Adidas 1999 Annual Report Download - page 31

Download and view the complete annual report

Please find page 31 of the 1999 Adidas annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 94

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94

27
Management Discussion and Analysis
In addition, the shift of club component production to
lower-cost production sources in Southeast Asia also
contributed to gross margin improvement.
Gross margin improved in each of the principal market
regions for the Taylor Made brand during 1999, with the
largest gain in gross margin percentage being realized in
the important Japanese market.
Operating expenses reflect
focus on repositioning
Operating expenses increased at a rate of 16%, growing
slightly faster than net sales. This increase was driven
by the need to reposition the Taylor Made brand.
First, Taylor Made expanded its marketing activities
during 1999 to support the introduction of the wide
array of new products and technologies launched during
the year.
Second, total operating expenses were adversely affected
in 1999 by the cost of integration of the European sales
and marketing efforts. The European integration resulted
in increases in logistics, sales and bad debt expenses.
However, by the end of 1999 the efficiencies targeted
with this integration were already being seen and should
result in more efficient and more economical operations
in 2000.
Third, in the United States, Taylor Made increased its
investment in management and technical personnel
during the latter half of 1999 to service the increase in
sales and to position the brand to achieve further sales
growth in 2000.
Strong increase in operating profit
The improved gross margin more than offset increased
expenses. As a result, the operating profit of the Taylor
Made brand rose by 72% to DM 68 million.
Taylor Made and
adidas Golf business unified
The creation of a Global Business Unit “ Taylor Made-
adidas Golf” was completed in 1999 with the installation
of a new management team and organizational structure
in Carlsbad, California. Strategic planning and product
design as well as development and marketing direction
are now centralized, combining Taylor Made and adidas
Golf into one organization. Taylor Made-adidas Golf is
responsible for all golf products in the Golf category of
the adidas-Salomon Group.
Growth expected for 2 000
As a result of the organizational changes described,
Taylor Made-adidas Golf is now positioned to compete in
all major golf product categories. The centralization of
strategy and management will allow better use of the
strengths and consistent image of its brands in each of
the major regional markets.
NET SALES, BY PRODUCTS
(%)
Putters 4
Balls 6
Irons 35
Woods 45
Accessories 10
n
n
n
n
n