Adidas 1999 Annual Report Download - page 7

Download and view the complete annual report

Please find page 7 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

3
President’s Letter
On the other hand, we have decided to sell, by way of a
management buyout, the “ erima” brand, which with
sales of just under DM 40 million contributes only a
very small share of our consolidated net sales. The
“ Mavic” brand will remain within the Group but will be
incorporated under the “ Salomon” brand in all respects.
This will lower costs, streamline production and reduce
the number of locations.
While our strategy clearly underlines our commitment
to growth, our efficiency has to be further increased.
Expenses need to be kept under tighter control in future.
An increase in expenses beyond the volume of sales
growth, while offset by the improved gross margin in
1999, is not acceptable in the long term.
Therefore, we have initiated a number of projects to
increase efficiency, cut costs, and thus meet the
requirements of a high-performance organization. This
includes projects to improve supply chain efficiency,
reorganize our logistics system in Europe, restructure
and rationalize our organization, primarily in the market-
ing sector, further combine activities between the
brands, and increasingly utilize the internet, not only for
sales and marketing, but in order to strengthen contact
with the suppliers and the buyers of our products.
With these measures, we intend to reduce our operating
expenses as a percentage of sales in the near future by
up to two percentage points.
After the record levels reached in 1999, we will use
the year 2000 to further strengthen our investment in
the future – in the future of a company that operates
efficiently, achieves market success through innovative
products and builds on its core strengths, thus remain-
ing true to its heritage.
The growth and efficiency program involves additional
expenses. This is likely to have a corresponding impact on
net income in 2000. However, the measures initiated,
supported by an anticipated recovery of the American
market, will help to steer the company onto a steeper
growth track in sales and earnings from 2001 onwards.
Without a doubt, the measures to be effected in 2000
represent an investment in a successful and exciting
future.
Yours,
Robert Louis-Dreyfus