Management Assessment of Performance, Risks and Opportunities, and Outlook


We communicate our financial targets on an annual basis. We also provide updates throughout the year as appropriate. In 2019, the company delivered a strong operational and financial performance. Sales development was favorably impacted by rising consumer spending on sporting goods, supported by global trends such as increasing penetration of sportswear (), increasing health awareness and rising sports participation rates. see Economic and Sector Development The continued brand momentum, supported by innovative product launches and inspiring marketing campaigns, as well as the successful execution of the company’s strategic business plan ‘Creating the New’ drove robust sales growth and strong profitability improvements. We maintained our full-year outlook throughout the year and delivered top- and bottom-line results within the respective guidance ranges.

Company targets versus actual key metrics











As published on March 13, 2019.


Subject to change due to coronavirus outbreak in China.


2019 including negative impact from accounting change according to IFRS 16; excluding this impact, net income from continuing operations was expected to increase at a rate between 10% and 14% to a level between € 1.880 billion and € 1.950 billion.


Excluding acquisitions and leases.

Currency-neutral sales development




to increase at a rate between 5% and 8%




to increase at a rate between 6% and 8%

Gross margin




to increase to a level of around 52.0%




to decrease slightly compared to the prior year level of 52.0%

Operating margin




to increase between 0.5pp and 0.7pp to a level between 11.3% and 11.5%




to increase between 0.2pp and 0.5pp to a level between 11.5% and 11.8%

Net income from continuing operations3 (€ in millions)




to increase at a rate between 8% and 12% to a level between € 1.845 billion and € 1.915 billion




to increase at a rate between 10% and 13% to a level between € 2.100 billion and € 2.160 billion

Average operating working capital in % of net sales




slight increase




slight increase

Capital expenditure4 (€ in millions)




to increase to a level of up to € 900 million




to increase to a level of around € 800 million

In 2019, revenues increased 6% on a currency-neutral basis, in line with our guidance of 5%-8% growth. This development was driven by increases across all market segments including Europe, which returned to growth in the second half of the year. Our direct-to-consumer business grew at a double-digit rate, with e-commerce recording another year of exceptional growth. Supply chain shortages, which we had experienced following a strong increase in demand for mid-priced apparel, weighed on our top-line growth, particularly in the first half of the year. Consequently, revenues grew 4% on a currency-neutral basis in the first six months of 2019 before accelerating in the second half of the year as our mitigating actions showed the planned effect and we resolved the issue. The gross margin ended the year at 52.0%, as expected, reflecting an increase of 0.2 percentage points. Lower sourcing costs, positive currency developments as well as a better product and channel mix more than offset higher air freight costs to mitigate supply chain shortages and a less favorable pricing mix. The operating margin also developed as anticipated. At the beginning of the year we guided for an increase to 11.3%-11.5% and achieved a level of 11.3%. On top of the gross margin increase, lower other operating expenses as a percentage of sales supported this development. Net income from continuing operations increased 12% to € 1.918 billion, including the negative impact from the first-time application of IFRS 16, and as such reached the upper end of our guidance of 8%-12% growth. see Income Statement

In 2019, average operating working capital as a percentage of sales ended the year at a level of 18.1%, which reflects a year-over-year improvement of 0.9 percentage points. Our guidance for operating working capital was for a slight increase. The better-than-expected development mainly reflects an increase in payables, which is a direct result of improved payment terms with our vendors. Capital expenditure amounted to € 711 million in 2019, compared to our guidance of up to € 900 million. Investments were mainly focused on initiatives of the adidas and Reebok brands, aimed at further strengthening our own-retail activities in our own stores and e-commerce, franchise store presence and shop-in-shop presentations. Other areas of investment included logistics infrastructure and IT systems as well as the further development of our major corporate facilities in Herzogenaurach, Portland and Shanghai. see Statement of Financial Position and statement of Cash Flows

Beyond our financial performance, we also actively monitor non-financial KPIs. see Internal Management System

In 2019, our stayed on high levels, reflecting the strength of our brands.

Also from a market share perspective, we continue to be very encouraged by our strong performance in key categories and key markets, as defined in the company’s strategic business plan. In our two strategic growth markets, North America and Greater China, we once again saw market share gains.

Our diligence and discipline in sustainability matters continues to yield strong recognition for our company. In 2019, adidas was again represented in a variety of high-profile sustainability indices. For the 20th consecutive time, we were selected to join the Dow Jones Sustainability Indices (DJSI), the world’s first global sustainability index family tracking the performance of the leading sustainability-driven companies worldwide. adidas was assessed to be among the global top 10% best-performing companies in its industry in economic, environmental and social criteria, and received industry-best scores in criteria including Brand Management, Environmental Policy & Management Systems, Operational Eco-Efficiency and Social Reporting. see Sustainability As we are convinced that our employees’ feedback plays a crucial role in our pursuit of creating a desirable work environment, we continued to leverage insights that we gain from ‘People Pulse’, our global approach and system platform for quarterly measurement of the level of employee satisfaction. In 2019, People Pulse saw again high response rates. On average, our employee Net Promoter Score (eNPS) remained stable in 2019 compared to the previous year. People Pulse results are not only leveraged for general feedback on the employee experience at adidas, but also as a tool to gather employee insights regarding important elements of our strategy. see People and Culture

