In terms of the broad product categories, the lifestyle segment fared a little better than the sports segment last year, in spite of over-proportional marketing investments in sports performance. For the Adidas brand, global sales went up by 11 percent in the Sport-Inspired category and by 9 percent in Sport Performance.
At Reebok, double-digit growth in Classics was offset by a drop in Sport. The brand is trying to widen its footprint in the sports segment beyond the fitness segment, in terms of products and advertising.
Generally, the top line was lifted by a double-digit increase in direct-to-consumer revenues, which have come to represent around 30 percent of the total turnover. The increase was largely supported by a 36 percent jump in e-commerce to more than €2 billion. It followed a 57 percent increase in the previous year, and the group is investing heavily in this channel, but the management was unable to tell journalists at a press conference today whether it will be able to reach the ambitious target of €4 billion that it has set for 2020 under its current business plan.
Adidas' e-commerce business is largely driven by the Adidas app, which is now available in 25 countries. It underwent more than 7 million downloads last year, providing useful consumer insights. At the same time, Adidas has invested in two new flagship stores in Shanghai and Paris, which should be followed by one in London at the end of this year or soon after.
In contrast with previous years, the group didn't give a precise door count for 2018. The group closed more than 150 underperforming stores in Russia and some 250 Reebok stores in the U.S. In concert with its local franchisees, it is slowing down the pace of new store openings in China, where they have reached a total of around 12,000 units. As part of an €800 million capital expenditure budget for this year, the group plans to open about 200 stores worldwide and to remodel 150 others.
Apart from the development of e-commerce and the general sales growth rate, which was projected to be closer to 10 percent on an annual currency-neutral basis, the group is ahead of its business plan, dubbed “Creating the New,” in terms of profits. At a press conference at Adidas' new Halftime event center in Herzogenaurach last week, its chief executive, Kasper Rorsted, was proud to have added €5 billion in sales to the top line over the past three years, in spite of several divestitures. While the marketing budget has risen by around €700 million, the operating margin has grown by 4.3 percentage points and the net profit by €1.0 billion.
In view of the good results and a strong cash flow, the executive board is proposing a 29 percent increase in the annual dividend. Combined with its generous stock buy-back programs, it returned €1.5 billion to its shareholders last year and it plans to do the same this year.