Allan Mulally Fort CEO and Savior

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Hallo everybody, right now  I want to describe about Allan Mulally. He is the person who has save Ford Company from  struggling during the late-2000 recession. Allan Mulally was born in Oakland, California on August 4, 1945. But he grew up in his mother hometown Lawrence in Kansas. He said he found himself motivated when he was 17 after he listening about the challenge of President John F. Kennedy about sending a man to the moon.

In education side he can be considered a successful person after having graduated from University of Kansas in 1969 with Bachelor of Science and Master of Science degrees in aeronautical and astronautical engineering. He is also an alumnus of the Kappa Sigma Fraternity. He also received a Master’s degree in Management (S.M.)  from the MIT Sloan School of Management in 1982.

Career:

Boeing

Because of the many degree and prestige he received in his study it was not a strange thing that after graduate from college he immediately hired by Boeing as an engineer and then contributing on many project such as project 727, 737, 747, 757, 767 and 777 projects. He was later named as Vice President of Engineering for the commercial airplane group and in 1994, promoted to senior vice president of Airplane Development. In 1997, Mulally became the president of the Information, Space & Defense Systems and senior vice president. He held this position until 1998 when he was made president of Boeing Commercial Airplanes.

When Harry Stonechiper Chief Executive of Boeing is forced to resigned in 2005, Mulally is one of the possible candidate to replace him but eventually Mullay was passed and he decide not to remain in the company.

Ford

Mulally was named the President and CEO of Ford Motor Company on September 5, 2006.

One of Mulally’s first decisions at Ford was to bring back the Taurus nameplate. He said that he could not understand why the company previously scrapped the Taurus, which had been one of the company’s best sellers.

Mulally took over “The Way Forward” restructuring plan at Ford to turn around its massive losses and declining market share. Mulally’s cost-cutting initiatives led to the company’s first profitable quarter in two years. In 2006, Mulally led the effort for Ford to borrow US$23.6 billion by mortgaging all of Ford’s assets. Mulally said that he intended to use the money to finance a major overhaul and provide “a cushion to protect for a recession or other unexpected event. This decision prove to be correct as Ford is saved from bankruptcy during the automotive industry crisis of 2008–2009. 

In May 2009, Ford chairman William Clay Ford, who hired Mulally, said that “Alan was the right choice [to be CEO], and it gets more right every day”. This sentence is proven to be the correct word to simbolize the success of Allan Mulaly. He’s proven to be a leader that dare to take risk and didn’t let failure such as his failure to be Boeing CEO to impede him.

By: Ammes 32412055

Strategic Management at Honda

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PARADOX OF DELIBERATENESS AND EMERGENCE

Henry Mintzberg (1987) made a distinction between deliberate strategy and emergent strategy. Emergent strategy originates not in the mind of the strategist, but in the interaction of the organization with its environment. He claims that emergent strategies tend to exhibit a type of convergence in which ideas and actions from multiple sources integrate into a pattern. This is a form of organizational learning, (from its environment) in fact, on this view, organizational learning is one of the core functions of any business enterprise (See Peter Senge’s The Fifth Discipline (1990).)

Deliberate strategy on the other hand is involves intentional planning and predetermined outcomes based on internal and external analysis at a current point in time. Such analysis also involves the study of the historical trend of the organization and industry performance. A flawed assumption where the predetermined outcomes are derived from is that the future will behave as in the past and the macro environment will remain relatively stable. Such is not the case with the magnitude, velocity, frequency and abruptness of change reaching new unprecedented levels daily in the business landscape across the world.

The paradox of deliberateness and emergence is whereas deliberate strategies provide an organization with a sense of purposeful direction, emergent strategies imply that the organization is learning from its environment incrementally. This has led to dichotomies of strategies. However Mintzberg and Whittington says that this is not necessarily so, in fact Mintzberg advocates that firms in today’s highly turbulent business landscape need to be purposeful and resourceful simultaneously. In this sense he coined the term “deliberately emergent”. Whittington is in agreement as he classifies deliberate strategies under the classical school and emergent strategies under the evolutionary school both of which share the same outcome of profit maximization. The strategies may be different but the philosophy behind the strategies are in fact the same.

PORTER’S 5 FORCES ANALYSIS OF THE GLOBAL AUTOMOTIVE INDUSTRY

1. Threat of New Entrants.
In most major western economies with established automotive industry, the threat of new entrants was low in the 1970s and 1980s. In North America for example, it was thought that the Big Three (GM, Ford & Chrysler) were safe. But this did not hold true when Honda Motor Co. opened its first plant in Ohio. The emergence of foreign competitors with the capital, required technologies and better operations management skills began to undermine the market share of North American companies. This was also true when Honda took the risk to enter the British and European markets.

2. Power of Suppliers.
The automobile supply business is quite fragmented (there are many firms) throughout the many regions in the world. Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be devastating to the previous supplier’s business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power because the manufacturers order in volume.

3. Power of Buyers.
Historically, the bargaining power of automakers went unchallenged. Most customers however, became disenchanted with many of the national car makers and began looking for alternatives with better fuel economy, more stylish designs and better technology. Foreign cars provided these attributes. On the other hand, while consumers are very price sensitive, individually, they don’t have much buying power, as they never purchase huge volumes of cars.

4. Availability of Substitutes.
Besides the threat of someone buying a different car we need to consider other modes of transportation as alternatives or substitutes. We need to look at the likelihood of people taking the bus, train or airplane to their destination. The higher the cost of operating a vehicle, the more likely people will seek alternative transportation options. The price of petrol has a large effect on consumers’ decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but they also guzzle gas compared to smaller sedans and light trucks. When determining the availability of substitutes the following should also be considered; time, money, personal preference and convenience in the auto travel industry. The trend today is towards more fuel-efficient, safe and environmentally friendly cars that are affordable to the increasing global middle class.

5. Competitive Rivalry.
Highly competitive industries generally earn low returns because the cost of competition is high. The auto industry is considered to be an oligopoly, (which helps to minimize the effects of price-based competition. The automakers understand that price-based competition does not necessarily lead to increases in the size of the marketplace; historically they have tried to avoid price-based competition, but more recently the competition has intensified – rebates, preferred financing and long-term warranties have helped to lure in customers, but they also put pressure on the profit margins for vehicle sales.

Created by : stefani ( group 3 )

Convenience Store – Circle K


53710“What else do you need?” .. This is the slogan of the circle k

Circle K is an international chain of convenience stores, founded in 1951, in El Paso, Texas, United States. It is owned and operated by the Canadian-based Alimentation Couche-Tard.

Since the 1980s, Circle K has been the largest company-owned convenience-store chain (i.e. of non-franchised stores) in the U.S. It was second in overall number of U.S. stores to 7-Eleven. However by 1989, it faced strong competition from convenience stores owned by oil companies, and Circle K declared bankruptcy in 1990.[2] By July 2010, Circle K had dropped to fourth rank in number of stores (3,455), then behind BP (4,730 stores) and Shell (4,630 convenience stores).

Hmm.. How about the management???

Circle K has marketing and merchandising programs are strong in meeting customer needs by understanding the patterns of thought, behavior, work and shopping patterns of customers in outlets Circle K.

