In April of 2014, we officially joined forces with Austin Adventures: the world’s leading luxury active trip provider. Dan Austin, the founder and CEO, shared the vision of what our two companies could create together. Austin Adventures is known for an unbelievable level of customer service and for introducing their guests to some of the most beautiful natural settings in the world. These experiential tours typically include a modest level of hiking or biking and many trips cater to families. All trips feature authentic, local, five star accommodations and fine dining. Dan Austin understood that by partnering with Reebok, we could bring a totally new element of fitness to these trips, potentially redefining the active travel industry.
I am really fortunate to be returning from the first ever Reebok Fitness Vacation “pilot trip” in Montana and Wyoming. I was joined by my two Reebok colleagues, Matt DellaValle, a CrossFit coach at Reebok CrossFit ONE, and Joe Van Buskirk from Reebok’s Fitness Marketing team. Other attendees included an employee of Xantera tours (owner of Austin Adventures), two members of the fitness and travel media and a few fitness minded adventuresome guests willing to try out this new concept. Ten guests were led by three guides – two veteran Austin adventure guides and one local fitness professional recruited specifically for this project.
Over five nights and six days, our jam packed itinerary logged 63 miles of trail running, hiking and white (knuckle!) water kayaking. The natural environment of Montana and Yellowstone Park became our gym. Ten guests from a variety of home towns and backgrounds, connected only by our love of fitness, quickly formed a Reebok Tribe. We flipped hay bales, launched our bodies over hitching posts, took freshly cut logs from the ground to overhead, and even pulled a 3/4 ton Chevy pickup truck across a field. If that wasn’t enough, we also did burpees and pushups on rock formations in front of a waterfall. For a somewhat more relaxing activity, the group participated in a yoga and meditation session overlooking Beehive Basin.
Beyond just the fitness itself, the trip was an incredible learning experience. We learned about geothermal hot springs on a six mile trail running tour, and witnessed the Grand Prismatic’s brilliant colors from a vista that 95% of tourists never access. Day by day, we built up our capacity to handle our fitness activities in the high elevation. This culminated on day five, with an 11 mile hike up Sepulcher Mountain, 10,000 feet above sea level, with a summit reward of some of the best views of Yellowstone.
This trip truly brings the Reebok Delta – our new brand mark and the symbol of what our brand stands for – to life, by merging the mental, physical and social aspects of fitness. The trip might be over, but there is quite a bit of work to be done. Matt and Joe and I are stoked to work with the Austin team to build this from a pilot trip to a thriving enterprise that redefines active travel. We are planning eight trips over the next 18 months, with Montana Yellowstone as our “signature” destination.
So check out the trip details here and we guarantee you will agree that the Reebok Fitness Vacation by Austin Adventures is a truly unforgettable experience.
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Why? Because I love the game. Because all of us, the people at TaylorMade, adidas, Ashworth and Adams Golf love the game, and we want to see it grow. Because we believe there are a lot of people in the world who’d loved to introduce a friend, a family member, a colleague to golf and its values, lessons, and most of all, its joys.
As world-renowned business strategist Gary Hamel, the management brains behind the inspiration for Hack Golf, shared in his closing remarks on the night of our formal introduction.
Golf is fun. We want to make it funner.
In the last decade alone, we’ve seen five million golfers leave the game, and that’s out of 30 million. That’s discouraging in so many ways for our organization, and not just in the business sense.
How do we plan on making golf more fun? Good question. The simplest answer: We need your help.
We want you tell us what it is about golf you don’t find fun.
Is it too hard? Are there too many rules? Whatever you think, we want to hear about it. Then we want you to tell us what your ideas are for adding fun. What would you do differently to make the game more enjoyable?
Why are we asking? Because our game needs to innovate. Not just its format. Not just its equipment. We’re talking about the entirety of the golf experience.
Innovation stalls when the same people keep talking to the same people. That’s what’s been happening in golf. We need fresh thinking, from anyone and everyone.
Hack Golf is a method for inviting more people to contemplate the “fun” problem, and will lead to countless ideas. You can submit yours right now — just join and start thinking and typing.
Out of all of the ideas that are proposed, by avid golfers, lapsed golfers and non-golfers, too, we think the odds are great that we’ll find some real game-changers. No idea is too big, too small or too off the wall.
