Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (November 2014)
47 slides from Adidas's roadshow presentation, November 2014
Slide 1: Roadshow Presentation November 2014 – January 2015
Roadshow Presentation November 2014 – January 2015
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Slide 3: adidas Group Sales Up 9% Currency-Neutral In Q3
adidas Group Sales Up 9% Currency-Neutral In Q3 3 • adidas and Reebok sales up 12% and 7% in Q3 • Retail sales increase 20% with double-digit growth across all regions • Negative currency effects and weakness in golf continue to weigh on Group earnings • Diluted EPS down 11% to € 1.35
Slide 4: TMaG Negatively Impacted By Weakness In Golf
TMaG Negatively Impacted By Weakness In Golf 4 Golf Market • Currency-neutral sales decline 29% in the first nine months of 2014 • Operating profit negatively impacted by around € 150 million YTD • Ongoing measures to clean inventories in the market place • Major elements of restructuring programme
Slide 5: Consumer Sentiment In Russia/CIS Negatively Impacted
Consumer Sentiment In Russia/CIS Negatively Impacted 5 Russia/CIS • Higher promotional activities caused by weakening consumer sentiment • Operating profit negatively impacted by around € 100 million YTD • Accelerating real estate and inventory management initiatives • Further reduction in store net
Slide 6: Currencies Significantly Impact Financial Performance
Currencies Significantly Impact Financial Performance 6 • Around € 550 million negative impact on sales Currencies in the first nine months • Around € 150 million negative impact on Group operating profit in the first nine months
Slide 7: Initiatives To Improve Performance
Initiatives To Improve Performance 7 • Stabilise underperforming areas, particularly at TMaG • Adjust investment to account for current market risks • Reorganisation of roles and responsibilities in marketing and sales organisations • Stack internal and external talent • Next strategic plan to unloc
Slide 8: Strengthen Brand Leadership
Strengthen Brand Leadership 8
Slide 9: Increasing Investment In Brands
Increasing Investment In Brands 9
Slide 10: Sales Increase In Most Regions In Q3
Sales Increase In Most Regions In Q3 10 +10% Western Europe +19% (1%) European Emerging Markets North America +13% Greater China +16% +6% Latin America Other Asian Markets Sales development on a currency-neutral basis.
Slide 11: Retail Comp Store Sales Up In All Regions In Q3
Retail Comp Store Sales Up In All Regions In Q3 11 European Emerging Markets Western +10% +2% Europe +18% North +1% Greater China America +12% +17% Latin Other Asian America Markets
Slide 12: Latin America With Strong Tailwind From FIFA World Cup
Latin America With Strong Tailwind From FIFA World CupTM 12 • Currency-neutral sales grow 16% in Q3 • Double-digit sales increases in all major markets • Revenues at adidas up 17%, driven by double- digit growth in key categories
Slide 13: Ongoing Strong Brand Momentum In Greater China
Ongoing Strong Brand Momentum In Greater China 13 • Currency-neutral sales increase 13% in Q3 • adidas Sport Style grows 32%, driven by double-digit sales increases at adidas Originals and adidas NEO • Revenues in Retail up 32%, supported by the 18% comp store sales increase
Slide 14: European Emerging Markets Up 19% In Q3
European Emerging Markets Up 19% In Q3 14 • Double-digit sales increases for both adidas and Reebok in Q3 • Strong momentum at adidas Sport Performance and adidas Originals & Sport Style • Double-digit sales growth in all of the region’s major markets
Slide 15: Sales In Western Europe Grow 10% In Q3
Sales In Western Europe Grow 10% In Q3 15 • Revenues at adidas and Reebok grow 11% and 13%, respectively • Currency-neutral Retail sales up 29%, driven by double-digit comp store sales increase • Growth at adidas supported by double-digit sales increases in football and running and at adidas NEO
Slide 16: Other Asian Markets Show Robust Performance In Q3
Other Asian Markets Show Robust Performance In Q3 16 • Currency-neutral sales increase 6% in Q3 • Double-digit sales growth at both adidas (+11%) and Reebok (+33%) • Sales growth supported by double-digit increases in South Korea and India
Slide 17: Sales In North America Decline 1% In Q3
Sales In North America Decline 1% In Q3 17 • Sales growth at adidas (+6%) more than offset by double-digit declines at TMaG (-33%) and Reebok (-12%) • Growth at adidas supported by double-digit sales increases in football and running • Retail sales up 15% in 9M, driven by mid- single-digit comp stor
Slide 18: adidas And Reebok With Strong Sales Growth In Q3
adidas And Reebok With Strong Sales Growth In Q3 18 Q3 2014 Change 9M 2014 Change Net sales (€ in millions) 3,364 +12%1) 8,904 +11%1) Gross margin 46.2% (2.4pp) 47.0% (1.4pp) Net sales (€ in millions) 447 +7%1) 1,158 +6%1) Gross margin 37.4% (3.0pp) 38.4% (1.4pp) 1) Currency-neutral.
