Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (May 2014)
57 slides from Adidas's roadshow presentation, May 2014
Slide 1: Roadshow Presentation May - July 2014
Roadshow Presentation May - July 2014
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Slide 3: adidas Group Sales Stable On Currency-Neutral Basis
adidas Group Sales Stable On Currency-Neutral Basis • Retail sales increase 22% currency-neutral • Currency-neutral adidas and Reebok sales grow 5% and 3%, respectively • Strong momentum in emerging markets • Gross margin decreases 1.0pp to 49.1% • Operating margin down 3.2pp to 8.6% • Diluted EPS a
Slide 4: Items Weighing On First Quarter Results
Items Weighing On First Quarter Results • Sales reduced by € 235 million due to • Strategic changes to product and launch adverse currency translation cycles at TaylorMade-adidas Golf • Operating profit impacted by around • Operating profit impacted by around € 50 million € 80 million
Slide 5: Strong Growth Continues In Emerging Markets
Strong Growth Continues In Emerging Markets +0% Western Europe +28% European Emerging Markets (20%) North America +5% Greater China +19% +0% Latin America Other Asian Markets Sales development on a currency-neutral basis.
Slide 6: Acceleration In Comparable Store Sales Around The World
Acceleration In Comparable Store Sales Around The World European Emerging Markets +10% +15% Western +6% Europe North +2% Greater China America +16% +3% Latin Other Asian America Markets Q1 2014: Own-retail regional comparable store sales growth.
Slide 7: European Emerging Markets Fastest-Growing Region In Q1
European Emerging Markets Fastest-Growing Region In Q1 • Sales up 28% currency- neutral driven by strong growth in all markets • Comp store sales up 10% • Strong momentum in Football and Running • Robust growth in adidas Originals & Sport Style
Slide 8: 5th Consecutive Quarter With Double-Digit Growth In LAM
5th Consecutive Quarter With Double-Digit Growth In LAM • Sales up 19% currency-neutral • Double-digit growth in most markets • adidas and Reebok sales increase double digits • Currency-neutral Football sales up 50%
Slide 9: Ongoing Strong Momentum In Greater China
Ongoing Strong Momentum In Greater China • Sales increase 5% currency- neutral in Q1 • Own-retail revenues increase 22% currency-neutral
Slide 10: Revenues in Western Europe Stabilise
Revenues in Western Europe Stabilise • Double-digit growth in Germany and Poland • Currency-neutral Retail sales up 25% in Q1 • Revenues in Football, Running and at adidas NEO up strong double digits
Slide 11: Initiatives To Drive Growth In North America
Initiatives To Drive Growth In North America • Completion of the joint operating model for adidas and Reebok • Appointment of Mark King
Slide 12: adidas And Reebok Revenues Up In Q1 2014
adidas And Reebok Revenues Up In Q1 2014 Q1 2014 Change Net sales (€ in millions) 2,826 +5%1) Gross margin 47.6% (0.6pp) Net sales (€ in millions) 358 +3%1) Gross margin 39.6% +0.5pp 1) Currency-neutral.
