Adidas Ag · XETR:ADS
Adidas — 15th German Corporate Conference 2016
41 slides from Adidas's conference presentation, Jan 18, 2016
Slide 1: 15th German Corporate Conference
15 GERMAN TH CORPORATE CONFERENCE FRANKFURT – JANUARY 18-20, 2016
Slide 2: Stellar Performance in 2015
STELLAR PERFORMANCE IN 2015 TOP-LINE MOMENTUM ACCELERATES IN Q3 GROUP SALES INCREASE 13% CURRENCY-NEUTRAL OR 18% IN EURO TERMS TO € 4.8 BILLION ADIDAS BRAND UP 14% CURRENCY-NEUTRAL WITH DOUBLE-DIGIT INCREASES IN MOST REGIONS REEBOK WITH 10TH CONSECUTIVE QUARTER OF GROWTH DRIVEN BY DOUBLE-DIGIT GROWT
Slide 3: Broad-Based Top-Line Momentum in 2015
BROAD-BASED TOP-LINE MOMENTUM IN 2015 SALES INCREASE IN NEARLY ALL REGIONS IN Q3 NORTH AMERICA +6% RUSSIA/CIS -7% JAPAN +6% WESTERN EUROPE +18% GREATER CHINA +15% MEAA +14% LATIN AMERICA +20% 1) CURRENCY-NEUTRAL. FIGURES REFLECT COMBINED REVENUES OF THE ADIDAS AND REEBOK BUSINESSES.
Slide 4: Western Europe
STRONG BRAND MOMENTUM WESTERN SALES UP 18% CURRENCY-NEUTRAL IN Q3 DOUBLE-DIGIT SALES GROWTH IN MOST OF THE EUROPE REGION‘S MAJOR MARKETS STRONG SALES GROWTH AT ADIDAS (+19%) FUELLED BY DOUBLE-DIGIT SALES INCREASES IN FOOTBALL AND AT ADIDAS ORIGINALS REEBOK SALES UP 6% CURRENCY-NEUTRAL CONTINUED HARM
Slide 5: North America
REPOSITIONING OF ADIDAS AND REEBOK CONTINUES NORTH CURRENCY-NEUTRAL SALES INCREASE 6% IN Q3 REVENUES AT ADIDAS UP 11%, DRIVEN BY DOUBLE-DIGIT AMERICA GROWTH IN THE RUNNING AND FOOTBALL CATEGORIES AS WELL AS AT ADIDAS ORIGINALS REEBOK SALES DECREASE 11%, WITH DECLINES IN MOST CATEGORIES SALES INCREAS
Slide 6: Greater China
STRONG PRESENCE AND VERY ASPIRATIONAL BRAND PERCEPTION GREATER CURRENCY-NEUTRAL SALES GROW 15% IN Q3 DOUBLE-DIGIT INCREASES AT ADIDAS AND STRONG CHINA IMPROVEMENTS AT REEBOK ADIDAS SALES GROW 14%, DRIVEN BY STRONG DOUBLE- DIGIT SALES INCREASES IN KEY PERFORMANCE CATEGORIES AS WELL AS AT ADIDAS ORIGI
Slide 7: Russia/CIS
CLEAR MARKET LEADERSHIP DESPITE ONGOING MACROECONOMIC CHALLENGES RUSSIA/ PRO-ACTIVE TACTICAL PRICING IN RETAIL ENVIRONMENT SALES DOWN 7% CURRENCY-NEUTRAL IN Q3 CIS CURRENCY-NEUTRAL SALES DECLINES AT BOTH ADIDAS (-7%) AND REEBOK (-4%) OPERATING EXPENSES DOWN 29%, PRIMARILY DUE TO LOWER OPERATING OVER
Slide 8: adidas and Reebok Enjoy Strong Momentum
ADIDAS AND REEBOK ENJOY STRONG MOMENTUM Q3 2015 CHANGE 9M 2015 CHANGE NET SALES (€ IN MILLIONS) 4,007 +14%1) 10,540 +11%1) GROSS MARGIN 47.9% +1.6pp 47.9% +1.0pp NET SALES (€ IN MILLIONS) 476 +3%1) 1,295 +6%1) GROSS MARGIN 38.9% +1.6pp 39.4% +0.9pp 1) CURRENCY-NEUTRAL.
