. In Japan, last year’s increase in the consumption tax rate continues to dampen growth
prospects in the region. Consequently, currency-neutral combined sales of adidas and Reebok are
forecasted to grow at a low-single-digit rate, with sales at both brands projected to be above the prior
year level. Lastly, in the region Middle East, Africa and other Asian markets, we expect currency-
neutral combined sales of adidas and Reebok to grow at a high-single-digit rate, driven by markets
such as South Korea and Southeast Asia, where both adidas and Reebok enjoy strong momentum.