Adidas 2003 Annual Report Download - page 96

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TaylorMade-adidas Golf /// IN 2003, TAYLORMADE-
adidas GOLF CURRENCY-NEUTRAL SALES GREW 4% AS A
RESULT OF INCREASING SALES IN THE IRON AND SOFT
GOODS CATEGORIES. IN EURO TERMS, HOWEVER, REV-
ENUES DECLINED 10% TO € 637 MILLION IN 2003 VERSUS
€ 707 MILLION IN 2002. GROSS MARGIN DECLINED 3.3 PER-
CENTAGE POINTS TO 45.5% OF SALES VERSUS 48.8% IN THE
PRIOR YEAR AS A RESULT OF LOWER METALWOOD AND
GOLF BALL MARGINS. OPERATING PROFIT, HOWEVER,
DECREASED 9% TO € 67 MILLION IN 2003 FROM € 74 MIL-
LION IN 2002 WITH MAJOR OPERATING EXPENSE REDUC-
TIONS PARTIALLY OFFSETTING LOWER GROSS MARGIN. FOR
2004, CURRENCY-NEUTRAL SALES, GROSS MARGIN AND
OPERATING PROFIT GAINS ARE EXPECTED.
CURRENCY-NEUTRAL TAYLORMADE-adidas GOLF SALES UP
4% /// Currency-neutral sales at TaylorMade-adidas Golf grew
4% during 2003. In euro terms, full year revenues declined
10% to € 637 million in 2003 from € 707 million in 2002. The
currency-neutral sales growth was realized despite the fact
that sales comparisons were negatively impacted by the non-
renewal of a distribution and licensing arrangement with
Slazenger Golf at the end of 2002. Excluding the approxi-
mately € 25 million of Slazenger Golf sales that was included
in last year’s revenues, currency-neutral sales would have
increased by 9%. Like-for-like revenues in euros were down
8%.
CURRENCY-NEUTRAL SALES GROWTH DRIVEN BY NEW
PRODUCT INTRODUCTIONS AND EXPANDING PRODUCT
LINES /// The currency-neutral sales improvement at Taylor-
Made-adidas Golf was a result of solid double-digit increases
in the irons, putters, footwear and apparel categories. This
growth was largely driven by new product introductions in the
hardware categories such as our RAC technology, a new type
of club head construction that dramatically improves feel at
impact and was employed in all new irons and wedges in
2003, and expanding product line and market shares of our
soft goods products. Sales of both metalwoods and golf balls,
however, declined. This decrease is mainly a result of higher
clearance sales in advance of new product launches in 2004.
However, with strong product introductions during the year,
including a further evolution of the successful metalwood
R500 Series, TaylorMade was able to not only remain world
leader in the industry’s largest and most important category
but even further strengthened its number one position in
2003. Golf ball sales declined, impacted by the non-renewal of
the Slazenger Golf distribution and licensing arrangement at
the end of 2002.
92 REPORTING GROUP MANAGEMENT REPORT /// TAYLORMADE-adidas GOLF
TAYLORMADE-adidas GOLF AT A GLANCE € in millions
2003 2002 Change
Net sales 637 707 (10%)
Gross margin 45.5% 48.8% (3.3pp)
Operating profit 67 74 (9%)
TAYLORMADE-adidas GOLF NET SALES BY QUARTER € in millions
Q1 2003 134
Q1 2002 176
Q2 2003 177
Q2 2002 203
Q3 2003 176
Q3 2002 137
Q4 2003 150
Q4 2002 191
TAYLORMADE /// TAYLITE GOLF BAG