Based on preliminary figures, adidas-Salomon sales in 2004 reached 6.478 billion ($8.06 bn), a 7% improvement in currency-neutral terms. In euros, sales increased 3.4% to 6.267 billion ($7.10 bn). Currency-neutral sales increased for all brands and in all regions.
Group gross margin increased 2.3 percentage points to 47.2% in 2004 from 44.9% in 2003, a record level that reflects the impact of increased adidas own-retail activities, an improving product mix as well as a stronger euro.
Operating expenses in 2004 grew 6.6% to 2.478 billion(3.08 bn) versus 2.324 billion ($2.63 bn) in 2003. Group operating profit increased 18% to 580 million ($721.4 mm) versus 490 million ($554.7 mm) in 2003 and operating margin grew 110 basis points to 9.0% in 2004 from 7.8% in 2003. As a result, income before taxes grew 19% to 520 million ($646.8 mm), compared to 438 million ($495.9 mm)in the prior year. This performance was driven by higher sales and strong gross margin improvement.
Net income for the Group in 2004 increased by 20.8% to a record 314 million ($390.6 mm) from 260 million ($294.3 mm) in 2003, representing basic earnings per share of 6.88 ($8.56) versus 5.72 ($6.48) in 2003. The earnings growth is twice as high as the initial guidance at the beginning of the fiscal year.
adidas-Salomon CEO Herbert Hainer commented, “Our excellent 2004 performance underlines our Group’s ability to deliver significant operating margin improvements. Our record earnings were driven by currency-neutral sales increases at all our brands and in all our regions as well as strong gross margin expansion. 2005 will be another exciting and successful year for adidas-Salomon. We plan to grow Group sales at mid- to high-single digit rates on a currency-neutral basis and deliver net income growth of between 10 and 15%.”