Adidas 1998 Annual Report Download - page 18

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16 Management Discussion and Analysis
SALES OF WINTER SPORTS PRODUCTS REMAINED STABLE Sales of
products under the Salomon brand name increased by 13% to DM 850 million in 1998.
Winter sports products, growing 1%, contributed 80% or DM 678 million to total Salomon
sales. Performance of the individual categories was mixed. Snowboard sales almost doubled
to DM 78 million as a result of the expansion of the product range. Alpine Ski equipment
(skis, bindings, boots and snowblades) decreased by 5% as a result of a continued decline
of the market, but Salomon succeeded in strengthening its market shares, except, as a
result of intensive price pressure, in the bindings sector.
SALES OF SUMMER SPORTS PRODUCTS DOUBLED Sales of Salomon
summer sports products were up 105% to DM 172 million. Summer sports products now
account for 20% of total Salomon brand sales, compared to 11% in 1997. Hiking Boots
and Footwear were the major growth drivers, increasing 55% to DM 130 million. Other top
performers included the newly introduced In-line Skates which contributed DM 42 million
to net sales in their first season. This result far exceeded management’s own expectations
and is attributable to Salomon’s leadership position in state-of-the-art technology for per-
formance-oriented in-line skates.
GROSS PROFIT SUBSTANTIALLY IMPROVED Gross profit grew at a signifi-
cantly faster rate than net sales, increasing 36% to DM 332 million. This result is attributable
to improvements of gross margin in all winter and summer sports product categories.
Gross margin across all product categories improved 6.6 percentage points to 39.0%.
This improvement reflects lower costs, better average sales prices, the stabilization of
inventories and a particularly strong winter season at the end of 1998.
SALOMON
SALOMON’S SUCCESS IN 1998 WAS PRIMARILY DRIVEN BY NEW PRODUCTS:
HIKING BOOTS, IN-LINE
SKATES AND SNOWBOARDS.
GROWTH ACHIEVED IN THE WINTER SPORTS SECTOR, A MARKET WHICH
HAS BEEN DIFFICULT FOR YEARS, UNDERLINES THE UNBROKEN INNOVATIVE
STRENGTH OF THE BRAND.
THE OPERATING RESULT IMPROVED DUE TO A NUMBER
OF MEASURES TO ENHANCE EARNINGS AND
ALMOST REACHED BREAK-EVEN. IN 1999 SALOMON EXPECTS TO ACHIEVE GROWTH IN SALES AND
AN IMPROVEMENT IN PROFITABILITY.
Net sales 1998, split by region
Americas Europe Asia
28.1% 54.4% 17.5%
SALOMON
SALOMON
Net sales 1998, split by products, in %
Hiking boots / Footwear 15.3
Alpine skis 22.5
In-line skates 5.0
Gear 4.0
Snowboards 9.1
Bindings 16.6
Cross-country
ski equipment 8.7
Ski boots 18.8
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