GROSS MARGIN IMPROVES TO 47.4 %
The adidas gross margin
increased by 1.2 percentage points to 47.4 % in 2007 from 46.2 %
in 2006. This development was in line with Management’s initial
expectation of a gross margin improvement. The increase was
primarily driven by cost synergies resulting from the combination
of adidas and Reebok sourcing activities, which positively
impacted
the segment’s cost of sales. Improvements due to
increased
own-retail activities also contributed to this development.
As a result, adidas gross profit grew 10 % to € 3.370 billion
in 2007 versus € 3.059 billion in 2006.
ROYALTY AND COMMISSION INCOME UP 8 %
In 2007, adidas
royalty and commission income grew by 8 % to € 80 million
from € 74 million in 2006. This increase was a result of higher
external licensee sales. Higher average royalty rates also
supported
growth. In addition, increased intra-Group royalties
received from the TaylorMade-adidas Golf segment due to
strong adidas Golf sales contributed to this development. adidas
royalty and commission income relates, for example, to royalty
income for cosmetics,
watches and glasses.
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ADIDAS GROSS MARGIN BY QUARTER in % |
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ADIDAS OPERATING PROFIT BY QUARTER € in millions |
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OPERATING EXPENSES AS A PERCENTAGE OF SALES GROW
MODESTLY
adidas operating expenses as a percentage of sales
grew 0.2 percentage points to 35.6 % in 2007 (2006: 35.4 %). Higher
operating overhead costs related to the continued expansion
of adidas own-retail activities and one-time costs associated with
the realization of cost synergies from the Reebok acquisition
contributed to this increase. In euro terms, operating expenses
grew 8 % to € 2.530 billion in 2007 from € 2.345 billion in 2006.
OPERATING MARGIN INCREASES TO 12.9 %
In 2007, the adidas
operating margin increased 1.0 percentage points to 12.9 %
(2006: 11.9 %). This development was in line with initial Management
expectations of an operating margin improvement. The
increase was the result of positive gross margin development
in the segment which more than offset slightly higher operating
expenses as a percentage of sales. Operating profit for
the adidas segment increased 17 % to € 920 million versus
€ 788 million during the same period in the prior year.