In addition, close cooperation with supply partners to provide attractive prices for customers franchises Circle K. In success-owned big names Circle K, the franchisor also participated in site selection by doing market analysis, site selection, sales forecasting models and market strategy planning.

Do you know about the mission and vision??

At Circle K, the mission are “Creating a pleasant shopping experience through a selection of promotional products, creative activities, and create a safe and comfortable shopping.Creating an integrated work processes among the functions of the organization and continually improve human resource capabilities.

Continue reading

Management and Leading of Nestlé

With over 265,000 employees worldwide and factory locations in more than 85 countries, Nestlé is a truly multinational, multicultural company. Considering that and their ill name of being an ‘aggressive company’ Nestlé should focused on Human Resources Management. And not only on appropriate tools of recruitment and derecruitment but mostly on managing workforce diversity, compensations and training.

The urgent issue is Nestlé’s policy of employment in developing countries. Customers assume, implicitly or explicitly, that “made by Nestlé” means made by Nestlé workers in Nestlé facilities directed by Nestlé management directly accountable to Nestlé’s corporate headquarters. This assumption on the part of consumers is what justifies their faith in the brand – and their willingness to pay. But to a growing extent, Nestlé is not employing thousands of the workers making Nestlé products. For example, in the important growing Indonesian market, only 44% of the workers making Nestlé branded products in four factories and one warehouse are permanent Nestlé workers. This is typical of Nestlé in Asia and other poorer regions of the world. And in Europe over 10% of workers in Herten Germany, for instance, are agency workers making Nestlé Herten product but not working for Nestlé. In Hungary (Diosgyori) over 20%, in Portugal (Avanca) over 25% and in the UK (York) almost one in eight workers are not permanent Nestlé employees. The use of third party producers (“co-packers”) will increasingly mean that the branded product for which consumers often pay more will come out of a non-Nestlé, “non-branded” factory, often a local one with no global brand or reputation to protect, but still with recognisible logo. Nestlé should take a close look at their employment practices so they can guarantee that branded Nestlé products are made in Nestlé facilities by Nestlé workers and managers on decent and permanent Nestlé work contracts.

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An example of management which noticed the importance of diversity may be Nestlé in USA. The are using a strong Supplier Diversity Program. They claim to selecting only those suppliers who can successfully meet Nestlé’s regional and international needs, which allows them to develop a strong, flexible and competitive supply base, and pass those improvements on to the customer. Not ignoring minority, woman and veteran-owned businesses tend to hire diverse employees. In supporting these business Nestlé support a growing segment of consumer community and gain their loyalty. And by retaining qualified, diverse suppliers, they can gain a distinct competitive advantage that can significantly impact bottom line.

And this is the advertisement from Nestlé

Created by : Lisa Maritseda (group3)

About Intel

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Intel’s Vision and Global Strategy
Intel vision is to create and extend computing technology to connect and enrich the lives of every person on earth, by focusing on the following key strategic objectives:
• Grow the PCnand data center business with new users and uses.
Extend Intel’s PC platform leadership and develop exciting innovations to deliver new user experiences; and lead the transformation to open data centers and cloud computing.
• Extend Intel solutions into adjacent markets.
Transform the embed- ded industry with Intel® architecture (IA) in new market segments; and launch and ramp IA solutions in smartphones, tablets, smart TVs, and vehicles.
• Create a continuum of personal computing.
Expand IA differentiation with new capabilities across devices; excite leading software developers to create the best user experiences and applications on IA; and deliver new usage models with multi-communications connectivity.
• Care for our people and the planet, and inspire the next generation.
Cultivate a workplace where employees can thrive both on the job and in their communities; develop technology solutions to address major global problems while reducing our environmental impact; and accelerate educa- tion transformation worldwide through technology, program, and policy leadership.

Corporate responsibility management structure
CEO and Board-Level Oversight
The Board of Directors’ Corporate Governance and Nominating Committee receives briefings from our Corporate Responsibility Office twice a year, in addi- tion to updates on specific corporate responsibility issues as needed. Our CEO receives regular corporate responsibility updates from executive management.

Management Review Committees (MRCs)
MRCs bring together senior executives from across the company to review performance and set strat- egy in specific areas. For example, our Corporate Responsibility MRC reviews emerging issues across a range of focus areas, and our Eco-MRC reviews Intel’s approach to environmental management.

Business Group and Cross-Functional Teams
Multiple business groups have dedicated teams that address corporate responsibility issues within their organizations, helping to develop plans and set goals in support of Intel’s overall strategy and objectives. Those groups include, but are not limited to, Environ- mental Health and Safety, Eco-Technology Program Office, Ethics and Compliance Program Office, Corpo- rate Affairs, Global Public Policy, Human Resources, Corporate Diversity, Supply Chain, and Information Technology. In addition, cross-functional teams coordinate efforts that span business groups. For example, our Eco-Stakeholder Council brings together representatives from across Intel to develop clear and consistent strategies for improving our environmental performance and engaging employees.

Intel – Stories of Innovations in Technology

Created by: Catherine Pritania (Group 3)

Adidas ( Statement Management from Staff ) part 2

John-Paul O’Meara – Head of Investor Relations

Herbert Hainer – Chairman of Executive Board and Chief Executive Officer

Robin J. Stalker – Chief Financial Officer and Member of Executive Board

Analysts

Michael Kuhn – Deutsche Bank AG, Research Division

Matthias Eifert – MainFirst Bank AG, Research Division

Jurgen Kolb – CA Cheuvreux, Research Division

Erwan Rambourg – HSBC, Research Division

Andreas Inderst – Exane BNP Paribas, Research Division

John Guy – Berenberg Bank, Research Division

Andreas Riemann – Commerzbank AG, Research Division

Bernd George Müll – Landesbank Baden-Wurttemberg, Research Division

Louise Singlehurst – Morgan Stanley, Research Division

Presentation

Operator

Good day, and welcome to the adidas Group conference call for 2012 full year financial results.

John-Paul O’Meara

Good afternoon, ladies and gentlemen, and welcome to our 2012 Full Year Financial Results Presentation. I’m JP O’Meara, and I head up the investor relations activities here at the adidas Group.

During today’s presentation, Herbert Hainer, adidas Group CEO; and Robin Stalker, Group CFO, will reflect on the achievement of 2012, clarify the impacts from one-off items and discuss the group’s strategic and financial outlook for 2013.

To allow for ease of comparison, there are a few things today to bear in mind during our discussions on the figures. Firstly, all sales and revenues-related growth rates will be discussed on a currency-neutral basis unless otherwise specified. And in addition, all comparisons will be based on the restated 2011 financial results and excluding impairment for 2012. Robin, in his remarks, will deal specifically with these issues.

So with that in mind, let’s begin. And as always, let’s start with a refresher of the widespread presence and success of our brands and athletes over the past 12 months.

[Presentation]

Herbert Hainer

So good afternoon, ladies and gentlemen, here in Herzo, and good morning to the people who are following us out of the U.S. and the rest of the world. I’m very proud to report that 2012 has been another successful year for our group. Our dedication to create the unexpected in our product and brands once again sparked consumer excitement all around the world. And this resulted in significant market share wins in many of our key categories and markets. And I look forward to sharing some of these great achievements with you this afternoon. However, 2012 was also not without its challenges. But as you would expect, we have moved swiftly and aggressively to deal with them, meaning we have delivered on our target for the year and are ready to drive for another year of new records again in 2013.

