Adidas 1999 Annual Report Download - page 9

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5
Management Discussion and Analysis
In a persistently difficult market environment adidas-
Salomon was able to further increase consolidated net
sales by 6% . Although partly offset by an increase in oper-
ating expenses, in particular for marketing and promotion
activities, gross margin improvements led to a significant
improvement in the operating profit. The financial result
also improved substantially, taking income before taxes up
25 % to a record level of DM 7 79 million. A corresponding
improvement of earnings per share was prevented only by
an increased tax rate and higher minority interests.
Moderate growth in
sporting goods markets
Development of the world’s sporting goods markets in
1999 was mixed. While Europe and Asia achieved mod-
erate growth, with Asia appearing to have overcome the
impact of the economic and currency crises, the North
American market continued to contract. The USA, the
world’s largest sporting goods market, remained im-
pacted by excess capacities at retail, shifts in consumer
demand and a resulting decline in sales.
Net sales above DM 10 billion
for the first time
In this difficult environment, adidas-Salomon increased
consolidated net sales by 6% to DM 10.5 billion. The
Salomon brand reported the highest increase, up 25%.
Taylor Made recorded a strong increase of 11%, while
the adidas brand showed an improvement of 3.5%. Due
to the first-time inclusion of net sales of adidas Japan,
Region Asia was the main driver of this development.
Decline in licensee sales
Net licensee sales in 1999 decreased significantly, de-
clining by 29% year-over-year to DM 938 million. This
decline is due to the expiry of the license agreement in
Japan at the beginning of the year, and the inclusion of
sales of the newly built-up adidas Japan in consolidated
net sales for the first time in 1999. Sales under product
licenses increased by 11% to DM 340 million.
Footwear again largest product division
Footwear again showed solid growth in 1999. Net sales
of Footwear within the adidas-Salomon Group reached
DM 4.3 billion, up DM 341 million or 8.5% on the pre-
vious year.
adidas-Salomon
MANAGEMENT DISCUSSION AND ANALYSIS
NET SALES BY BRANDS
(%)
Mavic 0.8
Taylor Made 5.5
Salomon 10.1
adidas 83.4
n
n
n
n
Difference to 100% due to HQ/Consolidation
(growth year-over-year in %)
North
Europe America Asia
adidas –4 –1 +82
Salomon +18 +21 +54
Taylor Made +11 +11 +10
Total –2 +2 +70
NET SALES BY BRANDS AND REGIONS