Adidas chalks out growth strategy to spur growth

Thursday, 26 March 2015

At its Investor Day in Herzogenaurach, the Adidas Group presented its new strategic business plan until the year 2020 focusing on accelerating growth by significantly increasing brand desirability. The company expects the new strategy to spur top and bottom-line growth, with revenues projected to increase at a high-single-digit rate on average per year on a currency-neutral basis until 2020 compared to the expected 2015 results. The Group's net income is expected to grow at a considerably higher rate than the top line and is projected to expand by around 15 percent on average in each of the next five years.

The new business plan is built around three major strategic choices: speed, cities and open source. With the new plan in place, the company will further increase its sales through controlled space activities to above 60 percent of sales. At the same time, the group aims to expand its ecommerce business to above 2 billion euros (2.1 billion dollars) by 2020, by implementing an omni-channel approach. Further, the company will also evolve production capabilities to expand product customisation options for its consumers.

The group also aims to continue its growth in all relevant geographic markets with a focus on six global key cities: Los Angeles, New York, London, Paris, Shanghai and Tokyo. Across these cities, the Adidas Group will invest in talent, attention and marketing spend. The investments will also be made in strengthening its core brand portfolio of Adidas, Reebok and TaylorMade.

With the three strategic choices driving a surge in brand desirability, the Adidas Group expects to generate high-single-digit currency-neutral sales growth per year on average over the next five years. By aiming to increase market share over the period, the company expects to generate attractive margin expansion and operating leverage. As a result, the bottom line is expected to grow at a faster rate than the top line, with net income forecasted to increase by around 15 percent on average per year until 2020 compared to the expected 2015 results.

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