So let me go into more details. In 2012, group sales increased by 6% or 12% in euros to EUR 14.9 billion. This means we added EUR 1.6 billion in revenues during the year. Our focus on quality growth, which is a key component of our Route 2015 strategy, also ensured our bottom line again grew significantly faster than the top line.

The group’s operating margin improved 80 basis points to 8% and earnings per share grew by 29% to EUR 3.78, also our highest result ever. Due to the strong operational performance, we finished 2012 with a net cash position of EUR 448 million, a fivefold increase compared to a year ago. And this significant cash flow generation once again underpins the trajectory and the value we are unlocking with our Route 2015 strategic business plans.

In terms of growth, despite macroeconomic headwinds, sales increased in each and every region in 2012. In terms of highlights, without any doubt, the standout performer was Greater China. Sales for the year increased 15% to a new record level of over EUR 1.5 billion with double-digit growth in every quarter. For many players in our industry, China was indeed a challenge in 2012. However, this was mainly due to the specific competitor issues and not because of any lack of interest in sporting goods on the part of the consumer.

So you might ask yourselves, what is our recipe for success? As part of a rising middle class, our consumer target group in China is maturing at a rapid pace, becoming increasingly discerning and sophisticated. Given the breadths and the depths of our product offering in performance and lifestyle, adidas fits perfectly to this consumer. And on top of our global appeal, we also infuse our brand messages and products with local flair and understanding. Additionally, we have deepened our already very close relationship with our retail partners, who now operate more than 7,500 point of sales across Greater China. By ensuring that our business remains constantly in tune with theirs, we are able to keep our product offering fresh at the point of sale. And this is a clear edge we are enjoying and will continue to enjoy. Looking forward from our market research, we can see that the adidas brand appeal has the most momentum in the Chinese market right now. And as a result, I’m very confident we will continue to take more market share and grow faster than any of our major competitors also in 2013.

Turning to another one of our strategic markets. Sales in North America grew 2% in 2012 with brand adidas increasing 9% and TaylorMade-adidas Golf are up 25%. Excluding the impact from the NFL and the NHL license, Reebok revenues declined 11% in North America while total group sales, excluding the NFL, increased by 6%. Since we began Route 2015, adidas brand sales are up more than 1/3, which is well ahead of market growth. In fact, when we look deeper into the adidas numbers, our business with our key high school kids relevant retail partners was up over 20% in 2012. Through Originals in basketball, we have created a great base to build on. And quite frankly, when I look at our plans for running, we are only just at the beginning of exploiting the tremendous opportunities this market has to offer for our group.

Speaking of markets with opportunities, in Russia/CIS, revenues were up 17% in 2012, driven by outstanding comparable store sales growth of 8%. Both adidas and Reebok sales grew at double-digit rates with adidas up 16% and Reebok increasing 20%. Equally as encouraging was our group’s resilient performances in Western Europe and other Asian markets. Revenues in our home territory were up 3%, driven by double-digit growth in the U.K. and Poland, as well as increases in Germany and in France.

In Other Asian Markets, despite our issues in India, sales in the region increased 7%. This was driven by double-digit growth in South Korea and the strong rebound in Japan, where revenues increased 11% as we extended our considerable lead over competitors in that market. And finally, in Latin America, sales increased 8% for the full year, driven by a strong adidas brand performance, where sales were up 13%. Double-digit increases in football and running, as well as over 20% growth in own-retail, were key to this development.

Turning to our brands. Two of our group’s most important values are passion and performance, both of which were at the forefront of many of our 2012 brand and category achievements. The obvious highlights from 2012 has to be the role adidas played at the year’s major sporting events, which spurred adidas brand sales up 10% or 15% in euros to over EUR 11.3 billion. In particular, the London 2012 Olympic and Paralympic Games will surely count among the most memorable and inspiring sporting events of our time. The adidas brand, as the official sportswear partner of the event and of Team GB, played its role to perfection. It delivered its most comprehensive offering of high-performance products ever and contributed significantly to the emotion of the event with the highly acclaimed Take the Stage campaign.

Similarly in Poland and Ukraine, standout performances from our teams and players at the UEFA EURO 2012 was another catalyst which truly inspired consumers and fans around the world. They once again reconfirmed adidas as the #1 football brand, highlighting that our passion for innovation continues to set us apart from the competition. These are iconic [indiscernible], the official match ball and Federation jerseys, as well as our presence in the UEFA Champions League, we once again dominated the world’s favorite sport, achieving a new record level of sales of well above EUR 1.7 billion, eclipsing even our own very high expectations. However, our success was not just limited to the event-related categories. In fact, all other key adidas categories, be it running, basketball or outdoor, grew at double-digit rates in 2012.

In running, sales grew by 13% as the adizero and Clima product franchises continued to drive sales globally. adizero footwear sales increased more than 40%, driven by another year of high visibility on the world’s major marathon podiums. On the court, our basketball business altogether paced, with our sales growth rate doubling to 22% compared to 11% a year ago. And in particular, our D Rose, Crazy Light and NBA-licensed products drove growth of almost 50% for the category in the strategically important mall-based channel in the U.S. And finally, in outdoor, sales increased 14% as we continue to make strides towards our Route 2015 goal of EUR 500 million revenues. And this was driven again by the highly innovative range of Terrex footwear and apparel.

This passion for innovation leads me to another major highlight of our year, TaylorMade-adidas Golf. With sales up 48% to over EUR 1.3 billion in just 2 years, our golf business has already rocketed past its initial Route 2015 targets and is now more than double the size of its neighbors down the road in Carlsbad. Considering that the golf industry is still relatively stagnant, this is a remarkable testament to TaylorMade-adidas Golf’s relentless focus on helping golfers to perform better.

Turning now to Reebok. Sales declined 18% in 2012. Excluding the impact from the discontinuation of the NFL business and transfer of the NHL-related sales to Reebok-CCM Hockey, sales declined by 8%. The brand’s gross margin was essentially flat at 35.9%, which is not a bad performance, given we had quite some promotional activity to move all toning products during the year. While we are obviously disappointed with the Reebok results, we have seen the underlying business further stabilized as we accelerate our measures to position Reebok as a fitness brand. In fact, in the fourth quarter, Reebok sales, excluding license revenues, were up 3%, driven by 13% growth in Classics and almost 40% growth in apparel.

As we announced last April, we discovered commercial irregularities at our Reebok business in India, which brought to light a high level of criminal energy and collusion between former employees and external business partners. As promised, we have followed up vigorously and swiftly on the matter through a thorough internal and external investigation, also with police involvement. In addition, we have also taken the opportunity to comprehensively review our internal control processes and procedures of governance and compliance with the necessary external expertise at all of our locations around the world.

Robin will take you through more specific details on the matter in his presentation in a few minutes. But let me reiterate quite clearly, noncompliance with our policies has never been and will never be tolerated within our organization. And as unpleasant as the identified irregularities at Reebok India Company are, I am satisfied we have diligently completed our efforts to uncover all the wrongdoings by simultaneously laying the foundation for a healthy and profitable business for Reebok in India in the future. And here let me reiterate once again our full commitment to the Reebok brand in India.

