• Group Business Performance 
• Business Performance by Segments 
  • adidas Business Performance 
  • Reebok Business Performance 
  • TaylorMade-adidas Golf Business Performance 
• Risk and Opportunity Report 
• Subsequent Events 
• Outlook 

adidas Business Performance

In 2007, sales growth in the adidas segment exceeded Management’s initial expectations, while profitability developed in line with expectations. Currency-neutral sales in the adidas segment increased 12 %. In euro terms, sales grew 7 % to € 7.113 billion in 2007 from € 6.626 billion in 2006. Gross margin increased 1.2 percentage points to 47.4 % (2006: 46.2 %), mainly driven by the realization of cost synergies related to the Reebok acquisition and own-retail expansion. Gross profit grew 10 % to € 3.370 billion in 2007 from € 3.059 billion in 2006. As a result of the positive gross margin development, which more than offset a slight increase in operating expenses as a percentage of sales, operating margin increased 1.0 percentage points to 12.9 % (2006: 11.9 %). Operating profit increased 17 % to € 920 million in 2007 versus € 788 million in 2006.

 

ADIDAS AT A GLANCE
€ in millions

	2007	2006	Change
Net sales	7,113	6,626	7 %
Gross profit	3,370	3,059	10 %
Gross margin	47.4 %	46.2 %	1.2 pp
Operating profit	920	788	17 %
Operating margin	12.9 %	11.9 %	1.0 pp

 

ADIDAS NET SALES BY QUARTER € in millions

 

adidas 2007 Net Sales by Division

TRANSFER OF LICENSED BUSINESSES HAS ONLY MINOR IMPACT ON OPERATIONAL PERFORMANCE
The transfer of the NBA and Liverpool licensed businesses from Reebok to brand adidas in the first half of 2006 had only a minor effect on sales growth in the adidas segment. Sales related to these businesses accounted for around one percentage point of total sales growth in the adidas segment.

CURRENCY-NEUTRAL SEGMENT SALES GROW 12 %
Revenues for the adidas segment grew 12 % on a currency-neutral basis. This development clearly exceeded Management’s initial expectation of a mid-single-digit sales increase. Both apparel and footwear revenues increased strongly. Hardware sales, however, declined. Currency translation effects negatively impacted segment revenues in euro terms. Sales grew 7 % to € 7.113 billion in 2007 from € 6.626 billion in 2006.

ADIDAS DIVISIONS REALIGNED
During 2007, adidas realigned its business into two divisions.  see adidas Strategy The Sport Performance division accounted for 80 % of adidas sales (2006: 78 %). The Sport Style division, which merged our Sport Heritage and Sport Style activities to sharpen brand image and improve consumer targeting in sports lifestyle, comprised 20 % of segment sales (2006: 22 %).

SPORT PERFORMANCE UP 14 % ON A CURRENCY-NEUTRAL BASIS
Sales in the Sport Performance division increased 14 % on a currency-neutral basis in 2007. The key categories identified by brand management as medium-term growth drivers  see adidas Strategy contributed the majority of this increase, with particularly strong growth in the running and training categories. In euro terms, Sport Performance sales improved 10 % in 2007 to € 5.608 billion from € 5.100 billion in the prior year.