Adidas 2005 Annual Report Download - page 22
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18
Your performance in North America improved signifi cantly in 2005. What are the main reasons for your
turnaround and is it sustainable?
North America is a crucial market for adidas and for the sports footwear and apparel sector overall. Our
turnaround there came as a result of hard work – getting the right people in place, making profi tability
our most important performance metric, improving the product mix and enhancing our communications
to better position the adidas brand. We also understand the sales channels in North America much better
now. Historically, our business was always driven by a few outstanding products and skewed towards
one channel of distribution. Now we’re growing across all product categories and all channels and we’ve
deepened our knowledge of what works and what does not work with retailers. For that reason, I believe
the improvements are sustainable if we continue to stay focused.
In 2005, you became the market leader in Japan. How did you do it?
Japan is the second largest sporting goods market in the world, so having a strong presence there is very
important to us. Since we took over distribution in Japan seven years ago, our goal was always to become
the market leader. Our strategy was simple: make the brand desirable with a clear focus on performance,
bring top-quality products to a demanding market, and deliver the best all-around service in the industry.
We feel the success we’re enjoying in Japan can be replicated in other Asian markets, notably Korea and
China, and we are intent on maximizing all the growth opportunities this region presents.
What about your golf segment? TaylorMade-adidas Golf delivered its best performance in North America
in three years, but profi tability declined somewhat. How do you explain this performance, and do you
expect the golf segment to be an integral part of the adidas Group’s business going forward?
TaylorMade-adidas Golf had a great 2005, with our best performance coming from North America. Our
industry-leading product pipeline, including the r7® quad driver, rac™ irons and ClimaCool®, helped us to
translate innovations into market share gains and sales growth of 21%. However, it is also true that profi t-
ability for the segment was down in 2005, primarily due to costs associated with the buy-out of our golf
ball manufacturing contract with Dunlop Slazenger. We have since made the strategic decision to move
a large portion of this production to Asia, which is much more cost-effi cient. TaylorMade-adidas Golf is a
core brand, and we expect continued growth in sales and an impressive profi tability increase this year.