Adidas 2003 Annual Report Download - page 103

CURRENCY-NEUTRAL SALES GROWTH OF 3 TO 5%
EXPECTED /// Based on these economic and sector develop-
ments as well as the backlog development at brand adidas
(see Group Management Report/adidas) and feedback from
retailers, we expect to grow Group sales by 3 to 5% on a
currency-neutral basis in 2004. These gains will be driven by
top-line expansion at adidas, Salomon and TaylorMade-adidas
Golf. Improvements are anticipated in all product categories,
with apparel projected to lead the way based on the strength
of our “Apparel Breakthrough” initiative. Further, we expect
this growth to be largely driven by volume increases.
STABILIZING BUSINESS IN NORTH AMERICA AS TOP PRIOR-
ITY /// On a regional level, our top priority will be to stabilize
our adidas business in North America. This will be supported
by a new management team, which was put in place in
January 2004. The primary focus of our activities will be to
enhance relationships with retail partners by fine-tuning our
distribution strategy, launching a major brand advertising
campaign, entitled “Impossible is Nothing”, and increasing
the own-retail presence of brand adidas. These activities
coupled with the improving economic and sector outlook in
the USA are expected to drive currency-neutral growth in the
second half of 2004.
CONTINUED STRENGTH EXPECTED IN EUROPE /// In our
largest and most profitable region, Europe, we plan to con-
tinue on our solid growth path in 2004. adidas supplies the
official match ball and is Official Licensee for the UEFA EURO
2004™ European Football Championships in Portugal and
Official Outfitter for the Summer Olympics in Athens. Both
these events are expected to increase adidas brand exposure
and sales in Europe. Our successful “Winning in Europe”
program (see Group Strategy) aims to accelerate top-line
growth in the region with focus on key accounts and own
retail. In addition, the “Winning in Europe” area formation
should generate bottom-line improvements of approximately
€50million between 2003 and 2006. Our sales growth
projection for the region in 2004, however, remains in the
mid-single-digit range, reflecting the overall difficult retail
environment in most markets.
OWN-RETAIL EXPANSION TO DRIVE GROWTH IN ASIA AND
LATIN AMERICA /// In Asia and Latin America, expansion of
own-retail activities will be the key drivers of growth, as retail
infrastructure is less developed in these regions than in other
parts of the world. Major gains will come from Japan, Korea,
China, Australia, Brazil, Mexico and Argentina, where growth
will be spurred by new product and marketing initiatives as
well as sourcing and distribution optimization. Varied but
largely positive macroeconomic development in these regions
will also support growth in 2004. As a result, double-digit
currency-neutral sales increases are expected in both Asia
and Latin America.
NEW PRODUCTS AS IMPORTANT DRIVER OF GROWTH IN
2004 /// At adidas-Salomon, one of our key competitive
advantages is our technological leadership in the sporting
goods industry. Since 2001, we have successfully brought at
least one major product revolution or significant evolution per
year to the market. In 2004, we will continue to leverage this
strength by further commercializing evolutions of our well-
established technologies and introducing several completely
new product technologies to the market. In addition to these
new technologies, the continued strength of our largest
sports categories within each of the brands will be critical to
meeting our growth expectations in 2004.
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EXPECTED 2004 CURRENCY-NEUTRAL NET SALES GROWTH RATES
BY BRAND AND REGION
adidas mid-single-digit
Salomon mid-single-digit
TaylorMade-adidas Golf mid-single-digit
Europe mid-single-digit
North America positive
Asia double-digit
Latin America double-digit
Total 3 to 5%