Later this year we plan to take all of the ideas that were posted and choose the ones with the most promise. Then we’ll experiment with them; to find if they bring more fun, and more golfers, to the game.
Already we’ve pledged on behalf of TaylorMade up to $5 million in funding over the next five years for Hack Golf, a significant signal of our commitment and belief it’s the right path at the right time to evolve golf into the modern society in which we live.
Hack Golf itself is an experiment. Yet the potential is huge. To all of you reading the adidas Group blog: Please join Hack Golf and share your ideas for a better game.
Who knows? You just might help change the golf world.]]>
This election comes with another very special and even more emotional touch:
with this assignment I will be following in my father’s footsteps, as he was the first ever German President of the WFSGI from 1986 to 1989. I remember very well just how much work, dedication and passion he put into resolving the sporting goods industry’s challenges; and I am determined to put just as much heart and soul into this role. I appreciate the challenges will be very different though, as the sporting good industry’s has since changed quite a bit and became an incredibly fast-moving sector.
Therefore, it will be very important for our industry to stay ahead of the game and to ensure further boost of trends and innovation.
The integration of electronic devices in sporting goods and the linking of equipment with information and communication technology will, for example, further affect the future of the sport. I expect ‘Digital Sports’ to open up absolutely new possibilities and new business models. We will see a transformation from ‘product accompanying services’ to ‘service accompanying products’. It’s not all just about the products though – it’s also about topics like the ‘Future of manufacturing’ and the implications this will have on business processes, people, environment and society. I would recommend that manufacturers and retailers work more closely together and to break fresh ground with new industry partners.
Another important aspect for the whole sporting goods industry is our interest in pursuing the concept of “free and fair trade”. To me it is kind of arbitrary that an industry, which per se promotes healthy and active lifestyle, has to pay the highest anti-dumping duties and tariffs compared to any other..
Obviously, there are number of other challenges, which the WFSGI Board has clearly addressed in its strategic direction for the period of my term. The WFSGI is a global voice of everyone active in the sports industry – be it brands, retailers, suppliers or national and international federations. We are a recognized partner of international institutions, such as the IOC, WHO, UNESCO as well as governmental stakeholders.
I am convinced that in a globalized world this institution with its pursuit of industry-wide collaboration is more important than ever. I am really looking forward to representing WFSGI members on a global level supporting and promoting the sporting goods industry wherever I can together with the strong new Board and great WFSGI staff.]]>
Adore NEO. Desire NEO. NEO craziness … You name it, we are seeing a lot of love out there for our label … When it comes to NEO, you might have these pictures in your head of excited young teenagers screaming for Justin Bieber on stage, and you would of
course be right, just as we saw in March this year in our Hamburg store; or more recently in China when we invited a small group of NEO fans to come to our stores and celebrate Justin Bieber coming to town. They had no idea or even expectation that he would show up … Can you imagine the craziness when Justin actually turned up for a personal appearance to celebrate with them?
Since our humble beginnings in 2009 we have come a long way from the product offer to where we are today, moving from quite a sports-based look into a much more street/fashion look. We have created a highly desired sports fashion lifestyle label for teenagers. Easy for me and the team to say of course, we live and breathe the label day in and day out. Who better to hear this from than THE most important people NEO works with – our teenager. It is our NEO teens themselves who tell us how desirable we are.
NEO lovers are spontaneously putting pen to paper and writing love letters to us, telling us how much they love what we are doing, how they have a label they truly feel a part of, how NEO is THE reason they’ve found their passion, their focus and direction for their style. In my 20 years in the industry, I have never seen anything like it, it is truly amazing.
It all starts with our consumer. The NEO consumers are teenagers aged 14 to 19. Just as NEO is the teenager of the adidas family, so, too, are our consumers. Teenagers transitioning into adulthood, emotionally driven and searching out personal inspiration. They are story tellers, always looking for the next chapter – one life, with lots of channels … They are digital natives, growing up in the age of social media who now have a way to connect with like-minded individuals, share their passion and build upon it. They hoard and share information; they are the ‘collective individualists’.
We conduct vigorous research with our insights team to understand what they want, why they purchase, what they share, and how they express themselves … By having a laser focus on the consumer, NEO offers teens exactly the products and experiences they want and can afford to buy.
