In the money: Adidas sponsorship strategy pays off
Adidas's sponsorship strategy is paying dividends, with the sportswear brand's chief executive Herbert Hainer highlighting the success of its sponsorship of the London Olympics and the Euro 2012 football championship.
"Our association with major sporting events sets us apart from all the competition," Hainer told journalists today (2 August).
The comments came as the company recorded a 30% increase in first-half net income to EUR455m as group sales rose 11% to EUR7.3m.
Adidas has made no secret of its ambition to overtake Nike and become UK market leader by 2015, helped in a large part by its US$201m sponsorship of the games.
Hainer said Adidas is closing the gap on Nike, increasing its market share by two percentage points, and is now just one percentage point shy of Nike's market share, which was recently estimated to be 18% of the UK sportswear market.
Indeed, the German firm saw sales increase 24% this year in the UK, which Hainer attributed to its 'Take the stage' campaign, with activity on the ground in London and brand ambassadors like David Beckham.
"This will be the most successful games we have ever had," emphasised Hainer, with the sale of Olympic licensed products up 250% on the 2008 Beijing Olympics.
Meanwhile, the brand's sponsorship of the Euro 2012 football championship contributed to a 57% increase in football product sales in the second-quarter and up 25% over the half.
"Euro 2012 football took centre stage in the first part of this year, and there is no doubt that there were market gains in 2012 either through brand visibility, product sales or simply confirmation of our status as the most innovative brand in sport," said Hainer.
"Even at a time of economic recession in Europe, we sold more jerseys and more footballs at a European Championship than ever before. We sold over one million Germany jerseys and almost one million Spanish jerseys. In addition, the Tango 12 is our most successful ever European Championship tournament football, selling more than 7 million units," he added.
While football and the Olympics dominated much of the brand's focus during the first half of the year, Hainer emphasised the period was "not just about football." Indeed, the company's "strong product pipeline" contributed to gains in all of its key performance areas, including running, basketball, and outdoor, with performance products booking a 12% sales hike.
Clouds on the horizon
However, news was not all good for the company, with the Reebok brand recording a 26% drop in sales over the first half, which it attributed to legal issues in India, the loss of an NFL contract, and challenges relating to its Latin American operations including import restrictions and its joint venture partner.
While Hainer admitted "disappointment" that the brand couldn't build on the momentum of last year, he was "optimistic" about its prospects for 2013.
In India, the company has decided to proceed with criminal charges against former management who have been accused of fraud. He reiterated that there is unlikely to be any change from the EUR70m hit to full-year operating profit from the issues in India.
A "cash and carry" model is now running in the country until due diligence is carried out against its customer base. To support an independent review, the firm has also and engaged Ernst & Young to help it through the process.
"While the issue is unpleasant, we will achieve our goal for a fresh start in India for 2013," said Hainer.
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