Adidas 2003 Annual Report Download - page 102

Outlook /// 2004 IS POISED TO BE ANOTHER STRONG
YEAR FOR adidas-Salomon. MACROECONOMIC SIGNALS
INDICATE THAT SOME IMPROVEMENT IN THE GLOBAL
ECONOMY IS LIKELY AND TWO BIG SPORTING EVENTS ARE
EXPECTED TO BRING POSITIVE MOMENTUM TO THE SPORT-
ING GOODS MARKET. FURTHER, AND MOST IMPORTANTLY,
adidas-Salomon’s POSITIVE FINANCIAL PERFORMANCE IN
2003 GIVES US CONFIDENCE THAT WE WILL BE ABLE TO
CONTINUE THIS PROGRESS IN 2004. AS A RESULT, WE
EXPECT TO INCREASE GROUP REVENUES BY 3 TO 5% ON A
CURRENCY-NEUTRAL BASIS, EXPAND BOTH GROSS AND
OPERATING MARGINS AS WELL AS DELIVER NET EARNINGS
GROWTH OF AT LEAST 10%.
IMPROVING ECONOMIC OUTLOOK /// At the beginning of
2004, economic indicators suggest that global markets are on
the upturn and there is potential for continued recovery. In the
USA, both consumer confidence and GDP growth expectations
are at 18-month highs and the increased competitiveness of
the US economy resulting from a weaker dollar has increased
the potential for an export-driven upswing. As a result, lead-
ing economists project GDP growth in the region of between
3and 4% in 2004. In the Euro Zone, economic growth is also
expected to accelerate, however the strong appreciation of the
euro versus other currencies is likely to continue to dampen
economic recovery in the region. On the other hand, expected
improvements in the labor market as well as tax cuts sched-
uled to take effect early in the year have the potential to
stimulate private consumption during the course of 2004. As
aresult of these developments, GDP growth of around 2% is
projected for the region. The Japanese economy is expected
to improve further in 2004. In addition to exports benefiting
from the loosening of China’s import restrictions, private
consumption should also pick up due to less volatile compen-
sation levels. This is expected to lead to economic growth of
around 2%. For the rest of Asia, the growth expectations are
based on an increasing domestic demand in the major mar-
kets. In Latin America, although GDP growth expectations
vary widely among individual countries, economic and finan-
cial conditions have improved strongly throughout the region
over the last year, providing optimism for both increased
financial stability and a solid economic recovery.
POSITIVE SIGNALS IN THE SPORTING GOODS SECTOR /// The
sales outlook for the sporting goods sector is expected to
improve during 2004. In the USA, increased consumer spend-
ing, higher retail sales in the second half of 2003 as well as
better-than-expected back-to-school and holiday season
sales in the sector underpin expectations of further improve-
ments. In Europe, the consumption of sporting goods prod-
ucts is expected to remain under pressure. In some European
markets, especially in the UK, increased promotional activity
by retailers is likely to lead to more customized product
assortments from suppliers as well as increasing own-retail
activities. Despite these trends, a turnaround of the apparel
market is expected and should be supported by the UEFA
EURO 2004™ European Football Championships. Similarly,
the Summer Olympics in Athens should also serve as a
positive impulse for the market. In Japan, further retail
consolidation is expected to increase price pressure on major
vendors. However, projected increases in private consumption
have led major retailers to announce significant expansion
plans for the first time in five years.
98 REPORTING GROUP MANAGEMENT REPORT /// OUTLOOK
adidas SPORT PERFORMANCE ///
ADISTAR SINGLET SHIRT