Adidas 2000 Annual Report Download - page 32

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28
adidas-Salomon consolidated net sales increased by 9%
in 2000 to g5.8 billion. The gross margin was maintained
at an industry-leading 43.3% despite currency pressure.
adidas-Salomon’s income before taxes was g347 million,
down 13% over last year. This decline was largely a result
of increased operating expenses, which were up 12% to
g2.1 billion. Drivers of the higher operating expenses
were the Growth and Efficiency Program, as well as
higher marketing spend for the Summer Olympic Games
in Sydney and the EURO 2000TM soccer championships.
A higher tax rate and increased minority interests pushed
net income down to g182 million or g4.01 per share. This
result is in line with the expectations that the Group first
communicated in January 2000.
Economic Climate Develops Negatively
In 2000, negative development characterized many important
markets. International stock exchanges had their worst year in
over a decade, the US economy began to slow and retail
stagnated in Germany. Latest economic data suggests that
corporate profits in Europe started to slow in the second
quarter of last year. Japanese consumption fell and political
pressure continued in the Middle East and Asia.
Sporting Goods Sector Trends are Mixed
Development of the world’s sporting goods markets in 2000
was mixed. In Asia and Latin America, markets began to recover
overall after several turbulent years. In Europe, solid growth
was achieved by most sports companies. In North America,
retail space continued its consolidation trend of the last year,
ushering in positive improvements and a cautiously optimistic
outlook as the year closed.
In all major markets, however, competition from non-industry
players increased in 2000. New sports-oriented offerings
from fashion houses, vertical suppliers and athletic specialty
retailers’ own private labels competed head-to-head with our
products. Additionally, expenditures for consumer electronics
and telecommunications increased as a percentage of
disposable income, putting further pressure on the industry.
Sales Reach Record Level of g5.8 billion
Consolidated net sales for the Group reached c5.8 billion in
2000, the highest level in the Group’s history. This 9% year-
over-year improvement is the result of higher sales figures in
all brands and regions with the exception of adidas in North
America. In particular, adidas in Latin America and Asia delivered
very strong improvements, with sales increases of 34% and
29% respectively. The other brands also developed positively.
Salomon sales were up 19% and TaylorMade-adidas Golf made
big gains with an increase in sales of 35% over last year. Mavic
sales increased 25%. Currency-neutral, the overall develop-
ment improved only slightly over last year.
Licensee Sales Increase
Net licensee sales increased in 2000, up 28% year-over-year to
c616 million. This improvement was due to increased sales by
product licensees in Asia and Europe, showing the strength of
the adidas brand name.
Management Discussion & Analysis
adidas-Salomon
Net Sales by Brand
(in %)
adidas 80
Net Sales by Region
(euros in millions) Sales % of Total
Europe 2,860 49
North America 1,906 33
Asia 875 15
Latin America 171 3
Total* 5,835 100
* Difference in total due to HQ/Consolidation
Net Sales by Brand and Region
(growth year-over-year in %) North Latin
Europe America Asia America
adidas 3 (1) 29 34
Salomon 17 18 21 n/a
TaylorMade-adidas Golf 14 28 97 –
Mavic 22 36 34 –
Total 5 4 32 36
Mavic 1
TaylorMade-adidas Golf 8
Salomon 11