Finally, we continue to enjoy an overall strong level of on-time in-full (OTIF) deliveries to our customers and own-retail stores. In 2019, OTIF remained stable compared to the prior year level. see Global Operations


Our Risk Management team aggregates all risks and opportunities reported by Risk Owners and Executive Board members through the half-yearly risk and opportunity assessment process. Results from this process are analyzed and reported to the Executive Board accordingly. In addition, the Executive Board discusses and assesses risks and opportunities on a regular basis. see Risk and Opportunity Report Taking into account the potential financial impact as well as the likelihood of the risks explained in this report materializing, and considering the strong balance sheet as well as the current business outlook, we do not foresee any material jeopardy to the viability of the company as a going concern. This assessment is also supported by the historical response to our financing demands. adidas therefore has not sought an official rating by any of the leading rating agencies. We remain confident that our earnings strength forms a solid basis for our future business development and provides the resources necessary to pursue the opportunities available to the company. Compared to the prior year, our assessment of certain risks has changed in terms of likelihood of occurrence and/or potential financial impact. The changes in risks and opportunities balance out, leaving the overall adidas risk profile largely unchanged compared to the prior year.


In March 2015, adidas unveiled ‘Creating the New’, our 2020 strategic business plan, which defines strategic priorities and objectives for the period up to 2020. The strategy is designed to drive brand desirability which, in turn, is expected to spur top- and bottom-line growth.

In March 2017, ‘Creating the New’ was updated with complementary initiatives in order to grow the top and bottom line even faster than initially projected. Consequently, we had increased our financial targets for 2020. We project currency-neutral revenues to increase at a rate of 10% to 12% on average per year until 2020 compared to the 2015 results. Net income from continuing operations is expected to grow at a higher rate than the top line. While in March 2017 we projected net income from continuing operations to expand by 20% to 22% on average per year during the five-year period, we once again upgraded our long-term profitability target in March 2018 following the strong operational and financial performance in 2017. As a result, we expect net income from continuing operations to grow by 22% to 24% on average per year in the period between 2015 and 2020. see Corporate Strategy

Our successes since initiating ‘Creating the New’, as measured by financial as well as non-financial KPIs, are a direct consequence of our relentless execution and focus on this strategy. Throughout 2020, the whole organization will stay focused on successfully completing our current strategic business plan, before we announce details on the next strategic cycle in November 2020.

Against the background of rising consumer spending, increasing penetration of sportswear (‘athleisure’) and growing health awareness in most geographical areas, we project further significant top-line improvements in 2020. The revenue increase is to be driven by our extensive pipeline of new product launches paired with brand-building activities. In addition, the further expansion and improvement of our controlled space initiatives, in particular through our own e-commerce channel, is expected to contribute to the sales growth. Last but not least, major sporting events such as the UEFA EURO 2020 and the 2020 Olympic Games in Tokyo will support this positive development. In combination with tight control of both our inventory levels and our cost base, we expect to generate strong profitability improvements also in 2020. Supported by further operating margin expansion, our bottom line is again expected to increase at a double-digit rate in 2020. see Outlook

We believe our outlook for 2020 realistically describes the underlying development of the company. However, the outlook for 2020 as outlined in this report is subject to change depending on the further developments related to the coronavirus outbreak. Our business in Greater China performed strongly in the first three weeks of 2020. However, since then we have been experiencing a material negative impact on our operations in China. As the situation keeps evolving, the magnitude of the overall impact on our business in 2020 cannot be quantified reliably at this point in time. Accordingly, the company’s outlook for 2020 as outlined in this report does not reflect any impact of the coronavirus outbreak. see Outlook

In addition, ongoing uncertainties regarding the economic outlook and consumer sentiment in both developed and emerging economies as well as persisting high levels of currency volatility represent risks to the achievement of our stated financial goals and aspirations. see Economic and Sector Development No other material event between the end of 2019 and the publication of this report has altered our view.


The term is composed of the words athletic and leisure. It describes a fashion trend of sportswear no longer being just meant for training but increasingly shaping everyday clothing.

Controlled Space

Includes own-retail business, mono-branded franchise stores, shop-in-shops, joint ventures with retail partners and co-branded stores. Controlled space offers a high level of brand control and ensures optimal product offering and presentation according to brand requirements.

Net Promoter Score (NPS)

A survey-based measure of how likely people are to recommend a brand. The survey is based on one single question to consumers: ‘How likely are you to recommend this brand to your friends?’, which can be answered within a scale from 0 to 10. Promoters are consumers giving the brand a 9 or 10 rating, while detractors are those between a 0 and 6 rating. The NPS is the difference between promoters and detractors measured in percentage points.

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