The adidas Group strives to be the global leader in the sporting goods industry with brands built upon a passion for sports and a sporting lifestyle.
Inspired by our heritage, we know that a profound understanding of the consumer and customer is essential to achieving this goal. ...
Inspired by our heritage, we know that a profound understanding of the consumer and customer is essential to achieving this goal. To anticipate and respond to their needs, we continuously strive to create a culture of innovation, challenging ourselves to break with convention and embrace change. By harnessing this culture, we push the boundaries of products, services and processes to strengthen our competitiveness and maximise the Group’s operational and financial performance. This, in turn, will drive long-term value creation for our shareholders. To achieve this goal, we have made strategic choices and will prioritise our investments under our six key strategic pillars.
Creating long-term value for our shareholders through significant operating cash flow generation drives our overall decision-making process. ...
Creating long-term value for our shareholders through significant operating cash flow generation drives our overall decision-making process. Therefore, we are focused on rigorously managing those factors under our control, making strategic choices that will drive sustainable revenue and earnings growth, and ultimately operating cash flow. Across our operations, we pursue in particular the avenues for growth which we expect to be most value-enhancing, with particular emphasis on improving Group profitability. In addition, rigorously managing working capital and optimising our capital structure remain key priorities for us. Furthermore, we are committed to increasing returns to shareholders with above-industry-average share price performance and dividends.
Consumers want choice. Whether it is the athlete looking for the best possible equipment, or the casual consumer searching for the next fashion trend, we are inspired to develop and create experiences that engage consumers in long-lasting relationships with our brands. ...
Consumers want choice. Whether it is the athlete looking for the best possible equipment, or the casual consumer searching for the next fashion trend, we are inspired to develop and create experiences that engage consumers in long-lasting relationships with our brands. . To maximise our consumer reach, we have embraced a multi-brand strategy. This approach allows us to tackle opportunities from several perspectives, as both a mass and a niche player, providing distinct and relevant products to a wide spectrum of consumers. In this way, each brand is able to keep a unique identity and focus on its core competencies, while simultaneously providing our Group with a broad product offering, increasing our leverage in the marketplace.
As a Group, we target leading market positions in all markets in which we compete. However, we have prioritised our investments based on those markets which offer the best medium- to long-term growth and profitability opportunities. ...
As a Group, we target leading market positions in all markets in which we compete. However, we have prioritised our investments based on those markets which offer the best medium- to long-term growth and profitability opportunities. In this respect, we place considerable emphasis on expanding our activities in the emerging markets, particularly China and Russia/CIS, as well as building our market share in underpenetrated markets for the Group, such as the USA. No matter in which market we operate, we recognise that consumer buying behaviour and the retail landscape are unique. Therefore, to fully exploit market opportunities, we tailor our distribution strategy to present our brands to the consumer in the most impactful way. This is achieved by following a distinctive but coordinated channel approach. To this end, we strive to provide our customers with superior service to secure prime shelf space for our brands, while continuing our commitment to building strategic competency in own retail and e-commerce.
Speed and agility are key to outpacing the competition. ...
Speed and agility are key to outpacing the competition. We are committed to meeting the full range of customer and consumer needs by ensuring constant product availability in the correct size and colour, providing game-changing technical innovations and also the latest high-end fashion products to the highest quality standards. A key strategic priority is to enable faster product creation and production by continuously improving our infrastructure, processes and systems. By sharing information from point of sale to source and vice versa, we strive to connect and more closely integrate the various elements of our supply chain, to enable quick reaction to changing consumer trends. To this end, we focus on building maximum flexibility within our supply chain. While leveraging the efficiency of common infrastructure and processes, the Group strives to provide tailored solutions for all our business models, be it the wholesale or retail channels, or the performance-oriented or style-oriented businesses.
Every adidas Group employee is responsible for driving innovation. ...
Every adidas Group employee is responsible for driving innovation. Therefore, we foster a culture of challenging convention and embracing change, and require all areas of the Group to generate at least one new innovation or meaningful improvement per year. In particular, we believe that technological evolution and cutting-edge design in our products are essential to achieving sustainable leadership in our industry. Beyond this, enhancing services for our customers and implementing more efficient and effective internal processes are other areas where our organisation strives to innovate.
Our culture is continuously shaped by influences from the past and the present as well as our future aspirations. ...
Our culture is continuously shaped by influences from the past and the present as well as our future aspirations. We perpetuate the commitment of our founder, Adi Dassler, to the athlete and consumer, pride in what we do, quality and love of sport. We win as a team through open communication, collaboration and our shared values found in sport. Therefore, we foster a corporate culture of performance, passion, integrity and diversity by creating a work environment that stimulates innovation, team spirit and achievement based on strong leadership and employee engagement.
Like any global business, the adidas Group must manage wide-ranging commercial and competitive pressure to deliver increased financial returns and growth....
Like any global business, the adidas Group must manage wide-ranging commercial and competitive pressure to deliver increased financial returns and growth. At the same time, we are accountable for our employees and have a high degree of responsibility towards the workers in our suppliers’ factories and also for the environment. We are committed to striking the balance between shareholder interests and the needs and concerns of employees and workers, and the environment, or, in short, to becoming a sustainable company. We report publicly on the steps we take to have a more positive impact on society and the planet on our website at : www.adidas-group.com/sustainability.
In November 2010, the Group unveiled its 2015 strategic business plan named “Route 2015”, which defines strategies and objectives for the period up to 2015. ...
