Adidas Notes.doc - Wikispaces by pengxiuhui


									                                        Adidas Notes – Moorman

First sentence really spells it out – focused on making acquisitions that would allow it to surpass Nike
as leader in global sporting goods

1998 – Purchased Salomon SA to diversify into ski, golf, bike and winter. Price $1.5 billion euro

1998 sales of 5.1 billion euro

Struggled with integration, took 5 years to get back to same EPR

2005 – Sold most of Salomon assets for 485 million euro, kept TaylorMade

2006 – Bought Reebok for 3.1 billion – footwear, apparel, Rockport, Greg Norman, CCM hockey

2005 – Revenue of 5.8 billion, 2006 – 10.1 billion 2007 – 10.3 billion

2006 Nike revenue – 14.9 billion

Better integration of Reebok and Adidas supply chain - $105 million cost savings

Nike 36% market share in US footwear, Adidas/Reebok 21%

Break down financials, % change, changes in operating expenses

Founded 1920 in Germany by Dassler brothers – history in shoe innovations – over 700 patents

Gave athletic shoes to athletes to wear/promote

Bitter rivalry between brothers caused Adidas and Puma to form

Adidas really took off in 1960’s – 75% of track and field athletes wore adidas.

Also soccer shoes in 1954

Soccer balls in 1963 and apparel in 1967

1972 1164 of 1490 wearing adidas

1970’s – jogging became popular rec activity and adidas shoes and apparel for consumers

1974 – Nike becomes #1 training shoe in US – Adidas mgt underestimate Nike

Adidas concerned with Puma, did not see what Nike was doing

Nike signing sports stars to endorsement contracts

Top athletes still preferred Adidas but consumers going for Nike

Adidas passes up endorsement for Michael Jordan
Death of Horst Dassler left gap at Adidas – 1990 #8 in US (2% market share)

1993 – Robert Louis-Dreyfus turn around at company – big endorsement deals – Kobe, Anna, Beckham

1994 – Third largest in US behind Nike and Reebok

Nike still 3x more revenue than adidas and growing quickly internationally

1997 Salomon acquisition did not make sense – unsuccessful move into hard goods. Adidas was
footwear and apparel, not manufacturer

        Adidas is a design and marketing firm

1998 net loss of $164 million with Salomon acquisition

Is targeting global sporting goods industry the right strategic goal? Seems very broad

Is Adidas capable of competing with Nike? In all sporting goods or in certain sectors?

Move to acquire Reebok seems to make more sense – focus on footwear, apparel, and golf

Adidas – tech shoe for serious athletes, Reebok more leisure, middle price point

Sold off Greg Norman shortly after purchase

Do breakdown of % sales from geographic regions for Reebok and Adidas at time of acquisition (2004)

Adidas – German mentality of control, engineering and production

Reebok – US marketing-driven culture

Is Nike too far ahead in the race to be caught?

Adidas focused on leadership in product innovation

Looking at financials it appears they are investing heavy in adidas, a little in TM, and decreasing capital
expenditures in Reebok

Growing quickly the number of retail stores it operates – will that alienate other sporting goods

Supply chain management is key – enables getting new products to market faster

95% of production outsourced to contract man. In Asia

2005 – 547 suppliers 2007 – 377

Enables them to respond to changes in market and demand

Calculate gross profit margins and operating margins to see if changes are working
Two categories – Sport Performance Group – running, soccer, basketball, training

                Sports Style – comfort of athletic apparel, but not athletes

Growth Rates in footwear/apparel slowing, emerging markets have healthy growth rates

Leader in soccer – aligns well with developing markets – most popular sport in world

Still big in Olympics

Sports Performance group – 80% of sales in 2007, 10% increase in 2007

Sports style – faster growing market, higher profit margin (less innovation)

Why are they making Y-3? Tights, blouses, leather jackets? Doesn’t seem to fit

Europe - 50% of sales, NA 18% Asia 24% (17% growth rate) (much in China)Latin America 8% (39%

Strong in Russia, leader over Nike

Asia 2/3 of world’s population

Strong in developing markets – losing to Nike in North America – Is that a problem, largest market but
slowest growth rate.

Is Adidas well-positioned in rapidly growing developing markets?

Is Adidas using Reebok brand correctly – when purchased poor rep for quality, innovation and styling

        Mainly targeting towards women looking for comfy shoes and aerobics gear

Buying back distribution rights for Reebok and putting Reeboks in same store as Adidas. Does that
make sense? Is there a possibility of cannibalization?

TaylorMade golf performing well in Asia, overall golf industry in decline

Leader in drivers, behind Callaway in irons, lacking in putters, wedges, balls

Strong in golf apparel – big in pro endorsements – is that taking away from endorsements in other

Also acquired Ashworth clothing for more strength in traditional golf apparel

Still lost market share to Nike in North America footwear in 2008

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