Adidas 2002 Annual Report Download - page 77

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75
GROSS MARGIN IMPROVEMENT REFLECTS BETTER
PRODUCT MIX AND LOWER CLEARANCE /// The adidas
gross margin improved by 1.0 percentage points from 38.2%
in 2001 to 39.2% in 2002. Drivers of this improvement were
increased own-retail activities as described above, lower
clearance sales and an improving product mix. Despite the
heavily promotional retail environment in the USA, adidas
gross margin increased in all regions except Latin America.
OPERATING EXPENSES INCREASE AS A RESULT OF KEY
INITIATIVES /// In 2002, adidas operating expenses were
up 11% from € 1.5 billion in 2001 to € 1.7 billion in 2002.
As a percentage of net sales, this represents an increase of
1.6 percentage points from 30.9% in 2001 to 32.5% in 2002.
Marketing expenses associated with the 2002 FIFA World
Cup™, the expansion of adidas own-retail activities and start-
up costs related to the purchase of the remaining shares of
adidas Italy were the drivers of this increase. As a result of
these developments, adidas operating profit decreased 3% to
€ 343 million versus € 352 million in the prior year.
HIGHEST adidas YEAR-END BACKLOG GROWTH RATE IN
FOUR YEARS /// adidas backlogs at the end of 2002 increased
6% versus the prior year. On a currency-neutral basis, this
increase was 14%. This represents the highest growth rate of
our year-end backlogs in four years. This strong development
was led by footwear, where backlogs grew 12% (+22% cur-
rency-neutral). Apparel backlogs decreased in euro terms by
1%. On a currency-neutral basis, however, this represents an
increase of 5%.
adidas AT A GLANCE € in millions
2002 2001 Change
Net sales 5,105 4,825 6%
Gross margin 39.2% 38.2% 1.0pp
Operating profit 343 352 (3%)
Order backlogs1) 6%
Currency-neutral order backlogs1) 14%
1) At year-end
adidas SPORT PERFORMANCE NET SALES BY PRODUCT
45% FootwearHardware 5%
Apparel 50%
adidas OWN-RETAIL STORES
44% Concession CornersConcept Stores 27%
Factory Outlets 29%
adidas NET SALES BY REGION
53% EuropeAsia 17%
Latin America 3%
North America 27%
adidas SPORT HERITAGE NET SALES BY PRODUCT
92% Footwear
Accessories 2%
Apparel 6%