Slide 19: adidas Football Dominates On And Off The Pitch
adidas Football Dominates On And Off The Pitch 19 Football • Football sales grow 25% currency-neutral in Q3 • Double-digit growth rates in most regions • Footwear, apparel and hardware increase at double-digit rates
Slide 20: Running Growth Rates Accelerate In Q3
Running Growth Rates Accelerate In Q3 20 Running • Running sales accelerate 20% in Q3 • Double-digit sales increases in both apparel and footwear • Strong momentum across all regions • 2 million pairs of Boost sold in Q3
Slide 21: Major Marathon Wins And Counting adizero Adios Boost
27 Major Marathon Wins And Counting adizero Adios Boost
Slide 22: Training Grows Robustly Across All Regions
Training Grows Robustly Across All Regions 22 Training • Currency-neutral sales increase 8% in Q3 • Double-digit sales growth in European Emerging Markets and Latin America • Powerful launch of ClimaHeat product range
Slide 23: Basketball Returns To Growth In Q3
Basketball Returns To Growth In Q3 23 • Revenues increase 4% in Q3 • Apparel sales up 14%, supported by the start of the NBA season • BOOST technology enters basketball with the launch of Crazylight Boost Basketball
Slide 24: Originals Leverages New Product Franchises
Originals Leverages New Product Franchises 24 • adidas Originals grows 9% in Q3 • Double-digit sales growth in European Emerging Markets, Greater China, Other Asian Markets and Latin America • Footwear sales increase 12% during the quarter Originals • Strong launches of Rita Ora and Pharrell William
Slide 25: adidas NEO Revenues Accelerate In Q3
adidas NEO Revenues Accelerate In Q3 25 • Sales increase 33% currency-neutral in Q3 #NEORunway • Footwear, apparel and hardware all up at double-digit rates • Double-digit growth across most regions • Five additional store openings in Western Europe
Slide 26: Reebok Enjoys 6th Consecutive Quarter Of Growth
Reebok Enjoys 6th Consecutive Quarter Of Growth 26 • Sales increase 7% currency-neutral in Q3 • Retail sales grow 11%, with eCommerce sales up 77% • Double-digit growth in most regions • Ongoing strong momentum in Fitness Training (+25%), Walking (+30%) and Studio (+52% )
Slide 27: Group Gross Margin Down 1.3pp In 9M
Group Gross Margin Down 1.3pp In 9M 27 • Overproportionate growth in Q3 2014 9M 2014 emerging markets Wholesale 41.8% 42.3% • More favourable product mix (2.1pp) (0.9pp) Retail 58.1% 59.4% (3.4pp) (3.2pp) • Less favourable hedging rates Other Businesses 35.3% 37.7% • Higher input costs (0.1pp) (3.9p
Slide 28: Group Operating Profit Declines 13% In Q3
Group Operating Profit Declines 13% In Q3 28 Q3 2014 9M 2014 Royalty and commission income € 27 million € 77 million +2% (0%) Other operating income € 19 million € 105 million (68%) (2%) Other operating expenses € 1,594 million € 4,647 million +4% +3% Other operating expenses 38.7% 41.8% as a percen
Slide 29: Diluted EPS Down 11% In Q3
Diluted EPS Down 11% In Q3 29 Q3 2014 9M 2014 Financial income € 5 million € 14 million (15%) (5%) Financial expenses € 12 million € 50 million (55%) (25%) Income before taxes € 397 million € 892 million (10%) (19%) Income tax rate 28.6% 28.8% +0.6pp +1.1pp Net income attributable to € 282 million €
Slide 30: Wholesale Up 8% Currency-Neutral In Q3
Wholesale Up 8% Currency-Neutral In Q3 30 Wholesale Q3 2014 Change 9M 2014 Change Net sales (€ in millions) 2,717 +8%1) 7,159 +6%1) Gross margin 41.8% (2.1pp) 42.3% (0.9pp) Segmental operating margin 34.2% (2.1pp) 34.0% (0.7pp) 1) Currency-neutral.
