• DEUTSCH

Group gross margin improves 2.4 percentage points

The gross margin of the adidas Group increased 2.4 percentage points to 47.8% in 2010 (2009: 45.4%) see  15  . This development was mainly due to lower input costs, less clearance sales and a larger share of higher-margin Retail sales. As a result, gross profit for the adidas Group grew 22% in 2010 to € 5.730 billion versus € 4.712 billion in the prior year see  14.

Royalty and commission income grows

Royalty and commission income for the adidas Group increased 16% to € 100 million in 2010 from € 86 million in the prior year. On a currency-neutral basis, royalty and commission income was up 12%, mainly as a result of higher licensee sales. New licensee partnerships also had a positive effect on the Group’s royalty and commission income.

Other operating income increases 10%

Other operating income includes items such as gains from the disposal of fixed assets and releases of accruals and provisions. In 2010, other operating income increased 10% to € 110 million (2009: € 100 million), mainly due to the settlement of a lawsuit and the divestiture of a trademark.

Other operating expenses as a percentage of sales down 0.2 percentage points

Other operating expenses, including depreciation and amortisation, consist of items such as sales working budget, marketing working budget and operating overhead costs. In euro terms, other operating expenses increased 15% to € 5.046 billion in 2010 (2009: € 4.390 billion), as a result of the expansion of the Group’s own-retail activities and higher marketing expenditure see  17. However, other operating expenses as a percentage of sales decreased 0.2 percentage points to 42.1% in 2010 from 42.3% in 2009 see  18.

Sales working budget increases as a percentage of sales

Sales working budget consists of expenses to support the Group’s sell-through development. Expenditures relate to advertising and promotion initiatives at the point of sale as well as store fittings and furniture. As sales working budget expenses are channel-specific, they are allocated to the Group’s operating segments. In absolute terms, sales working budget expenditures increased 28% to € 308 million in 2010 from € 241 million in the prior year. The Group’s sales working budget as a percentage of sales increased 0.3 percentage points to 2.6% in 2010 (2009: 2.3%), primarily as a result of new store openings to support the Group’s retail expansion see  19. In addition, higher expenditure at the point of sale in connection with the 2010 FIFA World Cup as well as new product launches at the Reebok brand contributed to this development.

	14 Gross profit € in millions

	15 Gross margin in %

	16 Gross margin by quarter in %