Adidas Ag · XETR:ADS
Adidas — Q2 2021 Earnings Presentation
52 slides from Adidas's earnings presentation, Aug 5, 2021
Slide 1: August 5, 2021 Q2 2021 roadshow
AUGUST 5, 20
Slide 2: Forward-looking statements disclaimer
This presentation and other statements made in connection herewith may contain forward- looking statements with respect to Management’s plans and expectations for the future development of adidas. Such forward-looking statements are subject to risks and uncertainties, which are beyond the control of
Slide 3: Agenda
AGENDA & WR = adidas INTRODUCTION BUSINESS UPDATE FINANCIAL UPDATE OUTLOOK
Slide 4: Introduction
Slide 5: Growth
GROWTH
Slide 6: Stakeholder strategy
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Slide 7: Makers, suppliers, distributors, consumers, communities
Makers Suppliers Distributers DEI Council Communities Consumers Partners Creators & Services
Slide 8: Business Update
X SESIBUSINESS UPDATE,
Slide 9: Highlights
HIGHLIGHTS © Be S| < ae” | _ a CREDIBILITY EXPERIENCE = SUSTAINABILITY adidas
Slide 10: Credibility
CREDIBILITY
Slide 11: Exclusives
+ EXCLUSIVES EK WIN FOOTRALL SIGNED BY PLAYER SPORTS CHALLEW:
Slide 12: Sustainability
SUSTAINABILITY adidas
Slide 13: Global store fleet reopening
100% 100% 90% 3% 89% of global store 80% fleet open at the APAC lockdowns end of March materialize 70% 60% 90% 50% EU lockdowns get 97% of global store 97% 40% fleet open at the lifted 30% end of June 20% 10% 80% 0% Apr ‘21 May ‘21 Jun ‘21 Open Closed
Slide 14: Q2 drivers of growth and drag
As 97% of stores open and new product launches sell through well Significant drag on growth Driven by exceptional growth in both own retail and wholesale Delays in product availability and higher shipping costs Lower discounting compensating for unfavorable mix effect Due to continued impact from CO
Slide 15: Q2 net sales, operating profit and EPS
and 51% in euro terms to € 5,077 million due to better pricing and healthy inventory position reflecting operating margin of 10.7% of € 387 million of € 1.93
Slide 16: Currency-neutral sales growth by period
▪ Despite high-single-digit drag from external factors (EU ▪ Despite low-double-digit drag lockdowns, supply-chain from external factors (geo- challenges) political situation, APAC lockdowns) Q1 Q2 Q1 Q2
Slide 17: Sell-through trends improving sequentially
Sell-through trends improving sequentially 15% increase vs. 2019 level 15% increase vs. 2019 level
Slide 18: E-commerce sales trend
E-com sales up vs. 2019 in June March April May June
Slide 19: Wholesale and e-commerce growth
Increase of 70% reflects strong product sell-through E-com net sales excluding China increase 86% vs. 2019 level Revenues almost double driven by growth with strategic accounts
Slide 20: Franchise and technology portfolio
Diversification of franchise and technology portfolio pays off Successful product launches and activations driving credibility As excitement returns on both professional and amateur level
Slide 21: Financial Update
FINANCIAL UPDATE
Slide 22: Operating margin by market
Operating margin: 21.3% (+24.2pp vs. 2020) Operating margin: 19.3% (+24.4pp vs. 2020) Operating margin: 30.4% (-7.2pp vs. 2020) Operating margin: 23.7% (+21.2pp vs. 2020) Operating margin: 18.0% (+39.4pp vs. 2020)
Slide 23: Q2 2021 income statement
+55% currency-neutral Net Sales 5,077 3,352 +51% Geo-political situation and APAC Gross Margin 51.8% 51.3% +0.5pp lockdowns reducing top-line growth at a low-double-digit rate Other Operating Expenses 2,107 2,010 +5% (in % of sales) 41.5% 60.0% -18.5pp Marketing and Point-of-Sale Expenses 616 525 +1
