Our goal as a Group is to lead the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. We continuously strive to generate consumer excitement and enhance brand profitability by executing a clear strategy. In everything we do, we are focused on strengthening and developing our brands to maximize the Group’s operational and financial performance and create shareholder value.
PERFORMANCE AS CORE GROUP VALUE
Our Group’s mission
and strategy are rooted in our desire to provide athletes
with the best possible equipment to optimize their performance.
This philosophy originated with our brands’ founders
Adi Dassler, J. W. Foster and Gary Adams whose passion for
sport inspired them to develop innovative sports products
and create new sports categories. We aim to consistently
perform at a level where we not only meet but exceed the
expectations of our stakeholders.
We strive to be closer to consumers than any of our competitors,
and our unique understanding of consumers enables
us to enhance their athletic experience. In support of these
efforts, we continuously optimize our sales and distribution
processes and improve our customer service efforts for our
retail partners. We make every effort to align our employees’
personal objectives with our Group and brand targets and
reward our staff for high achievement 
see Employees.
Further, we are particularly focused on ensuring best-practice
social and environmental standards see Sustainability.
A commitment to constantly increase value for our shareholders
is at the core of our activities. This commitment to top performance
differentiates us from other competitors and is a unifying
principle across our multi-brand organization.
LEVERAGING OPPORTUNITIES ACROSS OUR BRAND PORTFOLIO
The strength of our brands is a key factor in our Group’s
success. Within our brand portfolio, we primarily pursue two
strategic options:
Market penetration – gaining market share across all
markets in which we compete, and
Market development – expanding into new markets and
addressing new consumer segments.
Our multi-brand approach allows us to tackle opportunities from several perspectives, as both a mass and niche player, providing distinct and relevant products to a broad spectrum of consumers. In this way, each brand is able to concentrate on its core competencies and excel. Across all brands, we focus on increasing awareness and visibility, providing clear and consistent messaging and supporting product initiatives at the point-of-sale. In addition, our commercial success also depends on leveraging the scale of our organization and sharing best practice across our Group.
LEADING POSITION IN MARKETS WORLDWIDE
As a global
organization, we target leading market positions in all regions
where we compete. In Europe, where our Group is the market
leader in terms of sales, our strategy is two-fold. First, we
continue to strengthen our position in the major Western
European markets by growing our brands through well-coordinated
efforts with key account partners. Secondly, we
are capitalizing on the strong growth opportunities in the
region’s emerging markets (i.e. Eastern Europe, the Middle
East and Africa).
In North America, we see significant upside potential. As a Group, we are number two in terms of sales, but we believe we are currently underrepresented in the North American sporting goods market. Therefore, we target market share expansion via a strong, consumer-driven product offering, a diversified distribution strategy, and visible and engaging communication initiatives.
In Asia, where our Group is the market leader in terms of sales with number one positions in Japan, Korea, India, Thailand, Indonesia and New Zealand, our goal is to strengthen and extend our market leadership position. Our key priority in the medium term is expanding our business in the region’s two most important markets Japan and China. In tandem, we will also continue to capitalize on opportunities in other emerging markets in Asia.
Finally, in Latin America, our Group’s fastest growing region for the last several years, we are focused on rapidly expanding our business in the four most important markets: Brazil, Argentina, Mexico and Chile. Our target is to take over market leadership in terms of sales by 2010.
EXTENDING INNOVATION AND DESIGN LEADERSHIP
We are
determined to address every consumer in a specific and unique
way – with product and communication initiatives that generate
trade and consumer interest. As a result, we believe that technological
innovation and cutting-edge design are essential to
sustainable leadership in our industry.
Innovation plays a significant role in differentiating our product
offering in the minds of consumers. By leveraging the extensive
R&D expertise within our Group see Research and Development,
we continuously challenge the boundaries of functionality and
performance. It is our objective to launch at least one major
new technology or technological evolution per year.
Through design partnerships and collaborations with Stella McCartney, Yohji Yamamoto, Porsche Design and Rolland Berry we are widening our design reach and imbuing our products with the excitement consumers demand. By continually expanding our capabilities in R&D and design, we are able to introduce new products at high price points, thus contributing to Group margin improvement.
CUSTOMIZING DISTRIBUTION
Our Group will drive future success
by engaging consumers with unique interactive product
approaches and rewarding point-of-sale experiences. Our
brands must be competitive in this environment where consumers
make their final purchase decisions based on availability,
convenience and breadth of product offering. As a
result, we are continuously refining our distribution proposition,
concentrating on two areas: expanding controlled space
and improving retail relationships.
Controlled space includes:
Our own-retail business
Mono-branded stores run by retail partners
Shop-in-shops that we establish with our key accounts
Joint ventures with retail partners
Co-branded stores with sports organizations or other
brands
These formats provide us with a high level of brand control as we either manage the stores ourselves (i.e. own retail) or we work closely with our partners (mono-branded stores, shop-in-shops, joint ventures, co-branded stores) to ensure the appropriate product offering and presentation at the point-of-sale. Brand control helps us drive sales and profitability increases and expand our market position. By 2010, we intend to generate at least 30% of our Group’s revenues through controlled space.
Going forward, we will also further differentiate and segment our product offering to align our distribution more closely with a given retailer’s customer base. In addition, we are partnering with retailers to increase the level and quality of sell-through information we receive. This creates a mutually beneficial relationship that will help us become a more valuable and reliable business partner to our retailers.
CREATING SHAREHOLDER VALUE
Sustainable revenue and
operating profit growth are critical to our success. see Internal Group Management System Creating value for our shareholders
through significant free cash flow generation drives
our overall decision-making process. For each of our brands,
we pursue the most value-enhancing avenues for growth,
with particular emphasis on continuously improving profitability.
In addition, rigorously managing working capital and
optimizing financial leverage remain key priorities for us. As
always, we are committed to increasing returns to shareholders
with above-industry-average share price performance
and dividends.