So that, ladies and gentlemen, wraps up my review of the group’s operational performance in 2012. Despite the cosmetic offset accounting restatements and impairments in our reported figures today, I believe it is important to recognize just how successful our underlying growth and operational performance have been over the past 12 months. In addition, we have also again demonstrated our ability and longstanding credentials in tackling external and internal challenges with speed and with determination. Be it the full mitigation of considerable sourcing cost pressures, the countless hours of rigorous efforts to solve the commercial irregularities at Reebok India Company or the discipline and restraint in managing our business in a persistently uncertain global economy, I am very proud of the passion and the dedication of our employees around the world to tackle these challenges. And more importantly, all of this was achieved while continuing to stay diligent and focused on ensuring we remain fully on course to deliver our ambitious Route 2015 strategic goals.

So I will be back in a few minutes to tell you about what’s to come in 2013. But first, Robin will take you through all the financials.

Robin J. Stalker

So thank you very much, Herbert, and a very good afternoon, ladies and gentlemen. So as you’ve just heard, 2012 was another successful year for our group. From an operational perspective, we again delivered a robust performance, and I will highlight how this has played out throughout the financials of our group. However, before I come to that, let me provide you with some more clarity on the one-off items contained in our financial results this morning.

Now as we announced in April 2012, we discovered commercial irregularities at our Reebok business in India, which resulted in the termination of the services of the then Managing Director and Chief Operating Officer. As Herbert said, we have followed up vigorously and swiftly on this matter. Key findings from our internal investigations include inappropriate recognition of sales, a failure to book sales returns and a failure to correctly post credit notes to accounts receivable. This resulted in a significant overstatement of net sales and accounts receivable, as well as materially incorrect accounting for inventories and provisions. During the investigation process, the new management also discovered 4 secret warehouses not disclosed in the official accounting record. The findings of the investigation suggest that the practice of inflating sales and profits had been going on for several years.

As a result of these findings, we have restated our accounts in accordance with the IAS 8, which has led to a reduction of net income attributable to shareholders of EUR 58 million for 2011 compared to what we had previously reported. In addition, shareholders’ equity in the opening balance sheet for 2011 was negatively impacted by EUR 153 million to account for the prior year period. Now for further information, we have outlined the changes in detail in Note 3 of our 2012 annual report.

The second one-off topic is goodwill impairment. As you know, impairment losses are noncash in nature and do not affect the adidas Group’s financial situation. However, let me spend a few minutes explaining to you why we have done so. So following our review of the medium-term growth prospects of specific markets and segments as part of our annual impairment test and taking into account our updated targets for Route 2015 outlined at our investor field trip in September, we came to the conclusion that a few of our cash-generating units need to be impaired. The resulting impairment of EUR 265 million means we have reduced goodwill on our balance sheet by 17%. In the overall scheme of things, the negative impact on total assets is minor at only 2%.

Looking at the specifics. Within Wholesale cash-generating units, goodwill impairment losses amounted to EUR 106 million in North America, EUR 41 million in Latin America, EUR 15 million in Brazil and EUR 11 million in Iberia. Now the impairment losses were mainly caused by adjusted growth assumptions for the Reebok brand, especially in North America, Latin America and Brazil, and an increase in the country-specific discount rates as a result of the euro crisis. Now in addition, goodwill of EUR 68 million allocated to Reebok-CCM Hockey and EUR 24 million allocated to Rockport was impaired. These impairment losses are the result of the reevaluation of future growth prospects and, with regard to Rockport, were also due to an increase in the discount rate. Again, here we have provided full transparency and clarity on this topic in Note 2 of our 2012 annual report.

But now with that, ladies and gentlemen, let me get into the financials. Without deflecting from our great top line achievements, I believe our margin development is again one of the major financial highlights. The severe pricing pressure we faced in procuring our products from record-high raw material costs and wage inflation in 2011 was a significant headwind in each quarter in 2012. In fact, the headwind after supply chain integration amounted to 3.1 percentage points for the fourth quarter and 3.8 percentage points for the full year. Therefore, the 20 basis point improvement in gross margin to 47.7% highlights not only our best-in-class supply chain activities but more importantly, the strength of our brands and product innovations to take price increases.

In terms of magnitude, the key offsetting factors were: firstly, price increases, product engineering efficiencies and a more favorable product mix; secondly, the overproportionate sales growth in our Retail segment and emerging markets, which carry higher margins; and thirdly, our hedging strategy yielded us a slight positive tailwind in 2012. However, let me point out now that this will reverse in 2013.

Moving on in terms of operating leverage. Here, we also delivered against one of our key Route 2015 objectives, achieving a reduction in our other operating expenses as a percentage of sales of 50 basis points to 41.3%. Now although marketing investments grew 6% to EUR 1.8 billion, marketing spend as a percentage of sales declined 60 basis points to 12.1%, given the strong top line development. By brand, adidas marketing investments grew 10% to EUR 1.4 billion while spending at Reebok decreased 17% to EUR 238 million. As a result, 2012 operating profit was up 24% to almost EUR 1.2 billion. This translates into an operating margin of 8%, exactly in line with our guidance. For the fourth quarter, operating profit increased 49% to EUR 26 million.

Turning now to the nonoperating items of the P&L. Net financial expenses decreased 17% for the full year. A decrease in interest expense of 9%, as well as an increase in interest income of 16%, were the main contributors to the decline. Negative exchange rate effects were similar compared to the prior year at around EUR 7 million. For the fourth quarter, net financial expenses were up 40% as exchange rate variances had a significant influence during the quarter. Excluding these effects, which amounted to a swing of EUR 9 million, net interest expenses declined 27% in the quarter. The effective tax rate for the full year was 29.3%.

And as a result of all that, net income attributable to shareholders increased 29% to EUR 791 million. For the full year, this translates into a record earnings per share of EUR 3.78, slightly better than the range we guided to in November of EUR 3.68 to EUR 3.75. For the fourth quarter, we reported a net loss attributable to shareholders of EUR 7 million compared to a net income of EUR 3 million last year. And this was due to higher income taxes in the quarter as a result of adjustments related to Reebok India.

Now let me spend a few minutes on our segmental performance, starting with Wholesale. Wholesale revenues grew 2% for the full year with sales increases in all regions except North America. In the fourth quarter, Wholesale revenues decreased 4% as growth in Greater China, Latin America and Other Asian Markets was more than offset by declines in other regions. This decline was mainly due to the issues we already highlighted in November, such as the nonrecurrence of the NFL license sales and the prior year major sporting event-related product selling. For the full year, the Wholesale gross margin increased 0.4 percentage points to 40.3% as a result of a more favorable brand sales mix.

Moving over now to the Retail segment. Currency neutral sales grew 14% to EUR 3.4 billion, representing 23% of total group sales for the year. This was driven by robust comparable store sales growth of 7%, which is impressive considering the already strong 14% comp store growth in the prior year. Both adidas and Reebok comp store sales increased 7% each.