Slide 9: Originals
ONGOING BRAND HEAT SUPPORTED BY KEY FRANCHISES AND PARTNERSHIPS ORIGINALS SALES GROW 33% CURRENCY-NEUTRAL IN Q3 DOUBLE-DIGIT INCREASES IN ALL MARKETS EXCEPT RUSSIA/CIS ONGOING ROBUST SALES MOMENTUM IN MAIN FRANCHISES SUCH AS SUPERSTAR, ZX FLUX AND STAN SMITH
Slide 10: Football
STRONG MOMENTUM IN FOOTWEAR AND APPAREL FOOTBALL CURRENCY-NEUTRAL SALES GROW 19% IN Q3 DOUBLE-DIGIT SALES INCREASES IN MOST MARKETS ONGOING SUCCESS AROUND ‘ACE’ & ‘X’ REVENUES IN FOOTBALL APPAREL GROW AT DOUBLE-DIGIT RATES, REFLECTING THE SUCCESSFUL LAUNCH OF PARTNERSHIPS
Slide 11: Running
FURTHER EXPANSION OF BOOST FRANCHISE RUNNING CURRENCY-NEUTRAL RUNNING SALES UP 9% IN Q3, DRIVEN BY INCREASES IN MOST MARKETS DOUBLE-DIGIT GROWTH IN NORTH AMERICA, GREATER CHINA AND JAPAN FOOTWEAR REVENUES INCREASE AT A DOUBLE-DIGIT RATE 8 MILLION PAIRS OF BOOST RUNNING SHOES SOLD IN FIRST NINE MONTH
Slide 12: Reebok
10TH CONSECUTIVE QUARTER OF GROWTH REEBOK CURRENCY-NEUTRAL REEBOK REVENUES UP 3% IN Q3 DOUBLE-DIGIT INCREASES IN KEY MARKETS SUCH AS LATIN AMERICA, MEAA AND JAPAN DOUBLE-DIGIT GROWTH IN THE STUDIO CATEGORY AS WELL AS IN CLASSICS REVENUES IN NORTH AMERICA IMPACTED BY STREAMLINING OF FACTORY OUTLET BU
Slide 13: TMAG
REPOSITION TAYLORMADE AS AN INNOVATIVE LEADER IN THE GOLF MARKET TMAG Q3 REVENUES UP 6% CURRENCY-NEUTRAL, REFLECTING EASIER COMPARISONS AND FIRST OPERATIONAL PROGRESS STRATEGIC REVIEW OF GOLF BUSINESS CONTINUES TURNAROUND PLAN FOCUSING ON IMPROVEMENTS IN MANUFACTURING, ASSEMBLY, MARGIN AND MARKETING
Slide 14: Group Operating Profit Up 26% in Q3
GROUP OPERATING PROFIT UP 26% IN Q3 Q3 2015 9M 2015 GROSS PROFIT +20% € 2,304 MILLION +17% € 6,202 MILLION GROSS MARGIN +1.0pp 48.4% +0.1pp 48.6% OPERATING PROFIT +26% € 505 MILLION +19% € 1,101 MILLION OPERATING MARGIN +0.7pp 10.6% +0.2pp 8.6% NET INCOME ATTRIBUTABLE TO SHAREHOLDERS +20% € 337 MILL
Slide 15: Outlook
OUTLOOK
Slide 16: Outlook Increased
FY 2015 OUTLOOK INCREASED INITIAL GUIDANCE1) UPDATED GUIDANCE2) GROUP SALES MID-SINGLE-DIGIT HIGH-SINGLE-DIGIT (CURRENCY-NEUTRAL) INCREASE INCREASE GROSS 47.5% 48.0% MARGIN TO 48.5% TO 48.5% OPERATING BETWEEN 6.5% BETWEEN 6.5% MARGIN3) AND 7.0% AND 7.0% NET INCOME FROM TO INCREASE AT A TO INCREASE A
Slide 17: Futurecraft: 3D-Printed Running Shoe Midsole
FUTURECRAFT 3D-PRINTED RUNNING SHOE MIDSOLE
Slide 18: Futurecraft: Exploring Leather Manufacturing
FUTURECRAFT EXPLORING LEATHER MANUFACTURING
Slide 19: Football: UEFA EURO 2016 Creates Excitement
FOOTBALL UEFA EURO 2016 CREATES EXCITEMENT
Slide 20: Running: Double-Digit Growth in 2016
RUNNING DOUBLE-DIGIT GROWTH IN 2016
Slide 21: Originals: NMD
ORIGINALS WELCOMING NEW MEMBER OF THE FOOTWEAR FAMILY N M D
Slide 22: Yeezy Boost 350 Tan
ORIGINALS KANYE WEST AND ADIDAS ORIGINALS YEEZY BOOST LAUNCH SIXTH FOOTWEAR MODEL 350 TAN
Slide 23: Ongoing Focus on the U.S.
