adidas AG · XETR:ADS
adidas — MainFirst German & Swiss Conference (November 2013)
51 slides from adidas's conference presentation, Nov 19, 2013
Slide 1: 2013 Nine Months Results
2013 Nine Months Results MainFirst German & Swiss Conference Paris November 19, 2013
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS 2
Slide 3: adidas Group Delivers Solid Performance In 9M
adidas Group Delivers Solid Performance In 9M • Sales remain stable on a currency-neutral basis • Gross margin improves 2.1pp to 49.8% • Operating margin up 0.4pp to 10.5% • Net income and EPS stable • Net borrowings reduced by 47% to € 180 million 3
Slide 4: Emerging Markets Outpace Developed Markets In 9M
Emerging Markets Outpace Developed Markets In 9M (8%) Western Europe (1%) +1% North America European Emerging Markets +7% Greater China +15% +2% Latin America Other Asian Markets Sales development on a currency-neutral basis. 4
Slide 5: Latin America Sees Strong Growth At adidas And Reebok
Latin America Sees Strong Growth At adidas And Reebok • Sales grow 15% currency-neutral in 9M • Double-digit increases in most of the region’s major markets • Ongoing strong momentum in Retail with sales up 27% in 9M 5
Slide 6: Growth In Greater China Accelerates In Q3
Growth In Greater China Accelerates In Q3 • Momentum accelerates with sales growing 9% in Q3 • Comp store sales up 10% currency-neutral • adidas Originals sees strong demand with sales up 23% in Q3 6
Slide 7: Sales In European Emerging Markets Grow 1% In 9M
Sales In European Emerging Markets Grow 1% In 9M • Sales increase 2% in Q3 with growth in most markets • Wholesale up 10% in Q3 • Comp store sales negatively impacted by distribution centre issues 7
Slide 8: Mixed Performance Across Western Europe
Mixed Performance Across Western Europe • Sales in Western Europe decrease 6% currency-neutral in Q3 • Retail up 6% currency-neutral YTD • Running, Basketball and NEO grow at double-digit rates in Q3 8
Slide 9: North America Q3 Sales Impacted Heavily By Golf
North America Q3 Sales Impacted Heavily By Golf • Sales down 5% currency-neutral • Retail sales increase 9% • Momentum in Running up 12% • Reebok returns to growth with sales up 5% currency-neutral 9
Slide 10: Other Asian Markets Up 4% Currency-Neutral In Q3
Other Asian Markets Up 4% Currency-Neutral In Q3 • Sales growth driven by strong increases at Sport Performance and Reebok • Double-digit increases in Training, Running and Basketball • Sales increase driven by growth in India, South Korea and Australia 10
Slide 11: adidas And Reebok Gross Margins Improve Strongly
adidas And Reebok Gross Margins Improve Strongly Q3 2013 Change 9M 2013 Change Net sales (€ in millions) 3,072 0%1) 8,478 0%1) Gross margin 48.7% +2.1pp 48.4% +2.1pp Net sales (€ in millions) 439 +5%1) 1,172 (1%)1) Gross margin 40.4% +6.4pp 39.8% +5.0pp 1) Currency-neutral. 11
Slide 12: Momentum Continues In Running Across All Regions
Momentum Continues In Running Across All Regions • Running sales up 13% in Q3 • Strong momentum across all geographies • Boost and Springblade most successful running launch ever 12
Slide 13: Growth In Basketball Driven By Strong Apparel Offering
Growth In Basketball Driven By Strong Apparel Offering • Basketball up 3% currency- neutral in 9M • Apparel up high-single-digits • Derrick Rose back on court, introducing his new signature collection 13
Slide 14: adidas Originals Sales Increase 2% In 9M
adidas Originals Sales Increase 2% In 9M • Sales in Action Sports up over 60% • Strong momentum in Emerging Markets • Successful hype launches (e.g. Mutombo and Big Sean Pro Model) 14
Slide 15: adidas NEO Propels Sport Style Up 11% In Q3
adidas NEO Propels Sport Style Up 11% In Q3 • adidas NEO label up 15% in Q3 and 12% YTD • Strong double-digit growth in Russia • Global Selena Gomez collection launched 15
