Adidas 2005 Annual Report Download - page 119

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Own Retail as Important Growth Driver for Brand adidas
Own retail will continue to be an important topic for adidas in
2006. We expect to open numerous new concept stores within
the next year and are also projecting a further increase in
comparable store sales. We expect own-retail sales to grow
at double-digit rates in 2006. As a result, the percentage of
revenues coming from own retail will be higher than the 2005
level of 13% of brand adidas sales. This expansion will allow
us to best showcase the breadth of our products to consum-
ers in major markets as well as to capture new market po-
tential in Eastern Europe and smaller Asian countries. Major
openings for brand adidas include adidas Sport Performance
Centers in Asia and Europe’s emerging markets as well as
new Sport Heritage Concept Stores in Hong Kong, Amster-
dam and Copenhagen.
Strong Backlogs Support High-Single-Digit Sales Growth
Expectations for Brand adidas
Backlogs for the adidas brand at the end of 2005 increased
8% versus the prior year on a currency-neutral basis. In euro
terms, this represents an increase of 15%. Footwear backlogs
grew 4% in currency-neutral terms (+11% in euros), reflecting
improvements in many categories, in particular Sport Perfor-
mance football and Sport Heritage products. Apparel back-
logs grew 9% on a currency-neutral basis (+16% in euros),
driven by improvements in the Sport Performance categories
football and basketball as well as in Sport Heritage. Hard-
ware backlogs, which grew at double-digit rates mainly due to
improvements in the football category, also contributed to the
positive development of adidas backlogs. As a result of the
strong product pipeline outlined above, our excellent order
book and vigorous growth expectations for our own-retail
activities, we expect high-single-digit currency-neutral sales
growth for adidas in 2006. Improvements are anticipated in
all major product categories and we expect this growth to
be largely driven by volume increases at wholesale as well
as through increasing own-retail activities. As the orders
are placed by numerous retailers we currently do not expect
that any retailer will generate more than 5% of brand adidas
sales.
Mid-Single-Digit Sales Growth Projected at TaylorMade-
adidas Golf
At TaylorMade-adidas Golf, we will continue to expand our
metalwood category in 2006, which is the most important
category within our golf business. This growth will mainly
be driven by new products such as the next generation of
r7® drivers, the r7® 425 and r7® 460. The irons category is also
expected to show outstanding performance in 2006, due to the
revolutionary r7® XD and r7® CGB MAX irons, which were suc-
cessfully launched in the fourth quarter of 2005. New product
extensions are also planned in the golf ball category, where
we will establish a dual brand strategy. TaylorMade will serve
as our premium golf ball platform, backed by the launch of
the new TaylorMade® Tour Preferred® (TP) golf ball, while
Maxfli® will be positioned as a top-value brand. In addition,
our Clima concept will be further extended in both the adidas
Golf footwear and apparel categories. Because of the different
order profile in golf compared to other parts of our business,
we do not provide order information for TaylorMade-adidas
Golf. However, based on trade show performance and ongo-
ing dialog with customers, we are confident that TaylorMade-
adidas Golf sales will grow at mid-single-digit rates on a
currency-neutral basis in 2006.
Outlook