ONGOING FOCUS ON THE U.S. STRONG INVESTMENTS IN BRAND-BUILDING ACTIVITIES AND POINT-OF-SALE ACTIVATION
Slide 24: Reebok: Continuing to Pursue Fitness Path
REEBOK CONTINUING TO PURSUE FITNESS PATH 24
Slide 25: TMAG: Strong Product Assortment for 2016
TMAG STRONG PRODUCT ASSORTMENT FOR 2016
Slide 26: Gross Margin Development 2016
GROSS MARGIN DEVELOPMENT 2016 SEVERAL MITIGATION INITIATIVES TO COMPENSATE DECLINE OF FOR THE MAJORITY OF MACROECONOMIC HEADWINDS 50 – 100 BPS SOURCING FX/HEDGING BRAND/MARKET GROUP GM 2015 INPUT EFFICIENCIES FOREIGN HEDGING PRICING MIX TMAG GM 2016 COSTS EXCHANGE EFFECTS EFFECTS 26
Slide 27: Operating Margin Development 2016
OPERATING MARGIN DEVELOPMENT 2016 TO REMAIN AT LEAST STABLE COMPARED TO 2015 LEVEL, DRIVEN BY AT LEAST STABLE SIGNIFICANT OPERATING OVERHEAD LEVERAGE OM 2015 GROSS MARKETING OOH OM 2016 MARGIN INVESTMENTS LEVERAGE 27
Slide 28: Our Strategy: Creating the New, Open Source
OUR STRATEGY FOR CREATING THE NEW FOCUS ON DRIVING BRAND DESIRABILITY OPEN SOURCE TOP-LINE & MARKET SHARE GROWTH BRAND GROSS MARGIN DESIRE EXPANSION OPERATING LEVERAGE
Slide 29: Marketing Investments 2016
MARKETING INVESTMENTS 2016 FURTHER LEVERAGING STRONG BRAND MOMENTUM 13-14% Sports Marketing Brand Marketing 13-14% 13.2% 12.8% 12.1% 12.6% CAGR (‘10-’14) Brand Marketing 8% 13.3% <50% <50% 50% 54% 50% 52% 49% CAGR (‘10-’14) Sports Marketing 6% 2010 2011 2012 2013 2014 2015 2016 29
Slide 30: Investment Priorities and Aspirations
INVESTMENT PRIORITIES AND ASPIRATIONS FOCUS ON BRAND MARKETING 1 2 3 4 REASON REASON BRAND SPORTS TO BELIEVE TO BUY ADVOCACY MARKETING FOCUS < BY45% 2020 30
Slide 31: Operating Overhead Leverage
OPERATING OVERHEAD LEVERAGE FOUNDATION LAID WITH ROUTE 2015 Quality of Focus distribution categories Brand eCommerce leadership expansion Above-market Retail services productivity Focus on key Warehouse product franchises consolidation Infrastructure Organisational modernisation set-up Range reducti
Slide 32: Operating Overhead Leverage: Accelerating Initiatives
OPERATING OVERHEAD LEVERAGE ACCELERATING INITIATIVES TO SPUR OPERATING OVERHEAD LEVERAGE Quality of Focus distribution categories Brand eCommerce leadership expansion Above-market Retail services productivity Focus on key Warehouse product franchises consolidation Infrastructure Organisational moder
Slide 33: Focused Organisation
FOCUSED ORGANISATION BRAND LEADERSHIP FOOTBALL RUNNING BASKETBALL TRAINING OUTDOOR HBS ORIGINALS STYLE DIGITAL SPORTS STRATEGY FUTURE CREATIVE DIRECTION BRAND MGT CTC 33
Slide 34: Focus Categories
FOCUS CATEGORIES EFFICIENT RESOURCE ALLOCATION LEAD GROW AMPLIFY AUTHENTICATE #1 IN EVERY MARKET DRAMATIC MARKET LARGEST BUSINESS REGIONAL PLAYERS/ SHARE GAINS IN EVERY MARKET GROWTH ENGINES FOOTBALL RUNNING TRAINING BASKETBALL, HEARTBEAT ORIGINALS NEO SPORTS, DIGITAL, OUTDOOR 34
Slide 35: Focus on Key Franchises
FOCUS ON KEY FRANCHISES 30% OF FOOTWEAR REVENUES BY 2017 35
Slide 36: eCommerce: 2 Billion Euro by 2020
ECOM PERSONALISED INTERACTION EUR PRODUCT-LED EXPERIENCE 600 MILLION BY 2020 PRODUCT AVAILABILITY AND EXCLUSIVITY LEVERAGE OMNI-CHANNEL CAPABILITIES 2 BILLION 36
Slide 37: Concept Store Productivity
CONCEPT STORE PRODUCTIVITY NS/SQM – EXCL. RUSSIA/CIS +7% 2015 - 2020 NEW SERVICE PHILOSOPHY BETTER ASSORTMENT AND RANGE PLANNING IMPROVED FOCUS ON STAFF TRAINING CAGR OMNI-CHANNEL CAPABILITIES 37
Slide 38: Mean More by Doing Less
MEAN MORE BY DOING REDUCE BY LESS 25% 38
Slide 39: Outlook 2016
GROUP SALES TO INCREASE OUTLOOK AT A HIGH-SINGLE-DIGIT RATE OUTLOOK 2016 GROSS MARGIN DECLINE TO BE LIMITED TO BETWEEN 50 AND 100 BASIS POINTS 2016 SIGNIFICANT REDUCTION OF OPERATING EXPENSES AS A PERCENTAGE OF SALES OPERATING PROFIT TO GROW AT A HIGH-SINGLE-DIGIT RATE OPERATING MARGIN TO REMAIN AT
Slide 40: Q&A
Q&A
Slide 41: Thank You
adidas G.R:0.U. P.