кейси для індивідуальної роботи 2014 н.р. / ADIDAS AG IN APPAREL

SCOPE OF THE REPORT

Scope

All values expressed in this report are in US dollar terms, using a fixed exchange rate (2011).

All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data are expressed in current terms; inflationary effects are taken into account.

Apparel

US$1,668 billion

Women‟s Clothing

US$661 billion

Men‟s Clothing

US$429 billion

Childrenswear

US$147 billion

Clothing Accessories

US$69 billion

Hosiery

US$51 billion

Footwear

US$309 billion

Disclaimer

Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors.

Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies‟ opinions, reader discretion is advised.

adidas, the second largest apparel brand in the world, trails in the wake of it great rival Nike. However, organic growth in developing markets, acquisition and a dynamic marketing and brand strategy have seen it outperform its rival over the review period 2006-2011, and its latest move into a more fashionaligned position could see it improve global share. NEO, a fast fashion adidas sub-brand aimed at teenagers, will pit the company against the likes of H&M and Zara.

German apparel company adidas AG was the second largest apparel company in the world in 2011, trailing its long-term rival Nike Inc. Both are primarily operators of sports-aligned brands, and are in direct competition.

The company operates a number of brands. The eponymous adidas brand is its principal one, generating 74% of adidas‟ total sales in 2011, according to the company.

Reebok, its next largest brand, was acquired in 2006 for around US$3.8 billion as part of adidas‟ strategy to overhaul Nike; Reebok‟s brand strength in the US gave adidas a stronger foundation in North America. Other brands include TaylorMade (golf apparel and equipment), Rockport (leather footwear) and Reebok Hockey/CCM (ice hockey apparel and equipment).

adidas‟ largest regional market remains domestic Western

Europe, which generated 26% of global revenues in 2011. However, Asia Pacific is set to overtake this going forward, generating 24% of value in 2011 compared to 19% in 2006. Although the company lags behind Nike in the key Chinese market, it is the number one brand in India. Like Nike, the company is seeking to extend its retail operations, allowing for improved brand control.

adidas AG: Total Revenue vs Net Income 2007-2011

Source: Company report

 In the financial year ending 31 December 2011, adidas saw growth in total revenues of 11.3% and

0.8

in net income of 18.3%. The company recovered quickly from a dip in sales and income in 2009,

0.7following weak market conditions in the wake of the global economic crisis.

0.4economic pressure, were up by 10% in 2011, andincome

0.2production costs rose sharply.

The company credits its rapid recovery on a

0.1mixture of product development and high level endorsements from its roster of sports stars, as

0.0well as ongoing development of its retail division. The company owns and operates 2,401 of its own adidas and Reebok branded stores, and its reported retail segment grew sales by 20% in

2011.

Wholesale - sales via third party retail channels - remained the largest part of the company‟s business in

2011, generating 67% of total revenue, down from 67% in 2010. Wholesale was among the more problematic areas of the company‟s business over the review period, in part because third party retailers in many countries responded to the economic crisis by price-cutting; this in turn undercut brand equity for adidas and Reebok.

As a result the company is seeking to push harder at controlling retail space, not only by rolling out more of the company-owned and -operated stores that make up its retail segment (and generated 21% of 2011 revenue, up from 19% in 2010) but also by extending its franchise operations. This includes single brand adidas or Reebok stores operated by wholesale partners, as well as a variety of other strategies. adidas‟ retail segment was the most dynamic in 2011, and is anticipated to continue to be so over the forecast period.

The wholesale and retail segments comprise the adidas and Reebok brands; the company‟s other brands, including Rockport and TaylorMade, generated 12% of 2011 sales. The company is developing different brand strategies for each of these.

adidas AG: Quarterly Total Revenue and Net Income Q1 2011-2012

0.3

The company reported revenue growth of 17% in euro terms and 38% in net income attributable to shareholders in Q1 2012, which it attributed to growth in all of its segments.

Most impressively, adidas outperformed its rivals Nike and Puma in China, with currency neutral growth in Greater China of 26% y-o-y compared to Nike‟s 21%. The company has therefore upgraded its revenue forecasts for 2012 to around 10% from a previous forecast of between 5% and 9%, with net earnings forecast to rise by between 12% and 17%, compared to the previous figure of between 10% and 15%.

