adidas Business Performance
In 2006 the adidas segment performed above Management’s initial expectations. Growth was broad-based, with particular strength in the Sport Performance football category, which benefited from adidas’ role as Official Sponsor, Supplier and Licensee of the 2006 FIFA World Cup™. Currency-neutral sales in the adidas segment, which initially were expected to grow by high-single-digit rates, increased 14%. This is the highest growth rate for the brand in eight years. All regions delivered double-digit revenue growth except Europe, where sales increased at a high-single-digit rate. In euro terms, sales grew 13% to € 6.626 billion in 2006 from € 5.861 billion in 2005. Gross margin increased by 0.9 percentage points to 46.2% in 2006 (2005: 45.3%), mainly driven by increased own-retail activities and a favorable product mix. Gross profit grew by 15% to € 3.059 billion in 2006 from € 2.654 billion in 2005. As a result of the strong top-line and gross margin development, which more than offset higher operating expenses as a percentage of sales, operating margin improved 0.1 percentage points to 11.9% (2005: 11.8%). Operating profit grew 14% to € 788 million in 2006 versus € 693 million in the prior year.
adidas at a Glance € in millions
| 2006 | 2005 | Change | |
| Net sales | 6,626 | 5,861 | 13% |
| Gross profit | 3,059 | 2,654 | 15% |
| Gross margin | 46.2% | 45.3% | 0.9pp |
| Operating profit | 788 | 693 | 14% |
| Operating margin | 11.9% | 11.8% | 0.1pp |
adidas Net Sales by Quarter € in millions
adidas Net Sales by Division
Currency-Neutral Segment Sales Up 14%
Sales for the adidas segment in 2006 grew 14% on a currency-neutral basis, with double-digit increases coming from all regions except Europe, where sales grew at a high-single-digit rate. This is the highest growth rate for the brand in eight years. In euro terms, sales grew 13% to € 6.626 billion in 2006 from € 5.861 billion in 2005.
Sport Performance Up 13% on a Currency-Neutral Basis
adidas Sport Performance is the largest division within the segment, comprising 78% of brand adidas revenues (2005: 78%). Sales in this division grew 13% on a currency-neutral basis in 2006. This positive development was driven by strong growth in footwear, apparel and hardware. Sales increased in nearly all major product categories. Football in particular, but also tennis and training, contributed to this strong improvement. In the football category, sales were positively impacted by adidas’ role as Official Sponsor, Supplier and Licensee of the 2006 FIFA World Cup™ and the brand’s sponsorship of six participating teams. In euro terms, Sport Performance sales improved 12% in 2006 to € 5.100 billion from € 4.545 billion in the prior year.
Sport Heritage Grows 13% on a Currency-Neutral Basis
The Sport Heritage division contributed 22% to brand adidas sales (2005: 22%). Currency-neutral sales in the division grew 13% in 2006, representing the third consecutive year in which the division grew by double-digit rates. This increase was driven by double-digit growth rates in footwear, apparel and accessories. In euro terms, Sport Heritage sales increased 12% to € 1.444 billion in 2006 from € 1.290 billion in 2005.
Sport Style Grows 37% on a Currency-Neutral Basis
As a result of the division’s well-received product offering, the Sport Style division delivered strong sales growth in 2006. Revenues increased 37% both on a currency-neutral basis and in euro terms to € 26 million in 2006 (2005: € 19 million), again representing less than 1% of brand adidas sales.