Slide 13: Football Sales Increase 27% In Q1
Football Sales Increase 27% In Q1 • Football sales up 27% in Q1 • Double-digit growth in most regions • Strong federation jersey and official match ball sales
Slide 14: Continued Strong Momentum In Running
Continued Strong Momentum In Running • Sales increase 7% currency-neutral in Q1 • Strong performance of Boost and Springblade franchises • Western Europe, European Emerging Markets and Japan all up at double-digit rates • Running apparel sales increase 17%
Slide 15: ClimaChill Drives Growth In Training
ClimaChill Drives Growth In Training • Sales increase 8% currency-neutral in Q1 • Strong momentum in Latin America and European Emerging Markets
Slide 16: Originals & Sport Style Up 3% Currency-Neutral In Q1
Originals & Sport Style Up 3% Currency-Neutral In Q1
Slide 17: New Originals Offering Resonating Well With Consumers
New Originals Offering Resonating Well With Consumers • Double-digit sales growth in emerging markets • Retail sales up 27% with double-digit growth in footwear and apparel • Ongoing strong momentum with Action Sports
Slide 18: adidas NEO Label Increases At Double-digit Rate
adidas NEO Label Increases At Double-digit Rate • Currency-neutral sales up 24% • Increase driven by double-digit growth in footwear and apparel 18
Slide 19: Reebok Sales Up 3% Currency-Neutral
Reebok Sales Up 3% Currency-Neutral • Sales growth driven by Fitness Training, Walking and Studio categories • Gross margin expands 50 basis points to 39.6%
Slide 20: Reebok Introduces The New ZQuick Series
Reebok Introduces The New ZQuick Series
Slide 21: Reebok Classics Grows At A Double-Digit Rate
Reebok Classics Grows At A Double-Digit Rate • Classics up 19% on a currency-neutral basis • Footwear and apparel sales up double digits
Slide 22: TMaG Remains Market Leader In Metalwoods And Irons
TMaG Remains Market Leader In Metalwoods And Irons • Sales down 34% in Q1 2014 • Realigning product launch cycles to mirror market demand patterns • US rounds played down 5% year-to-date
Slide 23: Group Gross Margin Decreases 1.0pp In Q1 2014
Group Gross Margin Decreases 1.0pp In Q1 2014 Q1 2014 • Overproportionate growth in emerging markets Wholesale 43.8% (0.5pp) • Larger share of higher-margin Retail sales Retail 59.9% (0.8pp) Other Businesses 39.0% (5.5pp) • Devaluation of currencies • Less favourable hedging rates 49.1%1) (1.0pp) •
Slide 24: Group Operating Profit Heavily Impacted By TMaG And Currencies
Group Operating Profit Heavily Impacted By TMaG And Currencies Q1 2014 Royalty and commission income € 24 million (2%) Other operating income € 50 million +177% Other operating expenses € 1,507 million +2% Other operating expenses 42.7% as a percentage of sales +3.1pp Operating profit € 303 million
Slide 25: Diluted EPS Down 35% In Q1 2014
Diluted EPS Down 35% In Q1 2014 Q1 2014 Financial income € 7 million +47% Financial expenses € 20 million +4% Income before taxes € 290 million (32%) Income tax rate 28.9% +1.4pp Net income attributable to € 204 million shareholders (34%) Basic earnings per share € 0.98 (34%) Diluted earnings per sh
Slide 26: Retail Sales Increase 22% Currency-Neutral
Retail Sales Increase 22% Currency-Neutral Retail Q1 2014 Change Net sales (€ in millions) 794 +22%1) adidas comp store sales +9%1) Reebok comp store sales +4%1) Total comp store sales +8%1) Gross margin 59.9% (0.8pp) Segmental operating margin 13.2% (0.8pp) 1) Currency-neutral.