Slide 24: Gross margin development vs. 2019
2020 vs. 19 ▪ Pricing impact: Drag from higher 2021 vs. 20 discounting in 2020 almost fully recovered 2019 level ▪ Mix impact: Normalization of channel mix and unfavorable regional mix in Q2 2021 ▪ Sourcing & other: Higher supply- 51.8% chain costs in 2021 ▪ Inventory allowances: Non- recurrence of
Slide 25: Inventories
At € 3,146 million Increase of € 875 million year-on-year At 32.5% Q2/20 Q3/20 Q4/20 Q1/21 Q2/21
Slide 26: Working capital and cash flow
Driven by better inventory management Driven by higher net sales across markets Normalization of payment terms Q2/20 Q3/20 Q4/20 Q1/21 Q2/21
Slide 27: Dividend and share buyback
Dividend paid Share buyback volume Total cash return to shareholders
Slide 28: Strong performance in Q2
WITH STRONG PERFORMANCE IN Q2 STRONG GROWTH AND PROFITABILITY DEVELOPMENT DIVESTITURE PROCESS REMAINS WELL ON TRACK adidas
Slide 29: Outlook
Slide 30: Our focus: brand heat with innovation and campaigns
OUR -OCUS DRIVING BRAND HEAT WITH PRODUCT INNOVATION, GLOBAL CAMPAIGNS AND SPORTS EVENTS adidas
Slide 31: 40
40
Slide 32: See Sport Rise
Slide 33: 4D FWD
Slide 34: 4D FWD Pulse
Slide 35: Club Football
CLUB FOOTBALL
Slide 36: MLS All-Star Game
Slide 37: Meteorite Pack
Slide 38: Agravic Ultra
Slide 39: NMD S1
Slide 40: ZX 5K Boost
Slide 41: Forum Exhibit
Slide 42: Blue Version
Slide 43: Flexpark
FLEXPARK Ss @
Slide 44: adidas x Prada Luna Rossa
ADIDAS X PRADA LUNA ROSSA 21
Slide 45: adidas x LEGO
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Slide 46: Innovation Day December 13/14
ECEMBER 13/14
Slide 47: Global supply-chain challenges
GLOBAL SUPPLY-CHAIN CHALLENGES FREIGHT CAPACITY PORT FACTORY COSTS CONSTRAINTS CONGESTIONS LOCKDOWNS adidas
Slide 48: Sourcing network by country and mitigation measures
Vietnam ▪ Health and safety top priority Rest of World ▪ Temporary disruptions in Vietnam ▪ No major interruptions in China and Rest of World ▪ Largely operational sourcing network expected by the end of Q3 ▪ Re-allocate production ▪ Secure additional production capacity ▪ Selectively utilize air fr
Slide 49: H2 top-line acceleration
▪ Strong brand momentum and product pipeline spur H2 top- line acceleration ▪ Higher growth in H2 vs. 2019 ▪ Net sales expected to increase up to 20% y-o-y H1 H2 H1 H2
Slide 50: Full-year 2021 guidance raised
▪ Net sales increase of up to 20% currency-neutral High-teens Increase of Net sales1 ▪ Operating margin increase to 9.5% - 10% increase up to 20% ▪ Net income increase to € 1.4 - € 1.5 billion Increase to Increase to Gross margin around 52% around 52% Operating margin Increase to Increase to 9% - 10
Slide 51: Summary
SUMMARY BRAND MOMENTUM STRENGTHENING WITH NEW PRODUCT LAUNCHES SELLING THROUGH WELL 2 H2TOP-LINE ACCELERATION DESPITE INDUSTRY-WIDE CHALLENGES MARGIN RECOVERY CONTINUING AS OWN THE GAME IN FULL EXECUTION ACROSS THE ENTIRE COMPANY FULL-YEAR OUTLOOK INCREASED WITH 2021 TO BE SUCCESSFUL FIRST YEAR OF N
Slide 52: Upcoming dates and Investor Relations contacts
Q3 2021 Financial Results Release November 10, 2021 Innovation Day December 13/14, 2021 SEBASTIAN STEFFEN Head of Investor Relations CHRISTIAN ROTTLER ANJA GFALL PHILIPP ULRICH MORITZ VERLEGER LAURA SÄNGER Director Investor Senior Manager Investor Senior Manager Investor Manager Investor Assistant M