Adidas 2005 Annual Report Download - page 98

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94 Group Management Report
adidas Business
Performance
In 2005, currency-neutral sales in the adidas segment
increased 12% with double-digit revenue growth coming
from all regions except Europe, where sales increased
at a single-digit rate. In euro terms, sales grew 13% to
€ 5.861 billion in 2005 from € 5.174 billion in 2004. Gross
margin as a percentage of sales increased by 1.1 percent-
age points to 45.3% in 2005 (2004: 44.1%), mainly driven by
increased own-retail activities, product mix improvements
as well as favorable currency movements. As a result,
operating profit grew 23% to € 693 million in 2005 versus
€ 564 million in the prior year. The adoption of new and
revised International Financial Reporting Standards had
a positive impact on the reported operational performance
in 2005. On a comparable basis, adidas operating profit
increased 20%.
Currency-Neutral Sales Up 12%
Sales for the adidas segment in 2005 grew 12% on a currency-
neutral basis, with double-digit increases in all regions except
Europe, where sales grew at a single-digit rate. In euro terms,
sales grew 13% to € 5.861 billion in 2005 from € 5.174 billion
in 2004.
Strong Growth in All Major Sport Performance Categories
adidas Sport Performance is the largest division within the
segment, comprising 78% of brand adidas revenues. Sales in
this division increased 7% on a currency-neutral basis in 2005,
with double-digit growth in all regions except Europe. Sales
increases in all major product categories, in particular train-
ing, tennis and running, were the drivers of this improvement
and reflect the broad strength of the adidas product offering.
In euro terms, Sport Performance sales improved 8% in 2005
to € 4.545 billion from € 4.223 billion in the prior year.
Sport Heritage Footwear and Apparel Sales Grow Vigorously
The Sport Heritage division contributed 22% to brand adidas
sales. Currency-neutral sales in the division grew vigorously
in 2005, up 41% compared to the prior year. This increase was
driven by growth rates of over 40% in both footwear and ap-
parel. From a regional perspective, sales increased at strong
double-digit growth rates across all regions. In euro terms,
Sport Heritage sales passed the € 1 billion mark for the first
time ever, improving 42% to € 1.290 billion in 2005 from
€ 907 million in 2004.
Sport Style Sales Grow Modestly
In their third year on the market, adidas Sport Style products
have become well established. Sales were particularly strong
in the fourth quarter, which more than compensated for a
weaker first half of 2005. As a result, sales in the Sport Style
division increased 2% both on a currency-neutral basis and in
euro terms to € 19 million in 2005 (2004: € 18 million), repre-
senting less than 1% of 2005 brand adidas revenues.
Q1 2004
Q1 2005
Q2 2004
Q2 2005
Q3 2004
Q3 2005
Q4 2004
Q4 2005
adidas Net Sales by Quarter € in millions
1,378
1,512
1,207
1,304
1,570
1,729
1,020
1,316
Sport Style <1%
adidas Net Sales by Division
Sport Performance 78%
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Sport Heritage 22%
2005 2004 Change
Net sales 5,861 5,174 13%
Gross margin 45.3% 44.1% 1.1pp
Operating profit1) 693 564 23%
1) The 2004 figure has been adjusted to reflect the changes in IFRS.
adidas at a Glance € in millions
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