Slide 16: Reebok Sales Up 3% YTD Excluding NFL Impact
Reebok Sales Up 3% YTD Excluding NFL Impact • Reebok sales up 5% currency-neutral in Q3 • Strong momentum in Fitness Training and Studio • Strong brand demand in Other Asian Markets and Latin America 16
Slide 17: Reebok Classics Up Strong Double-Digits YTD
Reebok Classics Up Strong Double-Digits YTD • Reebok Classics increase 21% in Q3 • Shaqnosis US release major success • First Reebok Classics store opened in South Korea 17
Slide 18: TMaG Negatively Impacted By Softness In Golf Market
TMaG Negatively Impacted By Softness In Golf Market • TMaG sales down 2% currency-neutral YTD • Significant margin hit to rebalance inventories • TMaG introduces new SLDR driver and SpeedBlade iron during Q3 18
Slide 19: 9M Group Gross Margin Improves 2.1pp
9M Group Gross Margin Improves 2.1pp Q3 2013 9M 2013 • Pricing and favourable Wholesale 43.9% 43.3% product mix +2.7pp +2.7pp • Overproportionate growth in Retail 61.5% 62.6% emerging markets +2.5pp +1.6pp • Larger share of higher-margin Other Businesses 35.3% 41.6% Retail sales (7.4pp) (2.4pp) 49.3
Slide 20: 9M Group Operating Margin Increases 0.4pp
9M Group Operating Margin Increases 0.4pp Q3 2013 9M 2013 Royalty and commission income € 27 million € 78 million (1%) (1%) Other operating income € 59 million € 106 million +80% (32%) Other operating expenses € 1,536 million € 4,515 million (1%) +0% Other operating expenses 39.6% 41.0% as a percent
Slide 21: Net Income Remains Stable In 9M
Net Income Remains Stable In 9M Q3 2013 9M 2013 Financial income € 5 million € 15 million (56%) (49%) Financial expenses € 26 million € 67 million (1%) (21%) Income tax rate 28.0% 27.7% (0.3pp) (0.1pp) Net income attributable to € 316 million € 796 million shareholders (8%) (0%) Diluted earnings per
Slide 22: Q3 Wholesale Segmental Operating Margin Up 3.2pp
Q3 Wholesale Segmental Operating Margin Up 3.2pp Wholesale Q3 2013 Change 9M 2013 Change Net sales (€ in millions) 2,553 (1%)1) 7,048 (2%)1) Gross margin 43.9% +2.7pp 43.3% +2.7pp Segmental operating margin 36.3% +3.2pp 34.8% +2.8pp 1) Currency-neutral. 22
Slide 23: Retail Trends Remain Solid In Most Markets
Retail Trends Remain Solid In Most Markets Retail Q3 2013 Change 9M 2013 Change Net sales (€ in millions) 923 +6%1) 2,512 +6%1) adidas comp store sales (2)%1) (1)%1) Reebok comp store sales (7)%1) (4)%1) Total comp store sales (3)%1) (2)%1) Gross margin 61.5% +2.5pp 62.6% +1.6pp Segmental operating
Slide 24: Retail Store Roll-Out Continues At Accelerated Pace
Retail Store Roll-Out Continues At Accelerated Pace • 2,611 stores operated at quarter-end • Net openings of 69 stores in Q3, 165 in 9M • 127 new stores opened, 58 stores closed, 31 stores remodelled in Q3 • 1,483 adidas and 369 Reebok branded; 759 factory outlets 24
Slide 25: Other Businesses Decline 1% Currency-Neutral In 9M
Other Businesses Decline 1% Currency-Neutral In 9M Other Businesses Q3 2013 Change 9M 2013 Change Net sales (€ in millions) 403 (9%)1) 1,453 (1%)1) Gross margin 35.3% (7.4pp) 41.6% (2.4pp) Segmental operating 17.2% (8.9pp) 26.2% (2.5pp) margin 1) Currency-neutral. 25
Slide 26: Operating Working Capital As A Percentage Of Sales
Operating Working Capital As A Percentage Of Sales Negatively Impacted By The Increase In Inventories 22 • Inventories increase 12% 21 on a currency-neutral basis 20.6 • Receivables up 2% on a 20.3 20.3 currency-neutral basis 20 20.0 19.9 20.0 • Payables increase 12% on a currency-neutral basis 19 Q
Slide 27: Net Borrowings Decline 47%
Net Borrowings Decline 47% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 448 • Net borrowings reduced by € 157 million to € 180 million 300 • Ratio of net borrowings/EBITDA decreases to 0.1 (2012: 0.2) • Equity ratio increases 0.8pp -100 to 49.3% (2012: 48.6%) (94) (180) (180) (318) (337) -500 Net borrowings
