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Adidas and Reebok shine, foresee positive year ahead

By Prachi Singh

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Business |REPORT

Adidas Group currency-neutral sales increased 12 percent in the fourth quarter of 2015. In euro terms, Group revenues grew 15 percent to 4.167 billion euros (4.527 billion dollars). In 2015, Group revenues increased 10 percent on a currency-neutral basis, driven by double-digit growth at Adidas and mid-single-digit increases at Reebok.

“2015 was a very successful year for the Adidas Group. We reached all of our major financial goals and exceeded our initial top- and bottom-line targets. Our 2015 performance is a picture-perfect example of a successful comeback in sport. As a Group, today we are stronger and in better shape than ever before,” said Herbert Hainer, CEO of the Adidas Group.

Adidas and Reebok sales rise in Q4

Currency-neutral Adidas revenues grew 16 percent, with continued double-digit sales increases in most markets including Greater China. The brand’s performance was particularly strong in Western Europe and North America, with currency-neutral sales accelerating, up 31 percent and 12 percent, respectively.

Currency-neutral Reebok sales were up 5 percent versus the prior year supported by double-digit sales increases in Western Europe, Latin America and MEAA as well as strong growth in Greater China, where revenues more than doubled during the quarter. Revenues at TaylorMade-adidas Golf declined 15 percent currency-neutral, as ongoing structural challenges in the golf market as well as the further execution of TaylorMade-adidas Golf’s restructuring programme aimed at resizing the golf business weighed on the performance during the quarter.

From a segmental perspective, combined currency-neutral sales of the Adidas and Reebok brands continued to show particularly strong growth in Western Europe, Greater China, Latin America and MEAA, with revenues up at double-digit rates each. Currency-neutral sales in Western Europe increased 30 percent, with double-digit sales growth in the UK, Germany, Italy, France and Spain. North America and Greater China saw strong improvements, with currency-neutral revenues up 8 percent and 16 percent, respectively.

Russia/CIS sales decreased 16 percent currency-neutral. Currency-neutral sales in Latin America were up 12 percent, driven by double-digit sales growth in Colombia, Argentina, Peru and Mexico. Japan sales in the fourth quarter decreased 4 percent currency-neutral. Currency-neutral sales in MEAA increased 17 percent, mainly due to double-digit sales growth in South Korea, the United Arab Emirates, India, Turkey and South Africa.

Currency-neutral sales for Other Businesses declined 3 percent as double-digit sales growth at other centrally managed business was more than offset by the double-digit decrease at TaylorMade-adidas Golf and a slight decline at Reebok-CCM Hockey. Gross margin increased 2.3 percentage points and the Group’s gross profit increased 21 percent to 1.966 billion euros (2.136 billion dollars).

Currency-neutral sales increase in 2015

Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 16 percent to 16.915 billion dollars (18.378 billion dollars). Currency-neutral Adidas revenues grew 12 percent, driven by double-digit sales increases in Western Europe, Greater China, Latin America and MEAA.

Currency-neutral Reebok sales were up 6 percent versus the prior year, reflecting double-digit growth in Western Europe, Greater China, Latin America and MEAA but revenues at TaylorMade-adidas Golf decreased 13 percent currency-neutral, due to sales declines in all markets except Latin America and MEAA.

From a segmental perspective, the combined currency-neutral sales of the Adidas and Reebok brands grew in most market segments. Revenues in Western Europe increased 17 percent, driven by double-digit sales growth in the UK, Italy, France and Spain. Currency-neutral sales in North America increased 5 percent. Revenues in Greater China grew 18 percent, while currency-neutral sales in Russia/CIS declined 11 percent. In Latin America, revenues grew 12 percent, driven by double-digit growth in Argentina, Mexico, Chile, Peru and Colombia. In Japan, sales remained stable on a currency-neutral basis.

Revenues in MEAA grew 14 percent, driven by double-digit growth in South Korea, the United Arab Emirates, Turkey, Israel and Australia. Revenues in Other Businesses were down 3 percent. High-single-digit sales increases at Reebok-CCM Hockey and double-digit sales increases in other centrally managed businesses were more than offset by sales declines at TaylorMade-adidas Golf.

In 2015, gross profit for the Adidas Group increased 18 percent and gross margin increased 0.6 percentage points to 48.3 percent.

Management to propose dividend of 1.60 euros

As a result of the stellar operational performance in 2015, the Group’s strong financial position as well as Management’s confidence in the Group’s long-term growth aspirations, the Adidas AG Executive and Supervisory Boards will recommend paying an increased dividend of 1.60 euros (1.74 dollars) to shareholders at the Annual General Meeting on May 12, 2016.

Commenting on the year ahead, Hainer stated, “2016 will be another successful stage in our race to becoming the best sports company in the world and achieving the Group’s long-term financial ambition. Our order books are full across all major performance and lifestyle categories and our brands are set to shine at this year’s major sporting events. This gives us every confidence that we will again grow the top and bottom line at a double-digit rate this year.”

Adidas