Slide 31: Retail Sales Increase 20% Currency-Neutral In Q3
Retail Sales Increase 20% Currency-Neutral In Q3 31 Retail Q3 2014 Change 9M 2014 Change Net sales (€ in millions) 1,047 +20%1) 2,799 +21%1) adidas comp store sales +8%1) +10%1) Reebok comp store sales (2%) 1) +0%1) Total comp store sales +6%1) +8%1) Gross margin 58.1% (3.4pp) 59.4% (3.2pp) Segmenta
Slide 32: Retail Store Development
Retail Store Development 32 • 2,822 stores operated at quarter-end • Net increase of 82 stores versus 2,740 at year-end • 277 new stores opened, 195 stores closed, 89 stores remodelled • 1,569 adidas and 426 Reebok branded; 827 factory outlets
Slide 33: Other Businesses Down 12% Currency-Neutral In Q3
Other Businesses Down 12% Currency-Neutral In Q3 33 Other Businesses Q3 2014 Change 9M 2014 Change Net sales (€ in millions) 354 (12%)1) 1,158 (17%)1) Gross margin 35.3% (0.1pp) 37.7% (3.9pp) Segmental operating 15.1% (2.1pp) 18.7% (7.5pp) margin 1) Currency-neutral.
Slide 34: High Focus On Reducing Inventory Growth Rate
High Focus On Reducing Inventory Growth Rate 34 23% • Inventories increase 7% 18% 18% 16% on a currency-neutral basis 13% 13% 12% • Receivables up 7% on a currency-neutral basis 8% 7% • Payables decrease 8% 3% on a currency-neutral basis -2% Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Currency-neutral inventories
Slide 35: Net Borrowings Negatively Impacted By Higher Capital Expenditure
Net Borrowings Negatively Impacted By Higher Capital 35 Expenditure Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 500 448 • Net borrowings increase 295 € 363 million to € 543 million • Ratio of net borrowings/EBITDA 100 increases to 0.4 from 0.1 in 2013 • Equity ratio increases to 52.1
Slide 36: adidas Group Confirms 2014 Full Year Outlook
adidas Group Confirms 2014 Full Year Outlook 36 Group sales (currency-neutral) mid- to high-single-digit increase Wholesale sales (currency-neutral) mid-single-digit increase Retail sales (currency-neutral) low-double-digit increase Other Businesses sales (currency-neutral) double-digit decrease 48.
Slide 37: Strategic Initiatives and Outlook
STRATEGIC INITIATIVES AND OUTLOOK
Slide 38: Crazylight Conquers adidas Football
Crazylight Conquers adidas Football 38
Slide 39: BOOST Integrated In Various Categories
BOOST Integrated In Various Categories 39 • xx • xx
Slide 40: New Signature Lines Redefine Basketball
New Signature Lines Redefine Basketball 40
Slide 41: 3-Stripes Footwear Back In The NFL
3-Stripes Footwear Back In The NFL 41 • New leadership team in place • Added key internal and external talent • Increasing investment in marketing and US Sports, in particular in the NBA and NFL
Slide 42: ClimaHeat Open All Winter Campaign Launches In Q4
ClimaHeat Open All Winter Campaign Launches In Q4 42
Slide 43: adidas Originals With Full Pipeline Of New Products
adidas Originals With Full Pipeline Of New Products 43
Slide 44: Reebok Building On Key Partnerships With New Products
Reebok Building On Key Partnerships With New Products 44
Slide 45: TMaG Unveils RSi Iron
TMaG Unveils RSi Iron 45
Slide 46: Questions & Answers
QUESTIONS & ANSWERS
Slide 47: Upcoming Event Dates
Upcoming Event Dates 47 March 5, 2015 Full Year 2014 Results May 5, 2015 First Quarter 2015 Results May 7, 2015 Annual General Meeting May 8, 2015 Dividend Payment1) August 6, 2015 First Half 2015 Results November 5, 2015 Nine Months 2015 Results 1) Subject to Annual General Meeting Approval.