Reebok Business Performance
In the period from February to December 2006, Reebok made important progress in consolidating distribution in North America to align it with the new positioning of the brand. Currency-neutral sales for the Reebok segment decreased 9% versus the prior year with declines in North America, Europe and Latin America which could not be offset by double-digit revenue growth in Asia. In euro terms, revenues also declined 9% to € 2.473 billion in 2006 from € 2.718 billion in 2005. On a like-for-like basis, currency-neutral sales decreased 6%, in line with Management’s expectation of a mid-single-digit decline. Reebok’s gross margin was 35.0%, including negative effects of € 76 million from purchase price allocation. Gross profit for Reebok in the period from February to December 2006 was € 865 million. Reebok’s operating margin was 3.5% including negative effects in a total amount of € 89 million from purchase price allocation. Operating profit was € 86 million. Excluding these purchase price allocation effects, Reebok’s gross margin was 38.0% and the operating margin was 7.1% in the period from February to December 2006.
Reebok at a Glance1) € in millions
| 2006 | 2005 | Change | |
| Net sales | 2,473 |
2,7182) |
(9%) |
| Gross Profit | 865 |
— |
— |
| Gross Margin | 35.0% |
— |
— |
| Operating Profit | 86 |
— |
— |
| Operating Margin | 3.5% |
— |
— |
| 1) Only includes eleven months of the twelve-month period.
2) Not consolidated within the adidas Group. Reebok prior year results are based on US-GAAP and not IFRS. |
|||
Reebok Net Sales by Quarter € in millions
Reebok Results Not Comparable with Prior Year
The business of Reebok International Ltd. (USA) and its subsidiaries is
consolidated within the adidas Group as of February 1, 2006. The
segment includes the brand units Reebok, Reebok-CCM Hockey and
Rockport. Reebok’s results are not comparable with 2005 reported
results, because only eleven months of Reebok’s 2006 results are
consolidated. Further, the NBA and Liverpool licensed businesses were
transferred to brand adidas in an effort to best utilize promotion
partnerships. Similarly, the Greg Norman Collection (GNC) apparel
business was transferred to the TaylorMade-adidas Golf segment. The GNC
wholesale business was consolidated in the TaylorMade-adidas Golf
segment until the end of November when it was sold to MacGregor Golf
Company. The results of the GNC-related retail outlet operations, which
were not part of the transaction, will be reported as part of Reebok’s
ownretail activities from January 1, 2007, onwards, as Greg Norman
product will be sold at Reebok factory outlets.