In November 2010, the Group unveiled its 2015 strategic business plan named “Route 2015”, which defines strategies and objectives for the period up to 2015.
This plan is the most comprehensive the adidas Group has ever developed, incorporating all brands, sales channels and Group functions globally. Based on its strong brands, premium products, extensive global presence and its commitment to innovation and the consumer, the adidas Group aspires to grow its business significantly until 2015.
According to our plan, total Group sales are targeted to grow 45% to 50% on a currency-neutral basis over the five-year period, thereby outperforming total market growth (both GDP and sporting goods industry). In addition, we aim to grow our bottom line faster than the top line. It is targeted to grow annual earnings at a compound annual growth rate of 15% and to reach an operating margin of 11% sustainably by 2015.
In September 2012, Management confirmed its Route 2015 aspirations for the Group. It also provided an update on its targets by segment and by brand in light of the Group’s performance in the first two years. For the adidas brand, the 2015 goal was increased by € 600 million to € 12.8 billion. adidas Sport Performance sales are now projected to reach € 8.9 billion (previously: € 8.5 billion), with the increase in expectations driven by record-breaking football sales and momentum in the running and basketball categories. Additionally, sales expectations for adidas Sport Style were increased to € 3.9 billion, up from € 3.7 billion, due to the continuing strong global resonance of adidas Originals and the solid performance of the adidas NEO label. At the Reebok brand, taking into account the strategic decisions to discontinue the NFL contract, reduce exposure to lower-profit markets such as India and Latin America, as well as shift the reporting of US-related NHL sales to Reebok-CCM Hockey, Management now expects sales of € 2 billion in 2015, compared to its previous goal of € 3 billion. The reduction of expectations for Reebok, which is partly offset by the projected increases at adidas, results in a reduction in the Wholesale segment revenue target to € 10.2 billion (previously: € 10.6 billion). Retail segment sales expectations remain unchanged at € 4.6 billion. In Other Businesses, which achieved its Route 2015 sales target of € 1.8 billion already in 2012, 2015 goals were raised to € 2.2 billion. This is driven by an exceptional performance so far at TaylorMade-adidas Golf and the growth opportunities expected with the acquisition of Adams Golf.
In order to reach our Route 2015 strategic goals, we have defined clear strategic priorities. These include:
Clear brand positioning and prioritisation: We believe that we have significant growth potential to exploit from our portfolio of brands. The majority of our targeted growth will come from Global Brands, which we anticipate will contribute over 80% of the Group’s expected revenue increase over the period. Areas within the adidas and Reebok brands that have been identified as key contributors to sustainable growth for the adidas Group include:
Expand presence in key growth markets: We have identified North America, Greater China, Russia/CIS, Latin America, Japan and the UK as key growth markets. Of those markets, the three ”attack markets” North America, Greater China and Russia/CIS are expected to contribute around 50% of the total Group growth under the Route 2015 plan, with each market targeting a double-digit compound annual growth rate. In the USA, the Group’s brands have enormous potential to gain market share by focusing on improved distribution and allowing a higher share of products to be specifically designed for that market. In emerging markets such as China and Russia/CIS, rising standards of living, increasing disposable income, positive demographic trends and growing sports participation should support demand for sporting goods.
Intensify controlled space focus: We intend to increase the portion of sales that comes from controlled space initiatives to over 50% of Group sales in the coming years (2012: 45%). This includes new openings of adidas and Reebok own-retail stores, the further extension of our mono-branded franchise store base in markets such as China, as well as new shop-in-shop initiatives with retail partners around the world. In terms of our own retail, we intend to open at least 550 adidas and Reebok stores over the five-year period, as well as grow significantly our eCommerce business, which we project to increase to € 500 million by 2015.
Leverage growth and operational scale through to bottom line: A higher exposure to emerging markets as well as expanding controlled space activities are important levers to improving brand presence, increasing sell-through and driving higher Group profitability. In addition, we continuously work on streamlining internal processes to accelerate decision-making, reduce complexity and make our organisation leaner and more efficient. At the beginning of 2011, we launched Driving Route 2015 to act as a key enabler to achieve these aspirations. The objectives of Driving Route 2015 are very clear: speed, consistency and consumer focus.
In addition, we have identified several profit levers across the Group to support improvements in profitability. For example, we are targeting improved product margins with initiatives such as range reduction, where we have the goal to achieve a 25% reduction by 2015. In wholesale, we are improving our business by sharpening our trade terms policies and reducing our exposure to lower-quality channels of distribution, focusing on higher-quality partners more aligned to where our target consumer is shopping. On our mission to become a best-in-class retailer, we are already halfway to our Route 2015 goal to add five points of margin in our Retail segment. Given the strong results from our HR programme SHINE, our real estate optimisation projects and benefits from the expansion of our Global Foundation Range, we are likely to exceed our original Retail margin target by one or two points. In manufacturing, we are combatting inflation in the supply chain by increasing our investments in automation and new production techniques. Also, our investments in infrastructure such as the new distribution centres in Osnabrueck/Germany, China and Canada will ensure we increase capacity in a cost-efficient way to service all of our channels, be it wholesale, own retail or eCommerce. Finally, we continue to work on enhancing our planning processes, to further improve profitability and working capital efficiency. Therefore, we believe there is significant potential to increase the Group’s operating margin to 11% sustainably by 2015.
Maintain financial flexibility: We strive over the long term to maintain a ratio of net borrowings over EBITDA of less than two times. A strong balance sheet increases our flexibility to realise value-generating medium- and long-term opportunities in the best interests of our shareholders as they arise.
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