In the fourth quarter, comparable store sales increased 1%. In particular, Russia/CIS positively contributed to this development with comp store sales advancing 4%. From a store format perspective, concept stores, factory outlets and concession corners all delivered comp store sales increases in the mid-single-digits. In addition, our sales per square meter continued to improve with store sales per square meter increasing 7% in 2012. Equally pleasing is the continuous improvement of our Retail profitability as segmental operating margin improved 20 basis points to 21.5%. Gross margin in this segment declined 1.7 percentage points during the year with 70 basis points of the decline related to the Russian ruble devaluation versus the U.S. dollar and the rest due to higher promotional activity, given weak retail conditions in many markets, particularly in Europe. However, this was completely offset by 1.9 percentage points of operating leverage, which drove retail profits for the period up 20%.

And that, ladies and gentlemen, underpins the great progress we are making on improving our Retail operations. At the end of the year, the Retail segment operated 2,446 stores, representing a net increase of 62 stores compared to December 2011. Our total selling space also grew versus the prior year and is now over 700,000 square meters.

Now moving on. Revenues in Other Businesses grew 17% in 2012 with particular strength in TaylorMade-adidas Golf up 20%, as Herbert has already mentioned. Sales at Reebok-CCM Hockey and Rockport also grew, increasing 9% and 2%, respectively. For the fourth quarter, Other Businesses grew 7%, mainly a result of the continued momentum at TaylorMade-adidas Golf, where revenues grew 15%. This was driven by almost 60% growth in the irons category as a result of the RocketBladez launch. Full year gross margin in Other Businesses decreased 80 basis points to 42.8%, driven by lower product margins at Reebok-CCM Hockey, where increased sourcing costs, as well as the NHL lockout, negatively impacted gross margin development. However, due to scale effects, segmental operating margins for Other Businesses increased 40 basis points to 27.4%.

Now moving over to the balance sheet where, ladies and gentlemen, I can again report on some impressive achievements. Despite the growth of our business in 2012, our ratio of operating working capital as a percentage of sales has reached a new record-low year-end level of 20.0%, an improvement of 40 basis points compared to the prior year. This very strong performance is better than our original expectation of even a slight increase of this ratio. At year end, inventories were up only 1% on a currency-neutral basis, reflecting the group’s strong focus on inventory management throughout 2012. Keeping our markets and channels clean and fresh has been a priority all year. This ensures our brands are well positioned for growth in the upcoming quarters.

Now in 2012, net cash flow generated from operating activities increased 17% to EUR 942 million. After cash outflows of financing and investing activities, this allowed us to improve our net cash position by EUR 358 million to EUR 448 million. This once again demonstrates the strength of our business model and puts us in a superb position to support and invest in the opportunities and growth initiatives of our Route 2015 strategic business plan.

Now in terms of priorities for the use of cash, our capital deployment policies remain unchanged. We will continue to pay down gross borrowings as they mature, of which EUR 280 million will be repaid in 2013. To further support group-wide initiatives in areas such as own-retail, infrastructure and IT in 2013, we will increase our capital expenditures to between EUR 500 million and EUR 550 million. However, at the same time, we reaffirm our commitment to advance direct shareholder returns, and the annual dividend is currently our preferred tool for this. Therefore, for 2012, we intend to pay a dividend per share of EUR 1.35, which is 35% more than 2011. This represents a payout ratio of 35.7%.

So in conclusion, ladies and gentlemen, in 2012, we have continued to execute in the right way, balancing our desire to grow with a high focus on the quality of that growth. We have again leveraged our scale and tackled our challenges with speed and with diligence.

And with that, let me now hand you back to Herbert to give you a glimpse into the strategic priorities to continue to drive success in 2013.

Herbert Hainer

Thanks very much, Robin. In the 2 years since we began our Route 2015, we have achieved quite a lot. As we reported in September, in most cases, we have even exceeded our expectations to date.

We have delivered robust underlying growth in all of our key attack markets. We have driven double-digit growth in all of our key adidas categories. We have already achieved our target for TaylorMade after just 2 years. We have accelerated swiftly with our controlled space initiatives and already achieved our goal of 45% in 2012. We have held our gross margin essentially flat and increased operating margins, while most of our competitors have not. We have grown earnings per share at a compound annual rate of 18% compared to our goal of an average of 15% per annum. And finally, we have generated EUR 1.75 billion in cash flow from operations. This, ladies and gentlemen, is a telltale sign of a group that knows where it is going. And believe me, despite the macroeconomic pressures, we will continue our upward trajectory in 2013 and for the remainder of our Route 2015 plan.

Our focus, as Robin has outlined, remains on driving quality and long-term sustainable growth for our brands. And this you will see again in 2013 through it a product pipeline packed with game-changing innovations, be it in running, be it in basketball, be it in football, in lifestyle or in fitness or golf. And I say game-changing because when you look at some of the examples I am going to share with you now, these are not just updates or tweaks. They are really revolutionary.

Take running, where all great footwear innovation starts. In 2013, we are introducing 2 breakthrough innovations, one of which launched at retail last week, the Energy Boost. In only a few days, Boost is already the talk of the trade, seeing higher levels of engagement and enthusiasm than any running product we have ever brought to market before. The sales were already outstanding with many of our own shops already sold out.

Why is Boost so special? Because together with our partner, BASF, the world’s leading chemicals company, we have created a completely new foam cushioning material that we are convinced over time will obsolete the 20-plus years materials bat ram [ph] of industry EVA foam. With its distinctive and unique midsole cell structure, Boost provides more energy return than any other foam cushioning material, combining soft comfort with responsive energy for the ultimate running experience. In the heat, in the cold and after countless kilometers, it performs more consistently and doesn’t lose its cushioning properties like standard EVA foam. So to show you what it really can, let’s take a look.

[Presentation]

Herbert Hainer

For those of you who are here in Herzo, you will get to try it live later, and we’ll see further insights from our adidas Sport Performance colleagues. Welcome, James and Eric.

Beyond running, we also have lots in store in our other categories in 2013. In basketball, we will continue to disrupt the market with great, new innovations in footwear and apparel, as well as by leveraging new assets, like John Wall or Ricky Rubio. During the summer, you will already start to see the next great innovation in football as we commence our preparations for the 2014 FIFA World Cup, with the Confederations Cup set to ignite football fever in Latin America.

We will also raise again icon building and brand activation. This year, we will build core signature collections around several of our superstars, including 4-time Ballon d’Or winner and record-breaking goalscorer Lionel Messi. This week, we launched Team Messi, a major digital initiative which you will hear more about as we go through the year. And in terms of digital innovation in general, we will be partnering with Google on an exciting project, which will show how creativity and technology can work together to provide consumers with new and innovative ways to engage with our brand.

And we have other major campaigns planned for adidas as well to drive deeper consumer connection, such as a new impactful women’s campaign, which is called #mygirls and a global Originals campaign, Unite All Originals. With Originals and Sport Style, here we will also see a new milestone in 2013.

In 2012, we broke the EUR 3 billion revenue mark for the first time with Sport Style sales increasing 16% or 21% in euro terms to over EUR 3.2 billion. Given the growth that we expect from adidas Originals and the adidas NEO label in 2013, this means our adidas Sports Style division on its own will surpass the third-largest player in the sporting goods industry in terms of size this year.

So let me move over to Reebok. As we have now stabilized the business to ensure we drive growth, we will commence a major brand and category offensive in fitness in 2013. Our new category approach, which we call The House of Fitness, allows Reebok to engage with consumers regardless of how they choose to stay fit. It focuses on 5 key areas: fitness training, fitness running, studio activities, including yoga, dance and aerobics, walking, as well as Classics. And the positive news when I look back at 2012, these categories, which now represent almost 90% of Reebok’s business, grew low single-digit with fitness training up 30% and Classics up 6%.