For NEO, this means giving our teenagers access to the label and handing control over to them. This is what sets us apart from our competition. To do this we follow three simple steps. First of all, we get our NEO lovers involved and excited; through our heroes we showcase call to action films, tweets and Facebook posts to engage them with the NEO label. We open our label to our teens by allowing them to participate in NEO. Be it an interactive look book or a digital treasure hunt, or a styling competition on Polyvore. Lastly, we reward our NEO lovers with experiences that only NEO can provide, for example, photo editing the NEO Selena winter campaign, or styling an outfit for Selena to wear at the next photo shoot, or creating the looks that walked the NEO Runway during Fashion Week in New York.
In 2014, we will launch an exclusive collection for own retail and ecommerce that further showcases NEO’s fashion and lifestyle credentials. We will open further stores in Germany, whilst also moving into new markets, in Poland and Czech Republic. We invite you all to come check out our stores, see our new collections and experience the NEO love.
We know that NEO’s future is bright. There is global desire for the NEO label. With a laser focus on the consumer, we have created a desired sports fashion lifestyle label for teenagers. Our products and prices are on point, our retail experiences are relevant and our simple consumer-centric marketing strategy drives NEO lovers from all around the world into our stores.
We enable teens to live their style, we are on a journey of DISCOVERY, testing the limits and finding our edge, we live in the NOW, not yesterday, not tomorrow, but right NOW. We are FRESH – confident, rebellious, new and bold, authentically unique; and of course we are YOUTHFUL – passionate, energetic, never standing still …
It’s a simple formula, it’s not rocket science, but it works. It creates NEO love in all of us. In 2014 and beyond we will continue to follow this successful approach.
ISO 14001 is an Environmental Management System standard that we use within the adidas Group to keep track of our Green Company targets. As part of this, we set up an environmental programme to take care of the environmental aspects at selected sites. After implementing and cross-checking the measures, we get an external organisation (TÜV Rheinland) to verify whether we have met our targets.
Currently, the adidas Group has twelve sites that are globally certified. This is a great achievement, if you think that we only had seven certified sites when we started the programme back in 2010. We have been able to almost double the number of sites certified, which is clear proof that our environmental management system is alive, growing and healthy.
As part of the re-certification procedure, a number of sites were audited. Several people who ensure that the environmental management system works properly were with the external auditors, and the final phase even included an interview with Mr. Hainer, the adidas Group CEO.
The re-certification process is quite a lengthy one. It might sound easy, but there is actually a lot of work happening behind the scenes, like implementing the procedures to ensure we are all working in the same way, motivating employees, e. g. set up a voluntary Green Team at each site or make sure the required and necessary documentation is available and working.
As an example, we run an internal campaign to engage employees and inform them about how they can act green in the office.
Among the projects I am particularly proud of, I would definitely mention the No-Waste cups, which are made from the ‘left-overs’ of paper production and can be re-used up to 200 times if returned via the designated cup collectors.
Or the installation of an electrical fuel station at the company’s Headquarters in Herzogenaurach (Germany), which will be soon followed by two more, one in the newly built employee parking area and one at the Outlet store, always in proximity of the company’s Headquarters.
Of course, there are also a few challenges along the way. Electricity is one, for example, and we constantly work to ensure we can reduce our consumption – by turning off the lights or switching off computers when not in use.
All this work paid off, as four new sites were ISO 14000 certified, and this is Manchester Stockport (administration, headquarters UK), Manchester Trafford Park (Trafford Distribution Centre, UK), Scheinfeld II (European Distribution Centre, Germany) and Uffenheim (Distribution Centre, Germany).
I am confident that all these efforts will enable us to further reduce our company’s environmental footprint while also taking advantage of the resources we will be able to save.
Want to know more? Check out our corporate website!]]>
When we first launched Route 2015, the goal was – and still is – to prepare and to transform the Group for long-term sustainable growth and success. Since then, we have made some exceptional progress, driving growth in key categories, improving profitability and tightly managing our capital.
Now just after the half-way point of our journey, it’s time to pause and reflect. And this time of the year is the right time to do so, because it’s make-or-break time for our goal of 17/11 (referring to EUR 17 billion in sales and 11% operating margin in 2015). So let me cut to the chase: We achieved great success during the first two years of Route 2015. But this year, we didn’t get as far as we thought we would in terms of the numbers.
