2007 Annual Report Herbert Hainer, Adidas CEO discusses some of the issues in the previous year (2007). One question is about the integration of Reebok. Two years ago, Adidas surprised investors with Reebok's bids. "Most (investors) agree that the deal will help Nike," was one of the foremost headlines and the Warren Buffet continued to invest in Nike. "
Hainer responds to some concerns like Reebok's 2007 sales.
… big changes on the Reebok brand, so improving US distribution; even stopping supply to the biggest buyer of the brand, where unnecessary stocks have resulted in a significant drop in profitability … But the real test is still ahead of us – making the brand of Reebok more relevant to consumers. The brand requires simple messages, so they stick to it, so its 2008 product and marketing strategies focus on two important concepts: fit and choose. Reebok seeks out to be a brand that is "fit for me".
Reebok's 2008 product range has been complemented by 893 new alignment initiatives through its collections … According to the report, sales will grow in almost every other market, especially in Russia and China, where the brand has been marketed in 2007, for the first time.
Another concern is the North American economic environment, which has "deteriorated in recent months."
Yes, North American economic conditions have become more and more difficult. Nevertheless, I am optimistic that, in times of relative economic weakness, we overcome most of our competitors. We are a regionally diversified group that is one of our most important strengths … Today we have a much broader distribution base and a significant improvement in the performance product and partnership portfolio in the region. That is why I trust that the adidas brand will again grow in North America in 2008 – although it is likely to be lower than in the past few years. Reebok … the growth of this market in 2009.
About the performance of TaylorMade-adidas Golf in 2007
… seeks to become the world's best-selling golf shop. … the adidas Golf footwear and apparel sales increased for the fifth consecutive year at two-digit prices. Similarly, the sale of a similar segment of the Greg Norman Collection's wholesale business has been increased by 9% on a currency-neutral basis, rising in all major categories. Increasing profitability for 2008 is the most important. … We sold Maxfli because all the know-how now have to be successful in the premium golf ball category. We focus on core golf brands: TaylorMade and adidas Golf.
About 2008 Financial Performance (solid after 2007 …):
… We expect a large one-time currency-neutral increase in sales – thanks to all of our brands' developments. The gross margin ranges from 47.5% to 48%. And our operating reserve increases to at least 9.5%. With our strong operating performance, we increase net income by at least 15%.
In 2008, the costs of the most important sports events of the year contribute to it. The company continues the share purchase program. Adidas will be able to achieve revenue gains by at least 15% – "marking double digit revenue growth for the eighth consecutive year".
Following the completion of Reebok acquisition (in the first quarter of 2006), Adidas reduced net borrowing by about EUR 1.2 billion. Financial leverage at the end of 2007 was 58.4%. "We now make a more aggressive shareholder return flexible." All dividends increase by 19%, "In 2008, we will return more to shareholders than ever."
Interestingly, Adidas has many styles. "Herbert Hainer (formerly Procter & Gamble) joined Adidas in Germany in 1987, joined the board of directors in 1997, and joined the board of directors in 1997, in 2001, became CEO. Vice-Chairman of the Supervisory Board of FC Bayern München AG.
The organization was led by three major departments:
- AdidAs (69% of the group's sales). Sports performance … in order to support athletes in all sports, sport performance includes four main categories: running, football, basketball and training. "It's designed to be done." Technological innovation and commitment to performance are the cornerstones of this division.
In Sport Style, the adidas sports style division is one of the leading suppliers of authentic sports life styles with the original.
- … In 2007, former divisions sported heritage and sport style into a single group
- tAYloRMAde-AdidAs Golf (8% 1) Group Sales) Taylormade … is a leader in the industry and the number one metal wood box. And AdidaS Golf
- Reebok (23% of group sales). Reebok is an American-inspired, global brand that creates and distributes sports and lifestyle products that build on a strong heritage and credibility in sports, fitness and women's categories. Other brands: Reebok-ccm Hockey and Rockport.
During the financial years, the highest growth rates during the Olympic years (2004, 2000, 1996) and probably in 2008