To accelerate this momentum, several new footwear and apparel collections will be launched throughout the year. In running, we will introduce 3 new platforms, including SubLite and ATV. And in fitness training, Reebok will introduce the Reebok Delta apparel collection, which takes design inspirations from the CrossFit community. In addition to new products, we will activate new exciting partnerships to authenticate and give credibility to Reebok in each category. Renowned yoga instructor Tara Stiles, the Spartan Race series of obstacle races and the Red Bull X-Alps adventure race are just a taste of what’s to come over the next couple of years. Bringing it all together in 2013, the Reebok brand will also speak to the consumer with one voice by launching the new global marketing campaign. The campaign, which is called Live With Fire, will be the brand’s first concerted effort to inspire the fitness consumer to live a life of passion, intent and purpose. And everything I see so far confirms that we are gaining traction for Reebok with retailers and consumers. And I fully expect a return to growth for Reebok once we have anniversary-ed the last of the NFL-related comparisons in the first quarter.

At TaylorMade-adidas Golf, our fast pace of new launches will also continue. The new RocketBladez irons have already sent our market share skywards to over 30% since launch. With new longer metalwoods like the R1 and the RocketBallz Stage 2, a major offensive in golf footwear with adizero and the potential for Adams Golf, I fully expect the distance between our sales and our nearest rivals to further widen in 2013.

As a group, we are therefore very well positioned to again achieved record sales in 2013. For the full year, we expect currency-neutral sales to increase at the mid-single-digit rate with growth across all brands, regions and channels. In terms of phasing, sales growth is expected to be weighted towards the second half of the year, mainly mirroring our product launch schedules, as well as the buildup to the FIFA World Cup in 2014.

2013 will also see a step change in the pace of gross margin and operating margin expansion. We expect our gross margin to increase to a level between 48% and 48.5%. Our operating margin will improve considerably in line with our previously announced guidance of approaching 9%. And this, in turn, will lead to another year of double-digit earnings growth with earnings per share increasing at a rate of 12% to 16% to a level between EUR 4.25 and EUR 4.40.

So in summary, ladies and gentlemen, it is certainly not by chance that I started my presentation today with the motto, Pushing Boundaries. Along from our extraordinary product innovations and great designs, our group’s ability to push boundaries has helped athletes to go faster, hit further and achieve their impossible at the pinnacle of sport for decades. However, pushing boundaries at our group definitely goes far beyond this definition. It lives in every aspect of our business. Every day, we collectively strive to bring a culture of pushing boundaries to life by constantly motivating and challenging each other to improve. Adi Dassler is often quoted as saying, “Strive for perfection. There is always something you can improve.” And this is exactly the spirit you will see from our group over the next 12 months. And this is the edge that will ensure our group’s continued success along Route 2015.

So thank you very much for your attention. And now Robin and myself will be happy to answer all your questions.

John-Paul O’Meara

Thank you, Herbert. [Operator Instructions] Just want to announce one other thing today. We have today launched our iPhone app as well for investor relations. So now it’s not just the iPad anymore, we’re fully onboard.

Question-and-Answer Session

John-Paul O’Meara

And so I’d like to take the first 3 sets of questions here in the room. So who would like to ask the first question? So just come over here, Michael Kuhn. And if you could announce the name of your firm and your own name for your first set of questions, that would also help us out.

Michael Kuhn – Deutsche Bank AG, Research Division

Okay. Michael Kuhn from Deutsche Bank. Two questions from my side. Firstly, on Q4 and some of the effects mentioned, is the 200 bps gross margin improvement a clean development? Or are there any special factors that we should consider? And on like-for-like and OpEx in Q4, you saw plus 1% performance like-for-like sales in Retail and you mentioned NFL and the tough comps. So what would be like a clean number? Could you help us here? OpEx, on the other hand, up quite substantially. Were there any special effects? Or what should we expect in terms of OpEx dynamics going forward? And secondly, you mentioned your CapEx plans of EUR 500 million to EUR 550 million for the upcoming year, which is quite a considerable increase. Is there any special project included in that? Or is it just investments on a broad scale?

Robin J. Stalker

Okay, Michael. Our fourth quarter is always a little bit difficult to extrapolate because it’s a fairly small quarter compared to the other quarters, obviously. So no, you can’t extrapolate the gross margin, unfortunately. 200 basis points is very nice. But there’s nothing really significant in one-offs in there. There’s about a 40 basis point impact from the Reebok India and there’s a few million, single-digit million impact in the cost also because of that. But Mike, I think here the best guidance is to look at what we’re saying for 2013 that we have a pretty good window of margin of 48% to 48.5%. And we’ve also given clear guidance on our operating margin now going up again to approaching the 9 percentage points — 9.0%. Second point was about CapEx. It tends to be in our CapEx about 1/3 to Retail, 1/3 to some of the infrastructure and 1/3 to the IT. You’ve seen here as you came to Herzo, you’ve seen a few buildings up outside there. We’ve also got a major warehouse initiative in Northern Germany, also costing some amount [ph] in 2013. But there’s nothing particular that I would highlight that’s different to what we’ve had in the past.

Michael Kuhn – Deutsche Bank AG, Research Division

[indiscernible]

Robin J. Stalker

Well, we’re not a very big CapEx company. Actually, I mean, EUR 500 million for our sort of size of business, I don’t believe, is very large. And I think our cash flow allows us to keep it at this sort of level. We’re definitely not planning on anything significantly different in the future. So I would say that’s a good reasonable guidance for the next couple of years.

John-Paul O’Meara

Well, let’s come here to Matthias, and then Jurgen.

Matthias Eifert – MainFirst Bank AG, Research Division

Matthias Eifert from MainFirst. First question to you, Herbert. I mean, you said that China overall market is not that bad. But if I look into it, how bad competitors are doing, I think there are some difficulties. Can you give us some of your insights, when you think these difficulties are worked through, and then we might be even seeing acceleration from your side? But I would be happy if you maintain the double-digit growth. And second question would be, you mentioned a second innovation on running this year. Is it another product platform similar to Boost or extension of some of the existing ones? And my third question would be about basketball. Is there any other player showing potential to launch a signature shoe besides Rose 3? I think injury of him has also shown that you probably need to broaden the bases of players, not to be too dependent on one guy. Can you give us a bit more insight on that, please?

