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Performance Apparel Markets, 1st quarter 2006 Business update Table 1: Adidas: breakdown of sales by region, 2004 and 2005 2004 2005 2005/04 (Euro mn) (Euro mn) (% change) Europe 3,068 3,166 3 North America 1,332 1,561 17 Asia 1,192 1,523 28 Latin America 224 319 43 Total continuing operations a 5,860 6,636 13 NB: percentage change calculations are based on unrounded data. a Numbers do not sum to totals indicated; the balance in each case is attributed to HQ/consolidation. The order backlog increased by 15% Priorities will be the World Cup and Reebok Football is Adidas’s most important product category and the company has a 35% share of the global football market The more challenging task is to get Reebok back on track Columbia’s sales grew by 4.1% to US$301.8 mn for the fourth quarter of 2005 But outerwear, its strongest category, fell by 4.7% to US$147.4 mn This decline was offset by strong sales of sportswear and footwear The order backlog at the end of the year increased by 15% with strong performances in North America and Asia. Herbert Hainer, the chief executive of Adidas, says that the company’s two biggest priorities for 2006 will be the World Cup football tournament and Reebok. The World Cup takes place in June 2006 in Germany—the group’s home country. Football is Adidas’s most important product category. Indeed, the company estimates that it has 35% of the global market for this category. Therefore Adidas will be making the most of the opportunities which this high share affords through, for example, high profile sponsorship of the events. On the downside, Adidas has the more challenging task of getting Reebok back on track. Sales were down by 5% in the fourth quarter of 2005 and the order backlog for this period declined by 24%. Analysts are predicting short-term problems for Adidas but the situation is expected to improve from 2007 onwards. COLUMBIA SPORTSWEAR USA-based Columbia Sportswear, a manufacturer of athletic wear, has reported sales of US$301.8 mn for the fourth quarter of 2005 which ended on December 31, 2005. This represents an increase of 4.1% compared with the fourth quarter of 2004. Despite the rise in overall sales, outerwear—the company’s largest product category—suffered a 4.7% drop in sales to US$147.4 mn for the fourth quarter of 2005. This decline was offset by strong sales of sportswear and footwear—which were the second and third largest categories respectively. Compared with the fourth quarter of 2004, sportswear sales were up by 11.5% to US$90.0 mn. Over the same period, sales of footwear increased by 19.9% to US$63.3 mn. © Textiles Intelligence Limited 51
Performance Apparel Markets, 1st quarter 2006 Business update Geographically the largest percentage increase was in “other international” where sales rose by 17.5% Net income dropped by 7.1% to US$36.6 mn For 2005 as a whole, sales grew by 5.5% to US$1,155.8 mn but net income fell by 5.7% In geographical terms, the largest percentage increase for the fourth quarter was seen in “other international” where sales grew by 17.5% to US$51.8 mn. European sales increased by 14.3% to US$50.3 mn. However, sales in the company’s largest region, the USA, rose by just 2.4% to US$185.4 mn. Columbia’s net income dropped by 7.1% from US$39.4 mn in the fourth quarter of 2004 to US$36.6 mn for the fourth quarter of 2005. For the whole of the 2005 financial year, sales amounted to US$1,155.8 mn, representing a 5.5% increase on 2004 sales. Nonetheless, the net income decreased by 5.7% from US$138.6 mn in 2004 to US$130.7 mn in 2005. Table 2: Columbia Sportswear: breakdown of sales by region, 2005 Sales Change a (US$ mn) (%) USA 676.9 1.5 Europe 184.4 8.3 Other international 179.7 27.1 Canada 114.8 -1.8 Total 1,155.8 5.5 a Over previous year. Source: Columbia Sportswear. Table 3: Columbia Sportswear: breakdown of sales by product category, 2005 Sales Change a (US$ mn) (%) Sportswear 450.3 13.6 Outerwear 440.0 4.4 Footwear 211.2 14.4 Equipment 9.1 15.2 Accessories 45.2 -2.0 Total 1,155.8 5.5 a Over previous year. Source: Columbia Sportswear. The company believes that current strategies will lead to continued long-term growth Commenting on these results, Tim Boyle, the president and chief executive officer, said: “During the last few years, we have made significant infrastructure investments to support future growth plans. “While we are disappointed with our 2005 revenue results, sales came in as projected, and we are generally satisfied with our expense management. “We believe the initiatives we are implementing to drive international expansion and footwear and sportswear product category growth, as well as the improvements being made to stabilise our North American outerwear business, position us for continued long-term growth.” 52 © Textiles Intelligence Limited
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