Herbert Hainer, adidas Group CEO, has confirmed and reinforced adidas Group’s long-term financial targets as outlined in its strategic business plan ‘Route 2015’. Under the strategic plan, by 2015, adidas wants to achieve global sales of €17 billion and a sustainable operating margin of 11%.
“We have made great progress since we introduced our Route 2015 ambitions in November 2010,” Hainer noted.
“Everything I have seen over the past 20 months has only reinforced my confidence that Route 2015 will be an overwhelming success. While the first two years of our execution were marked by exceptional sales momentum we will now focus and deliver even stronger on improving the profitability of our group.”
The adidas brand will continue to be the engine of the adidas Group with projected 2015 sales of €12.8 billion. This marks a 5% increase from the original target of €12.2 billion announced in November 2010.
The adidas Sport Performance sales target is now €8.9 billion (up from €8.5 billion) as ‘record-breaking football sales, tremendous momentum in basketball and an unprecedented product pipeline in running provide a strong backbone for future growth.’
adidas Sport Style is expected to grow to €3.9 billion (up from €3.7 billion) due to the ‘unmatched global resonance of Originals with the lifestyle consumer and solid momentum in the adidas NEO label.’
Other Businesses (TaylorMade-adidas Golf, Rockport, Reebok-CCM Hockey) are already set to achieve their Route 2015 goals in 2012 and are therefore now expected to contribute €2.2 billion (up from €1.8 billion) in sales by 2015.
At the Reebok brand, the adidas Group will continue to position Reebok as the fitness brand that caters to all major fitness categories, whether it is group activities such as CrossFit, fitness running, gym, yoga or dance.
Going forward, the global marketing organisation of Reebok will be organised in Business Units that build products and concepts for these respective fitness categories and for Classics.
Following the strategic decision not to renew the previous NFL licence, a change in reporting of NHL-related licence sales and the adidas Group’s focus on margin and operational efficiency, Reebok’s 2015 sales target is now reduced to €2 billion from €3 billion (about one third of the reduction relates to NFL- and NHL-related sales).
Matt O’Toole, Chief Marketing Officer of Reebok said, “Our razor-sharp focus on fitness will allow us to capture the hearts and minds of all fitness enthusiasts worldwide. Our new category structure will already bring more focus and a deeper product offering and will provide better commercial opportunities as we turn the corner into 2013.”
The group’s three key attack markets North America, Greater China as well as Russia/CIS are expected to contribute 50% of the sales growth within the Route 2015 strategic business plan.
In North America, the adidas brand currently enjoys strong momentum, with 2012 set to be the third consecutive year of delivering double-digit sales growth, fuelled by adidas Originals, basketball, American football and running.
Patrik Nilsson, President of adidas North America said “We have almost doubled our market share in the last three years by focusing on the next generation athlete. But this is just the beginning. This market continues to offer huge potential to us.”
For the full year 2012, the adidas Group continues to forecast new record sales and earnings. Currency-neutral sales are projected to increase at a rate approaching 10% versus 2011, with earnings per share expected to grow 15% to 17% (€770 million to €785 million). The adidas Group’s operating margin is forecasted to increase to a level approaching 8%.
Herbert Hainer added, “By leveraging quality growth to generate higher-margin sales and keeping tight control of our operating expenses, we are confident to add approximately 1 percentage point to our operating margin per annum starting in 2013 – showing clearly that we are on track to reach our 11% operating margin goal by 2015.
The adidas Group has never been in better shape and as we journey on Route 2015 we will continue to unlock significant value by sustaining our legacy as a global powerhouse in the sporting goods industry.”