At the same time, Adidas stated that Group will benefit from the consequent execution of operational improvements achieved throughout the last few years and from leveraging its brand leadership re-organisation to become more consumer-centric.
To beat expected significant increases in its underlying sourcing expenses, Adidas Group will continue to work on further increasing its production#
In addition, the Group will continue to optimise the overall organisational set-up and focus on initiatives that drive further efficiency gains.
Simultaneously, Adidas added that it remains committed to its long-term marketing investment strategy aimed at sustainably increasing brand desirability and accelerating top-line growth over the next five years.
So, for 2015 and 2016, the company increased its marketing spend target range by one percentage point to a level of between 13-14 per cent of sales from the previous range of 12-13 per cent of sales.
“As a result, sales and marketing investments are expected to further increase in absolute terms next year and, as a percentage of sales, remain at around the 2015 level,” the German company observed.
“Taking the expectations for both, sales and marketing investments as well as operating overhead expenditures into account, the company projects a significant reduction of its operating expenses as a percentage of sales, which will at least compensate the projected gross margin decline.
As a consequence, the Group's operating margin is expected to at least remain stable in 2016 compared to the 2015 level and in absolute terms, the Group's operating profit is forecasted to improve at a high-single-digit rate next year.
Adidas Group CFO Robin Stalker said, "We are well-prepared to cope with the cost pressure that the entire industry will be facing next year.”
“On one hand, our brands and products are enjoying strong momentum and on the other hand, we are optimising our processes and along the entire supply chain to drive further efficiency gains,” he too added. (AR)
Fibre2Fashion News Desk – India
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