Slide 27: Retail Store Development In Q1
Retail Store Development In Q1 • 2,741 stores operated at quarter-end • Net increase of one store versus 2,740 in prior year • 70 new stores opened, 69 stores closed, 41 stores remodelled • 1,558 adidas and 411 Reebok branded; 772 factory outlets
Slide 28: Operating Working Capital Negatively Impacted By Inventories And Receivables
Operating Working Capital Negatively Impacted By The Increase In Inventories And Receivables 22 • Inventories increase 18% 20,9 21,1 21 on a currency-neutral basis 20,6 • Receivables up 2% on a 20,3 20,3 currency-neutral basis 20 20,0 • Payables increase 8% on a currency-neutral basis 19 Q4/12 Q1/13
Slide 29: Net Borrowings Negatively Impacted By Higher Capital Expenditure
Net Borrowings Negatively Impacted By Higher Capital Expenditure Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 448 • Net borrowings increase 295 € 74 million to € 254 million 300 • Ratio of net borrowings/EBITDA increases to 0.2 from 0.1 in 2013 • Equity ratio decreases to 48.8% -100 (2013: 49.7%) (94) (180)
Slide 30: Strategic Initiatives and Outlook
STRATEGIC INITIATIVES AND OUTLOOK
Slide 31: Growth Across All Brands In 2014
Growth Across All Brands In 2014
Slide 32: adidas Demonstrates Leadership In Football
adidas Demonstrates Leadership In Football
Slide 33: adidas Football Introduces World's First Knitted Football Boot And Sock Hybrid
adidas Football Introduces World’s First Knitted Football Boot And Sock Hybrid
Slide 34: Running To Maintain Double-Digit Pace
Running To Maintain Double-Digit Pace
Slide 35: adidas Running To Expand Boost Significantly
adidas Running To Expand Boost Significantly
Slide 36: Boost To Be Expanded Into New Categories
Boost To Be Expanded Into New Categories
Slide 37: adidas Originals To Ignite Several New Partnerships
adidas Originals To Ignite Several New Partnerships
Slide 38: adidas Originals To Ignite Several New Partnerships
adidas Originals To Ignite Several New Partnerships
Slide 39: Expansion Of New NEO Retail Format
Expansion Of New NEO Retail Format 6 STORES IN GERMANY 5 STORES IN POLAND 5 STORES IN CZECH REPUBLIC
Slide 40: Reebok To Drive Visibility By Leveraging Partnerships
Reebok To Drive Visibility By Leveraging Partnerships
Slide 41: Reebok's Footwear And Apparel Product Pipeline Full
Reebok’s Footwear And Apparel Product Pipeline Full
Slide 42: New Store Concept: Homecourt
New Store Concept: Homecourt
Slide 43: New Store Concept: Neighbourhood
New Store Concept: Neighbourhood
Slide 44: New Store Concept: FitHub
New Store Concept: FitHub • 12 markets • 797 franchise stores • 266 concept stores
Slide 45: adidas Group Confirms 2014 Full Year Outlook
adidas Group Confirms 2014 Full Year Outlook Group sales (currency-neutral) high-single-digit increase Wholesale sales (currency-neutral) mid-single-digit increase Retail sales (currency-neutral) low-double-digit increase Other Businesses sales (currency-neutral) around prior year level Gross margin
Slide 46: Strong Operational Momentum But Currencies Add Significant Risks
Strong Operational Momentum But Currencies Add Significant Risks • Currency-neutral sales to increase at a high-single-digit rate • Net income attributable to shareholders to be between € 830 and € 930 million • Devaluation of major currencies adds significant risk to the achievement of 2014 goals
Slide 47: Questions & Answers
QUESTIONS & ANSWERS
Slide 48: Upcoming Event Dates
Upcoming Event Dates Aug 7, 2014 First Half 2014 Results Nov 6, 2014 Nine Months 2014 Results Mar 4, 2015 Full Year 2014 Results 1) Subject to Annual General Meeting Approval.
Slide 49: Appendix
APPENDIX
Slide 50: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better stronger natural cooler smarter faster
Slide 51: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 12 - 19 YEARS 16 - 24 YEARS 24 - 36 YEARS 35+ YEARS FOR THE FROM THE FOR THE OUTWARDLY FOR THE STYLE-ADOPTING TRENDSETTER CONFIDENT, SOPHISTICATED, HIGH SCHOOL KID TO THE FORWARD- ACTIVE MAN MAINSTREAM KID THINKING INDIVIDUAL
Slide 52: Reebok Building Sustainable Fitness Activities
Reebok Building Sustainable Fitness Activities
Slide 53: Fitness Is The Formula For Reebok's Success
Fitness Is The Formula For Reebok’s Success PARTICIPATION GYMS SPEND
Slide 54: Training - The Brand Of The CrossFit Community
Training - The Brand Of The CrossFit Community
Slide 55: Running - Building With The Spartan Race
Running - Building With The Spartan Race
Slide 56: Studio – Accelerating Visibility Through Les Mills
Studio – Accelerating Visibility Through Les Mills
Slide 57: Reebok ONE – Bringing The Fitness Community Together
Reebok ONE – Bringing The Fitness Community Together