Europe

adidas has divided its operating activities into the following operating segments: Europe, North America adidas, North America Reebok, Asia-Pacific, Russia/CIS, Latin America, Emerging Markets, adidas Golf, Runtastic and Other centrally managed businesses. While the operating segments Europe, Asia-Pacific, Russia/CIS, Latin America and Emerging Markets are reported separately, North America adidas and North America Reebok are combined to the reportable segment North America. Each reportable segment comprises all wholesale, retail and e-commerce business activities relating to the distribution and sale of products of the adidas and Reebok brands to retail customers and end consumers. The remaining operating segments are aggregated under Other Businesses due to their only subordinate materiality.

EUROPE

In 2019, sales in Europe increased 3% on a currency-neutral basis as well as in euro terms to € 6.071 billion from € 5.885 billion in 2018. adidas brand revenues were up 4% on a currency-neutral basis. This was driven by low-single-digit sales growth in Sport Inspired and mid-single-digit sales growth in Sport Performance. Reebok brand revenues in Europe decreased 2% on a currency-neutral basis, due to declines in both Sport and Classics.

Gross margin in Europe increased 3.9 percentage points to 51.5% from 47.7% in 2018, as positive currency effects, lower sourcing costs and a favorable channel mix more than offset an unfavorable product and pricing mix. Operating expenses were up 6% to € 1.722 billion versus € 1.628 billion in 2018, mainly reflecting an increase in operating overhead costs. Operating expenses as a percentage of sales were up 0.7 percentage points to 28.4% (2018: 27.7%). As a result of the increase in gross margin, which more than offset the negative effect of higher operating expenses as a percentage of sales, operating margin was up 3.2 percentage points to 23.2% (2018: 20.0%). Operating profit in Europe increased 20% to € 1.408 billion versus € 1.176 billion in the prior year.