Performance Apparel Markets - Grado Zero Espace Srl

Performance Apparel Markets, 1st quarter 2006
Business update
The court eventually
granted The North Face’s
motion for summary
judgement and entered a
permanent injunction
against the Salehs
The North Face has a zero
tolerance policy for
trademark counterfeiting
Following a preliminary injunction against the Salehs, The North Face
asked for a summary judgement 1 on its claims for trademark
counterfeiting and infringement. After months of briefing, the court
granted The North Face’s motion for summary judgement and
awarded US$1 mn against the Salehs. The court also entered a
permanent injunction against the Salehs.
Commenting on the outcome, Steve Rendle, president of The North
Face, said: “We have a zero tolerance policy for trademark
counterfeiting. The court’s decision in our favour shows that taking on
the counterfeiters directly through legal actions like this one does
work.”
FINANCIAL RESULTS
Adidas has had an eventful
year but its biggest
challenge is to get Reebok
back on track
In the fourth quarter of
2005 the company recorded
a net loss of Euro4 mn, in
spite of 27% sales growth
Reebok’s sales fell by 5%
to US$930 mn
But full year sales rose by
13% and net profits by
22%
European sales rose by just
3% but sales in Asia
increased by 28%
ADIDAS
The 2005 financial year (January to December) was fairly eventful for
Germany-based Adidas—the world’s second largest sporting goods
company. It divested Salomon, acquired Reebok and exceeded its
financial targets. However, there are challenges ahead—the biggest of
which is how to get Reebok back on track.
For the fourth quarter of 2005, sales rose by 27% to Euro1,521 mn
from Euro1,196 mn in the fourth quarter of 2004. All regions saw
sales increases in double digit figures. However, the company
recorded a net loss of Euro4 mn for the fourth quarter of 2005
compared with a Euro20 mn profit in the fourth quarter of 2004. The
loss was predominantly due to the costs associated with the integration
of Reebok.
Reebok’s sales for the fourth quarter declined by 5%, from
US$975 mn in 2004 to US$930 mn in 2005.
For the whole of 2005, Adidas saw sales rise by 13%, from
Euro5.86 bn in 2004 to Euro6.64 bn in 2005. Net profits for the year
rose by 22% to Euro383 mn compared with Euro314 mn in 2004,
despite a loss of Euro44 mn from the sale of Salomon.
On a regional basis (see Table 1), sales in Europe rose by just 3%.
Within the European total, there were declines in the UK and Iberia.
Sales in Asia, by contrast, rose by 28%, having been driven by strong
performances in China and Japan.
1 A summary judgement is a judgement rendered by the court prior to a verdict because no material issue of
fact exists and one party or the other is entitled to a judgement as a matter of law.
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