However, while the peak of the mountain from today’s viewpoint may be a little higher than we thought at base camp, we have all the equipment we need to climb it. We have immense brands and immense capabilities. In the second half of Route 2015, we will again accelerate our growth and profitability by uniting these to create a seamless consumer experience. We will realise our promise to create consumer desire at every touch point from brand building, to the field, to the wardrobe.
I am proud of what we have achieved so far on our Route 2015. But we are a high performance company and we want more. We are ready and willing to do what is right for the long-term success of our Group. We will continue to make bold decisions and pursue our goals with determination and focus. And I am convinced that we have everything in place to reach new heights, break records and drive long-term sustainable value.
If you would like to find out more about our Route 2015 business plan I suggest visiting our corporate website. You can listen to a podcast in which I explain the importance of Route 2015 for our company there. Also, an in-depth story about the Chinese market will be available there later today. In addition we will share an update about our adidas NEO business next week – stay tuned!
Firstly, and most severely, the persistent weakening of several currencies versus the euro throughout 2013, such as the Japanese yen, Brazilian real, Argentine peso, Turkish lira, Russian rouble and Australian dollar, has put a significant strain on our reported results in euro terms. In the third quarter alone, Group sales suffered a 7 percentage point negative impact from currency movements. Accumulated for the first nine months of the year, currencies wiped out € 500 million from our top-line result.
Secondly, in one of our most important Route 2015 markets, Russia/CIS, we had an unexpected short-term distribution constraint in Q3 as a result of the transition to our Group’s new distribution facility in Chekhov, close to Moscow. This significantly impacted the quantity of new product deliveries to stores, which was a major contributor to the double-digit comp store sales decline we saw in that market during the third quarter. Our Global Operations and local management teams have worked speedily to rectify the matter, and I am pleased to report that we are making good progress on returning the shipping quantities back to normal levels. Nevertheless, as we communicated in September, due to the sales shortfall and the further weakening of the Russian rouble, we will not achieve our original goal for Russia/CIS this year.
Thirdly, due to the continued softness in the global golf market, where TaylorMade-adidas Golf is the dominant leader, we took the decision in the third quarter to be more consequent and accelerate the rebalancing of inventories to healthier levels in the marketplace. As a result, sales declined 16% currency-neutral in the segment in the third quarter and gross margins decreased over 10 percentage points due to additional markdowns and incentives. This alone had a 70 basis point negative impact on the Group’s gross margin performance in the third quarter. Again here, our actions have delivered the desired result, and I am confident we will see a solid fourth quarter driven by highly innovative recent product launches such as the SLDR driver and fairway woods, as well as our new Speedblade family of irons.
Quick and focused actions like these show our Group’s determination to always be at the forefront of creating consumer excitement in our industry. And while we had our challenges in the period under review, these were definitely outnumbered by considerable and broad-based successes in many categories and regions.
These positive developments clearly highlight the effective execution of our strategy to fundamentally improve the long-term sustainable profitability of our brands and our Group. And to ensure we continue to drive these kinds of results, we also have been working diligently during the year on the further implementation of organisational measures to support our goals to drive faster and more efficient decision-making processes for the adidas and Reebok brands as well as ensuring we more fully leverage the power of our Group.
Staying on the future, with strong demand for our highlight concepts and innovations, upcoming initiatives around the 2014 FIFA World Cup and positive customer feedback to our spring/summer 2014 collections from all of our brands, momentum is clearly returning to our business. We already see some notable improvements in momentum in several key markets.
Our relentless pursuit of creating premium experiences for our consumers and customers will ensure we unleash the tremendous potential we see for the Group.
In summary, we have dealt swiftly and decisively with our challenges in 2013. There is no doubt that our industryleading innovations, strong partnership activations and keen understanding of the global consumer are clearly enhancing our position as the premium multi-sports company in the industry. I am sure you agree, from the initiatives I have shared, we have great potential to continue on our journey towards long-term sustainable value creation.
Great success is achieved by those with the ambition, desire and persistency to constantly improve, accept challenges as normal and embrace change. This mentality is at the core of the adidas Group’s philosophy and why we are fully committed to the course we set out on with our Route 2015 strategic plan. I am confident in the plan. And I am confident in our ability to execute against it.
Gelal Corap San. ve Tic. A.S. in Turkey (Gelal) has always invested and continues to invest in improving management systems for labour, health and safety, and environment. Currently employing 1,200 workers, Gelal has proven to be an industrial leader in sustainable manufacturing.