This good news for adidas comes at an opportune moment. At the end of April 2012, the company announced that

“commercial irregularities" at Reebok India could potentially cost the firm up to €125 million, with further restructuring there potentially costing up to €70 million in 2012.

Once again, the company was able to grow sales in markets where other apparel brand operators and retailers have struggled. adidas reported double-digit y-o-y growth in Japan and South Korea, and 11% in currency neutral terms. The company attributes growth to a mixture of product development, success among its sporting endorsement roster and most importantly a tightening grip on brand equity across its portfolio.

Historically, the company has distributed its products through third party retail accounts, principally footwear, sporting goods and department stores. Other sports brands including Nike and Puma have followed this strategy.

However, like its peers, adidas is seeking to take greater charge of its brands, pursuing a strategy it describes as

“controlled space”.

This not only includes rolling out more company-owned and -operated stores (it intends to open at least 550 adidas and Reebok stores by 2015) but also extending its mono-brand franchise operations, especially in China.

It is also seeking to develop more shop-within-a-shop operations with its principal wholesaling partners. adidas aims to generate 45% of total sales from these controlled space operations by 2015, compared to 36% in 2011.

At the same time, it is also looking to improve its internet business, which it seeks to grow to €500 million by 2015. In 2011, adidas operated online stores in the US, Asia and Europe, and is seeking to open its first online outlet in Latin America in 2012 as part of its strategy to add 10 new online markets over the year.

Above - Rockport brand store, Mecca

 This strategy allows the company far greater control of brand equity across the portfolio, and the focus on mono-branded operations allows each of its brands to maintain a unique identity. One of the principal difficulties facing sports brand producers in the global market is the huge amount of counterfeit products; operating brand stores guarantees the product‟s provenance to discerning consumers, as well as being a marketing tool to showcase new products. Store sites are typically premium located, further underpinning brand status.

adidas has been able to develop exceptionally high levels of brand awareness for the adidas and Reebok brands among the consumer base. Sports and nonsports buyers make repeat purchases of these brands, and have characteristically shown a lack of price sensitivity if the perceived aesthetic or function of a new apparel product is high enough.

However, because for many users there is a great deal of interchangeability between sports brands, adidas is looking to strengthen its relationship with consumers by increasing its use of social media. This is an increasingly important strategy among apparel companies, especially those targeting the 18-35 yearold demographic.

adidas primarily uses existing networks; its adidas Originals Facebook page, for example, added five million followers in 2011 to reach 12 million. It has also developed mobile phone apps including miCoach Football and miCoach Running that allow users to upload statistics to an interactive training site. The company uses these tools to build product awareness and engage directly with consumers, for example offering the opportunity to participate in brand design.

Above - miCoach,adidas’ interactive training app

 adidas slightly lags behind its principal rival Nike in this strategy, largely because Nike dominates the North American market where consumer use of these media is at its most developed. These are extremely effective platforms to disseminate new product information, build brand loyalty and heighten product awareness, especially among young consumers; at the same time it supports the brand position for adidas and Reebok in particular as tech-led, early adopting and youthful.

adidas AG: Global Revenue by Brand 2006-2011

14,000

12,000

Note: % figure above shows share generated by adidas brand

The company has identified three “attack markets”, geographic regions that it is focusing on. These are

North America (where Reebok is the company‟s key brand following acquisition in 2006), Greater China and Russia/CIS; these markets are anticipated by adidas to produce 50% of future growth to 2015.

The focus is therefore on emerging markets, and leverage of the adidas brand itself is used to grow global sales. The brand generated 74% of revenue in 2011, compared to 67% in 2006.

The company has supported this brand in particular with some of its highest-profile sports sponsorships, supplying uniforms to football teams including Real Madrid, AC Milan and the World Cup-winning Spanish national team. At the same time, it has used fashion designers including Stella McCartney and Yohji Yamamoto to develop a fashion position for the brand.

These strategies have underpinned global awareness, and made the adidas brand the principal tool for expansion. The fact that it is less characterised by specialisation also helps; its ice hockey and golf brands, for example, are less use in markets such as India and Brazil.