The sporting goods industry is expected to grow at + 6-7% per year over the next few years, driven by secular trends:
- Athleisure: a global fashion trend towards more casual dress
- Health & Wellness: growing awareness on improving health and quality of life, further increased by the radical changes within the global society resulting from the Covid-19 pandemic.
adidas is a strong brand in the design and distribution of sporting goods, (i) number 1 in Europe and number 2 worldwide and (ii) supported by strong innovation capability throughout multiple sponsorship agreements.
There is potential for growth in sales, mainly supported by:
- Digital: strong increase in e-commerce sales accelerated by the transformation of the economy and further adoption of online shopping and remote working under the effects of the Covid-19 lockdowns
- Omni-channel approach: strong sales dynamics from both e-commerce and “own stores” (Direct-to-Consumer model)
- The increasing share of ‘‘sport-inspired’’ lifestyle products in adidas’ product range
- Balanced growth across all geographies outside of China (reduced exposure to China and strong growth in markets that represent more than 80% of the business)
- The US market, where further market share gains are possible
- Speed initiatives: clear objectives to reduce the time-to-market of products.
Potential for EBIT margin improvement is driven by (i) channel mix optimization (shift to Direct-to-Consumer and e-commerce model), (ii) cost efficiency/overhead optimization mainly through economies of scale and (iii) increased profitability in the USA. The current focus of adidas lies on margin preservation/recovery in the current inflationary environment and after the termination of the Yeezy partnership.
adidas builds on a solid balance sheet with a strong cash conversion.
Supervisory Board 1/16*
- Supervisory Board