Reebok 2015 Annual Report Download - page 143

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GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
Business Performance by Segment – Western Europe
WESTERN EUROPE
REVENUES IN WESTERN EUROPE UP 17%
In 2015, sales in Western Europe increased 17% on a currency-neutral basis, due to double-digit sales
growth at both adidas and Reebok. From a market perspective, the main contributors to the increase were
the UK, Italy, France and Spain, where revenues grew at double-digit rates each. Currency translation
effects positively impacted revenues in euro terms. Sales in Western Europe grew 20% to € 4.539 billion
from € 3.793 billion in 2014.
adidas revenues in Western Europe grew 18% on a currency-neutral basis in 2015. This development was
driven by double-digit sales growth in the football category as well as at adidas Originals and adidas neo.
In addition, growth in the running and outdoor categories also contributed to the sales increase. Currency
translation effects had a positive impact on revenues in euro terms. adidas sales in Western Europe
increased 20% to € 4.193 billion (2014: € 3.485 billion).
Reebok revenues in Western Europe were up 11% on a currency-neutral basis in 2015. This increase was
mainly due to double-digit sales growth in the training and studio categories. In addition, high-single-
digit growth in the running category and mid-single-digit increases in Classics also contributed to the
development. Currency translation effects had a positive impact on revenues in euro terms. Reebok sales
in Western Europe were up 12% to € 347 million from € 308 million in the prior year.
SIGNIFICANTLY IMPROVED OPERATING MARGIN IN WESTERN EUROPE
Gross margin in Western Europe increased 2.1 percentage points to 47.5% in 2015 from 45.4% in 2014. This
development was driven by positive currency effects as well as a more favourable product and channel
mix, partly offset by higher input costs and a less favourable pricing mix. Gross profit in Western Europe
increased 25% to € 2.157 billion versus € 1.722 billion in 2014.
Operating expenses were up 18% to € 1.248 billion versus € 1.055 billion in 2014. This development reflects
an increase in expenditure for point-of-sale and marketing investments as well as higher sales expenditure.
Operating expenses as a percentage of sales decreased 0.3 percentage points to 27.5% (2014: 27.8%).
Operating margin improved 2.5 percentage points to 20.0% (2014: 17.6%), as a result of the gross margin
increase as well as the positive effect of lower operating expenses as a percentage of sales. Operating
profit in Western Europe increased 36% to € 909 million versus € 666 million in the prior year.
see Table 02
see Table 02
see Table 02
02WESTERN EUROPE ATAGLANCE€ IN MILLIONS
2015 2014 Change Change
(currency-neutral)
Net sales 14,539 3,793 20% 17%
adidas 4,193 3,485 20% 18%
Reebok 347 308 12% 11%
Gross profit 2,157 1,722 25% –
Gross margin 47.5% 45.4% 2.1pp –
Segmental operating profit 909 666 36% –
Segmental operating margin 20.0% 17.6% 2.5pp –
1 Rounding differences may arise in totals.