Herbert Hainer

Yes, Matthias. Let me start with China. As most of you who follow us already quite some time, you might remember that in 2009 when, after the Olympics in Beijing, we’re running into problems in the Chinese market. We had a lot of overinventories. I told you already at that time that we will use this opportunity to clean up the market and to build our relationship with the Chinese consumer in the retail on a complete, new platform. We invested into our retail partners. We put infrastructure in that we could exchange data much faster, which I also told you because then we can read the sell-throughs, we can refill the products, we can steer our inventory much better. And today, I think it’s fair to say when you ask the key retailers in China, we have the best sell-through rates; therefore, they achieve the best margin with our products and they have the lowest inventory. Of course, we have done a lot of marketing activities to stimulate the consumer, as I have said in my presentation. And I definitely do believe that we are doing a better job than many others in the Chinese market in the moment. And you will definitely see continued growth from us in the years ahead, there is no doubt. Second point was the second innovation in footwear. This is an exciting product, which is called SpringBlade. And as you have marketing gurus, especially Eric Liedtke, who is running our Sport Performance division on the adidas side, later with you on the Boost side, he definitely can explain to you what SpringBlade is. But it is a complete, new technology on the footwear side as well. And last question was basketball. Yes, you are right. We will further broaden our base with players. It’s not only about players but also with players. And as I have said, we have transferred John Wall from Reebok to adidas. We have Ricky Rubio onboard. And we are still looking for some more players, which we bring onboard. Obviously, we want to have the best one, the young rookies, the stars. This is not as easy. But we definitely strengthen our portfolio. Don’t forget, we strengthened our relationship with the NBA into the basketball game with key retailers in the U.S. for basketball. And last but not least, we are bring out permanently new products, as you have seen with the adizero, Crazy Light, the D Rose. Even if he didn’t play now for I think it’s 8 to 9 months, we activated him permanently. And you have seen the numbers on basketball for 2012. I mean, there is no doubt we need basketball to be successful for our success in the U.S., and this is what we will start to drive. Be not surprised if we will have positive numbers next year again. I am sure, so…

John-Paul O’Meara

Jurgen?

Jurgen Kolb – CA Cheuvreux, Research Division

Jurgen Kolb from Cheuvreux. Three questions. First, on Reebok. The Vulcabras situation in Latin America, is that — or can you update us on that situation? Is there anything negative that might pop up in this year or next year? Maybe an update here. Secondly, what’s your expectation in terms of ethics in terms of currencies? Because obviously, some currencies are playing a little bit of a hiccup here. So what’s your expectation there? And how much can you control that? And thirdly, on Boost again. Energy Boost, maybe a little bit of your additional plans in terms of rollouts. When will it come to a broader retail format, your expectations and hopes for additional categories, maybe? And also, as the product is probably not yet fully available, the TPU, in terms of profitability, is that shoe more attractive for you? I mean, the retail price is significantly higher. But is that something where you can also squeeze in some extra 10, 20, 50 basis points?

Herbert Hainer

So let me start with the first one with Vulcabras. Yes, you know that we have our joint venture partner in Brazil and in Argentina. And this is not always an easy relationship because Vulcabras has definitely some challenges with their own brands and with their own business on the market. Nevertheless, we try to work as good as we can. We are quite successful in Argentina. Brazil is more under pressure. In addition to that, our contract is running out in 2015. So we have a few challenges, but I don’t expect any big negative impact in 2013. Let me just answer the third as well before Robin goes through the FX question. Boost, in terms of availability, don’t worry, we have a few pairs out for you guys. But don’t underestimate it. We want to sell around 1 million pairs of Boost this year. And obviously, we have started at our own stores, as I said. And the rollout will be during the whole year. And our plan is over the next couple of years to bring Boost, more or less, the Boost technology in all of our shoes. So it will not be the running category, it will be basketball, it will be training. And you will see this category because this is such an advantage to that what is existing on the market. We would be stupid not to further roll it out into other product categories as well.

Robin J. Stalker

A very good question, Jurgen, in terms of currencies. I mean, this is the world we live in. There’s considerable movement in the currency pairs. Reporting euros, obviously we had some tailwind in 2012 through the appreciation, Jurgen, in some of our trading currencies. But in 2013, I think it may be going a little bit the other way. The biggest callout here is, obviously, the Japanese yen. There’s been significant pressure on that. But I think at this stage, it’s a bit early to suggest exactly what the development is going to be. We keep an eye on it, obviously. There’s little we can do about the translations where our business is. In terms of, however, the dollar-euro, we continue to hedge that in terms of our purchasing. And here, we’ve got a hedge rate at the moment for 2013, when we’re pretty much fully hedged, which just above the 1.32, which is inferior to what we had obviously in 2012, which was about 1.37 to 1.38. And so that will give us a little bit of a headwind also. And but that is obviously in our guidance now reflected.

Herbert Hainer

So Jurgen just reminded me that I didn’t answer the question on the margin of Boost. We are here to make profit. And to get to our 9% operating margin, we have to earn money with every shoe.

John-Paul O’Meara

So next, we’ll take 2 sets of questions from the telephone, please.

Operator

[Operator Instructions] We will now take our next question from Erwan Rambourg of HSBC.

Erwan Rambourg – HSBC, Research Division

Erwan Rambourg from HSBC. A few questions, if I may. Herbert, I think you mentioned to the press that you were expecting TaylorMade to have single-digit growth in 2013. I’m just wondering if this is down to the fact that the basis of comparison in terms of growth is tough. Or is the market overall for golf have toughened? And related to that, given all the moving parts on Reebok last year and the good performance of adidas, if you had to rank, in your view, brands in the portfolio for this year in terms of growth, could you give us a sense of what that ranking would be? Secondly, I was just wondering if you can help us understand when the end of the U.S. pain will happen, i.e., when the sort of one-offs on Reebok will stop weighing. I believe this might be Q2, but I just want to guess. I just want you to confirm when growth rates will normalize in the U.S. And then thirdly, I think you mentioned also to the press that you didn’t have in mind any acquisitions in the near future. So I was wondering if we could expect in the future, again all things being equal, the dividend payout to increase. It’s already at the sort of high end of your range of 20% to 40%. Can it go beyond that?

Herbert Hainer

So let me start with your first question, TMaG. Yes, the single-digit growth is definitely a reflection of the fast growth, which we had over the last several years. And as I also said in my presentation, we definitely want to make sure that we have a quality growth. So we don’t want to overheat the market. But we definitely do believe with all the new products which we are bringing in, we will further grow in top line and, of course, driving our profit within TMaG to a higher level. The second one was the ranking of the brands. In terms of growth perspective, we want to grow with all the 3 brands, and this year is easy calculating when we grow in TMaG, single-digit. And overall, we said that we want to grow mid-single-digits. Obviously, then the adidas brand has to grow as well because this is the biggest part. But we also have made a commitment that we want to grow the Reebok business in 2013. So you will definitely see all the 3 brands are growing in 2013. And then about the question on acquisition. No, we don’t have any plans for acquisition because I definitely do believe that we have still enough work to do with our Reebok brand and we also do believe that we have enough potential with all our 3 brands, be it adidas, Reebok or TMaG, to further grow to the level what we have given out for our Route 2015 plans. And as Robin has said already in his presentation, we want to give the money back to the shareholders. And within our guidance of 20% to 40%, we are now at 35.7%, and this is definitely what we want to continue, to give the money back. I think there was…

Erwan Rambourg – HSBC, Research Division

I just have a question on normalization of growth rates in the U.S.

Herbert Hainer

Yes. Yes, we know. But I’ll just hand over to my peer finance colleague. He is definitely better suited to answer that.

Robin J. Stalker

Okay. And I think you were asking about the normalization of the Reebok business in America, and that’s basically because of the NFL contract. And that, you’ll still see some impact in the first quarter. So your assumption is correct. From the second quarter on, it should be normalized.

Operator

We will now take our next question from Andreas Inderst of Exane BNP Paribas.