Now, their newly built manufacturing unit has been LEED certified – Gold level! - the first manufacturer of this size in their sector to achieve this tremendous result!
For those who do not know, LEED is an internationally recognized green building certification system developed by the U.S. Green Building Council. It provides verification that a building was designed and built using strategies aimed at improving everything from energy savings and water efficiency to CO2 emissions and indoor environmental quality. The number of points the project earns determines the level of LEED certification the building receives: LEED certification is available in four levels Certified, Silver, Gold and Platinum.
Participation in the voluntary LEED process demonstrates leadership, innovation, environmental stewardship and social responsibility. LEED-certified buildings are designed to lower operating costs; reduce waste sent to landfills, conserve energy and water, be healthier and safer for occupants and reduce harmful greenhouse gas emissions.
We are therefore very proud to be partnering with Gelal, and we cannot wait to see this new manufacturing unit operate at its full capacity: up to 100 million pairs of socks annually, and employing more than 1,200 people from the region when completed.
Well done, and go green!
First, let me put the examples and explanations I showcase below into perspective. Last year, 2012, was a record year for the adidas Group. Two mega sports events contributed to our huge success: UEFA EURO 2012™ and the London 2012 Olympic Games. This year is a more “normal” year, with of course a number of big sporting events, however none of truly world-wide interest. Another point to bear in mind is, as a global player with more than 170 subsidiaries, we touch upon nearly all currencies around this world, be it in sourcing or sales. In order to be able to provide comparable data, we have to translate all currencies into one, the Euro. As currencies are dynamic, their fluctuations impact our results. We do undertake measures to try to limit the effect of these movements; nevertheless, currency exchange rates in general are something we cannot influence on a company level. So, sometimes we benefit from these translation effects, this time however, the impact is quite negative.
And still, overall our results have proved to be very solid for the first half of 2013. Here are some examples from “Q2” and the “half year”:
The gross margin represents the percentage of total sales revenue that we, as a company, retain after taking off the direct costs associated with producing our goods. What does it indicate? The higher the percentage, the more a company retains on each Euro of sales to service its other costs and obligations. Our gross margin grew by 2.1 percentage points to 50.1%. This positive mid-year development was – among other reasons – due to a more favourable pricing, product and regional sales mix.
Net income attributable to shareholders can be described as the amount of money that remains after having paid operating expenses, financial expenses and taxes, for example. The adidas Group’s net income attributable to shareholders increased to € 480 million in the first half of 2013 from € 455 million in 2012. This represents an increase of 6% and is the highest net income we have ever achieved in a first half year period – a real highlight!
Our brand adidas remains successful, especially in Latin America and Greater China. We are very pleased that sales grew 21% in Latin America and 6% in Greater China (currency-neutral). The situation in Western Europe does not look as prosperous, for two reasons. The first reason is high prior year comparisons. We achieved outstanding sales in the same period in 2012 as we were approaching the peak of the two major sporting events UEFA EURO 2012™ and the London 2012 Olympic Games. Comparing results of a – so called – “event year” with a “non-event year” is rather difficult, and it can be expected that sales may not be as high in the following year. Second, we are all aware that the economic climate in many European countries is very challenging. This is a situation all companies across our industry have to deal with.
This is very good news. You may have heard that over the past years our brand Reebok was not as successful as we wanted it to be. Therefore, we are very happy that Reebok was able to grow sales by 11% in the second quarter of this year, compared to the same period last year. Even more important, the brand’s gross margin again improved considerably, expanding 4.1 percentage points to 39.4%, which is also the highest first half gross margin that we have achieved since we acquired Reebok in 2006. Key to this success is our strong and continuous focus on the expansion of the brand’s activities in the fitness category. The positive results of Q2 make us feel very confident that Reebok is now on the right track.
What is our forecast going forward into 2013? We are able to reconfirm the majority of our full year targets. As explained above, some economic factors such as the trading environment in Europe and the unfavourable development of several currencies versus the Euro indicate that it will be more challenging for us to reach some of our goals. However, there are some good reasons why we are confident – among them: our latest innovative products (e.g. the running shoe Boost) were received extremely positively by you, our consumers. In addition, new product launches and campaigns are in the pipeline for the remainder of this year.
If you now feel okay to dig deeper into our financial world, please have a look at our press release or check out our Investor Relations section - it is only one click away.