TaylorMade-adidas Golf Business Performance
In 2007, sales growth in the TaylorMade-adidas Golf segment exceeded Management’s initial expectations. Profitability developed in line with expectations. TaylorMade-adidas Golf revenues increased 1 % on a currency-neutral basis despite the divestiture of the Greg Norman Collection (GNC) wholesale business in November 2006. In euro terms, segment sales declined 6 % to € 804 million in 2007 from € 856 million in 2006. On a like-for-like basis, however, sales increased 9 %. The segment’s gross margin grew 0.8 percentage points to 44.7 % (2006: 43.9 %) as a result of higher margins in metalwoods and irons. In euro terms, gross profit declined 4 % to € 360 million in 2007 from € 376 million in the prior year. The segment’s operating margin decreased 0.4 percentage points to 8.1 % (2006: 8.5 %). This was due to higher operating expenses as a percentage of sales, which more than offset the positive gross margin development. As a result, operating profit decreased 10 % to € 65 million from € 73 million in 2006.
TAYLORMADE-ADIDAS GOLF AT A GLANCE
€ in millions
| 2007 | 20061) | Change | |
| Net sales | 804 | 856 | (6 %) |
| Gross profit | 360 | 376 | (4 %) |
| Gross margin | 44.7 % | 43.9 % | 0.8 pp |
| Operating profit | 65 | 73 | (10 %) |
| Operating margin | 8.1 % | 8.5 % | (0.4 pp) |
1) Including Greg Norman apparel business from February 1, 2006 to November 30, 2006.
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TAYLORMADE-ADIDAS GOLF NET SALES BY QUARTER1) € in millions |
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| 1) | Including Greg Norman apparel business from February 1, 2006 to November 30, 2006. |
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TAYLORMADE-ADIDAS GOLF 2007 NET SALES BY PRODUCT |
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| 1) | Includes irons, putters, golf balls, golf bags, gloves and other accessories. |
GNC DIVESTITURE AFFECTS REPORTED RESULTS
Compared
to the prior year, 2007 results of the TaylorMade-adidas Golf
segment do not include results of the GNC apparel business.
This is due to the divestiture of the GNC wholesale business,
which was completed on November 21, 2006. In addition,
results
of the GNC-related retail outlet operations, which were
excluded from the transaction, are now reported in the Reebok
business segment. These operations relate to the distribution
of GNC products via Reebok own-retail stores. The divestiture
had a negative impact on the segment’s sales development.
In total, the GNC apparel business contributed € 63 million of
sales to the TaylorMade-adidas Golf segment in 2006.
CURRENCY-NEUTRAL SALES INCREASE 1 %
Currency-neutral
sales at TaylorMade-adidas Golf in 2007 increased 1 % despite
the divestiture of the GNC wholesale business. On a comparable
basis, excluding prior year GNC sales, revenues increased
9 %. This development was above Management’s initial expectation
of mid-single-digit growth. Underlying adidas Golf
apparel
and footwear revenues grew significantly. Hardware
sales, in particular in the metalwoods category, also increased. 
see TaylorMade-adidas Golf Strategy Currency translation effects
negatively impacted segment revenues
in euro terms. Segment
sales decreased 6 % to € 804 million in 2007 from € 856 million
in 2006.
