GERMANY: adidas suggests market victory as Reebok buy boosts sales
The adidas Group got off to a "powerful start" in 2006, said the company's chairman and CEO yesterday (9 May), also claiming the company had knocked rival Nike from the top sports market spot.
"We are clearly market leaders in the biggest markets, therefore it's quite logical that we are the number one," suggested Herbert Hainer ambitiously as the business reported a 37% first-quarter profit increase and a 47% jump in revenues.
The acquisition of the Reebok business, a former rival to adidas, was given credit for the growth in sales. Without Reebok's business, adidas registered a more modest 13% revenues rise, as all regions enjoyed good business.
Including Reebok, total revenues were EUR2.46bn (US$3.14bn) compared to EUR1.67bn last year, while sales without were EUR1.99bn, up from EUR1.67bn.
Hainer said both the core adidas and TaylorMade-adidas Golf businesses had produced "excellent top- and bottom-line results", although Reebok's first-quarter order backlogs decreased 14% on the prior year
The upcoming football World Cup, which is taking place in adidas' home country Germany, is also no small part of the recent successes. "...we are well positioned for the World Cup", Hainer reminded the market yesterday.
Despite competitor Puma now holding claim to kitting out the most teams, adidas is providing replica uniforms for the German, France and Argentinian teams and is also providing balls and gear to the tournament's referees.
In addition, it holds deals with top players such as high-profile David Beckham, a long-time endorser of its three-stripe football boots.
The group said it now expects its football business to make sales of EUR1.2bn this year, explaining it had "seen excesses" in all football categories.
Geographically, North American sales jumped 113% in the first quarter - a surely satisfying result for the company who is self-confessedly desperate to get closer to Nike's number one spot in the US and worldwide. Sales also grew throughout Europe, Asia and Latin America.
"We have made important progress in successfully integrating Reebok within the adidas Group", Hainer said.
adidas has said it will pour its existing expertise into reviving the areas of the Reebok brand that are lacking. One strategy is drawing in subsidiaries to gain more control over regional operations.
Hainer also said adidas would work on moving Reebok into more selective distribution and tightening allocation strategy. In addition, he said "product initiatives, a focus on execution excellence and a more competitive attitude" are all changes to look forward to.
Long term, the company hopes it can lead Reebok into conquering the key European and Asian markets, while it follows Reebok's lead in cracking the US market.
By Rebecca Danton
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