Slide 28: Strategic Initiatives and Outlook
STRATEGIC INITIATIVES AND OUTLOOK 28
Slide 29: adidas Gearing Up To Launch Federation Jerseys
adidas Gearing Up To Launch Federation Jerseys 29
Slide 30: adidas Introduces The Samba Collection
adidas Introduces The Samba Collection 30
Slide 31: adidas Running To Maintain Double-Digit Pace
adidas Running To Maintain Double-Digit Pace 31
Slide 32: adidas Revolutionises Smart Running
adidas Revolutionises Smart Running 32
Slide 33: adidas Debuts New On-Court NBA Collection
adidas Debuts New On-Court NBA Collection 33
Slide 34: Turning Up The Heat With Hollow Fibre ClimaWarm+
Turning Up The Heat With Hollow Fibre ClimaWarm+ 34
Slide 35: Reebok Ramping Up FitHub Expansion
Reebok Ramping Up FitHub Expansion • Reebok FitHubs provide a new consumer fitness experience • Rolling out concept to major cities around the world 35
Slide 36: Reebok To Continue Bringing New Energy To Classics
Reebok To Continue Bringing New Energy To Classics 36
Slide 37: adidas Group Well Positioned To Increase Momentum
adidas Group Well Positioned To Increase Momentum • Strong demand for highlight concepts and innovations • 2014 FIFA World Cup initiatives • Organisational measures in place to drive efficiencies 37
Slide 38: adidas Group Confirms 2013 Full Year Outlook
adidas Group Confirms 2013 Full Year Outlook Group sales (currency-neutral) low-single-digit increase Wholesale sales (currency-neutral) low-single-digit increase Retail sales (currency-neutral) high-single-digit increase Other Businesses sales (currency-neutral) low- to mid-single-digit increase Gr
Slide 39: adidas Group
adidas GROUP 39
Slide 40: Route 2015 Financial Milestones
Route 2015 Financial Milestones
Slide 41: Revised Sales Targets For Global Brands
Revised Sales Targets For Global Brands 2010 OLD NEW 41
Slide 42: Brand Architecture – Portfolio Strategy
Brand Architecture – Portfolio Strategy 8% 14% 22% 14% 26% 10% 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 42
Slide 43: Brand Architecture – Business Reality
Brand Architecture – Business Reality 8% 14% 22% 14% 26% 10% 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 43
Slide 44: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better COOLER FASTER STRONGER NATURAL SMARTER 44
Slide 45: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 12 - 19 YEARS 16 - 24 YEARS 24 - 36 YEARS 35+ YEARS FOR THE FROM THE FOR THE OUTWARDLY FOR THE STYLE-ADOPTING TRENDSETTER CONFIDENT, SOPHISTICATED, HIGH SCHOOL KID TO THE FORWARD- ACTIVE MAN MAINSTREAM KID THINKING INDIVIDUAL 45
Slide 46: Reebok Building Sustainable Fitness Categories
Reebok Building Sustainable Fitness Categories 46
Slide 47: Building Strong Fitness Consumer Network
Building Strong Fitness Consumer Network 47
Slide 48: Well On Track To Deliver 11% Operating Margin By 2015
Well On Track To Deliver 11% Operating Margin By 2015 Quality of distribution Emerging Market Manufacturing growth excellence Retail Performance proficiency driven Trade Terms Organisational Infrastructure set-up modernisation Range reduction 48
Slide 49: IR And Media App – Available For iPhone And iPad
IR And Media App – Available For iPhone And iPad Investor Relations and Media App 49
Slide 50: Questions & Answers
QUESTIONS & ANSWERS 50
Slide 51: Upcoming Event Dates
Upcoming Event Dates Dec 2-3, 2013 Investor Field Trip, Herzogenaurach Mar 5, 2014 Full Year 2013 Results May 6, 2014 First Quarter 2014 Results May 8, 2014 Annual General Meeting May 9, 2014 Dividend Payment1) Aug 7, 2014 First Half 2014 Results 1) Subject to Annual General Meeting Approval. 51
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