Andreas Inderst – Exane BNP Paribas, Research Division

I have 3 questions. The first one on Reebok India. Up to the third quarter, you have guided up to EUR 70 million one-offs to clean up the market. And I just want to calculate a real clean EBIT margin for full year 2012. Maybe you can help. How much did you spend overall? Was it more than EUR 70 million, given that you had also — or that you cut roughly 2% the workforce at Reebok? That’s my first question. The second question relates to your working capital. Nice improvements on the inventory side. Robin, what can we expect going forward from inventory management? What kind of potential do you see to further improve your turns? And maybe you can quantify the impact maybe for the mid-term. And my third question relates to the lifestyle segment, a very nice development in the fourth quarter and also the full year. I believe you guide high single-digits, low double-digits for 2013. And on adidas NEO, how is it going here? You have already introduced the collection broadly to the market in emerging markets and in North America. How is the store rollout or the test stores going in Germany? And what can we expect in terms of rollout in Continental Europe?

Robin J. Stalker

Okay, Andreas. I’ll take the first 2 questions, and then Herbert will answer the third one. So I know you’d love to get it as clean as possible. And I can repeat that the Reebok India impact in 2012 is about that EUR 70 million. It’s almost exactly on the EUR 70 million. We were just a little bit under that by the third quarter. There was limited impact in the fourth quarter. But let me make it clear that this EUR 70 million is the difference between what our initial expectations were for the business as a contribution 2012 in India. And then what actually has happened because of our, as you correctly said, cleanup efforts in India, we’ve closed factory shops, and we closed about 400 shops. We’ve paid our minimum guarantees. But we’ve also had obviously a loss of sales and margin on that period. So that was a mixture of many things that clearly impacted our profit loss in 2012. In terms of the second question, working capital. Now I guided last year that our operating working capital as a percentage of sales was probably likely to slightly deteriorate or increase in 2012, where we’re actually able to do better. I guide again with a little bit of caution that it’s getting difficult to further improve this because as we grow our Retail business, we do carry inventory a little bit longer obviously. And so I’m optimistic that we will continue to manage our working capital extremely diligently. But I think at the level of working capital as it is that the moment, 20.0%, that’s a pretty good level to just try and maintain. What I would say, however, it’s in the inventory specifically. And we talked about stock turns. And although we carry more inventory, I think there is some opportunity in improving our stock turns, particularly when I look at some of our large Retail operations, and here I’m referring specifically to Russia. There are opportunities in our supply chain to further improve the speed of delivery to market, shorten the lead times, presumably keep less inventory on hand. So I’m not giving up on it. I think there’s still opportunities to improve. But I think I can’t promise too much on this area over the next year.

Herbert Hainer

And answering your third question, Andreas, on NEO. Obviously, we are quite happy with the performance of NEO, as you have seen, 14% growth in 2012 and especially because we are targeting new consumer group, as you know. So therefore, we are quite happy. This is mainly driven by China and by Russia. But also you asked about the test stores in Germany, which we all have opened in summer last year. And we said we will do a test phase of around 12 months. This will end in summer this year, then we will fully review our analysis in all we have seen and defined the next steps. I can tell you that, overall, we are very pleased with the learnings and the performance of the 10 test stores. And it definitely wouldn’t be a surprise if we decide to further roll out NEO stores in Europe starting in the second half of 2012.

Andreas Inderst – Exane BNP Paribas, Research Division

Yes. Okay. Maybe coming back to India, the EUR 70 million. Let’s ask the question differently because you said there’s a difference between initial expectations and what in the end came out. How much of the EUR 70 million will you recoup, let’s say, in 2013, in 2014?

Robin J. Stalker

I knew you’d be looking at that. So the figure, it’s difficult to say exactly how much that would be. What I obviously will not be repeating in 2013 are the closure of franchisee costs and the restructuring that we did. And we will get some sales back, so some of that EUR 70 million presumably will come back. I don’t believe, however, it will be a tremendous amount because the sales volume of the sales expectations that we have for Reebok into 2013 are still a lot lower than what our initial expectations were for Reebok India 2012. So you get a little bit of that EUR 70 million back definitely, but not all of it.

John-Paul O’Meara

Thanks, Andreas. Let’s move back to the room. And John, you’re up next.

John Guy – Berenberg Bank, Research Division

It’s John Guy from Berenberg. Just a few questions, please. The first one with regards to the stock, up 1% on an FX-neutral basis. When you’re looking at that well-managed stock, are there any specific areas where you think the stock is maybe slightly too high? Or is that evenly balanced across all the regions? It’s the first question. The second question, with regards to not acquisitions but disposals, is there any comment that you can give around potential progress around the disposal of the Reebok hockey business? I think that you had a few interested parties. I was just wondering if there’s any update there.

Robin J. Stalker

Okay. I’ll take the first question. So no, the very good thing about the development of our inventories over the last several quarters now is that this really is across the board. We have been able to install good discipline throughout all of our operating units to keep a focus on it. We’re obviously doing a tremendous amount also in the supply chain to become even more efficient in what is already a good supply chain. And so it’s not just a one particular area. I think the area where I would identify some potential improvement is what I just answered in the previous question, about those major Retail operations, where we have rather long supply chains at the moment. And that would be — Russia would be the key one there.

Herbert Hainer

Yes, John, you are right. We’re always getting interests for parts of our business. And we definitely have some interested parties looking to our hockey business, and we spoke to them. But we haven’t got from anyone an offer where we saw this is satisfying to our needs. And you know that we have quite a lot of innovations, which we’re bringing to the hockey business, be it the RBZ sticks, which would take over from TaylorMade into the hockey business, which is the most sold stick yet. Maybe the NHL lockout hasn’t helped there as well, but we are not under pressure and therefore, we decided no, we stopped the sales process. We will continue to drive our business, make it more profitable and growing. And this is the status of the moment.

John-Paul O’Meara

So Andreas, next.

Andreas Riemann – Commerzbank AG, Research Division

Andreas Riemann, Commerzbank. Two questions from my side. In 2014, there will be next soccer World Cup in Brazil. And the question, are you planning to use this event to focus more on Latin America because this is not one of your core regions, actually? And the second one, on Retail, you closed 260 stores. And the question is how many of the closures are basically openings next door for what are real closures? And given that you are becoming a bigger retailer, probably you can collect more data points, is this number going to come down in the future?

Herbert Hainer

So in terms of football, obviously, this is a big event for us as we are the football brand #1 in the world. And we also sponsor the football World Cup. And we will have a lot of teams there. Obviously, the qualification is not finished yet, but we just need to think about Mexico, Argentina out of the Latin America area, Paraguay and so on and so forth. So yes, this will be a big event for us, and we will use it to further drive our business in Latin America. And then you said Latin America is not a core area for us, but Latin America is definitely the area where we grow the fastest in last 10 years. And this business is relevant for us. There, we have a very good market position in most of the countries, and therefore, we definitely will use the World Cup in 2014, starting even with the Confederations Cup this year to show to the consumer what we are all about.

Robin J. Stalker

Andreas, yes, you’re picking up that we are becoming a much more sophisticated retailer. We’re learning a lot obviously about retail. And one of these learnings is that you do need to close stores, obviously, as soon as you identified that they’re probably potentially not as profitable as you thought they would be. And so there may be a number, particularly in some of the emerging markets where there’s been a larger shop opened in the close proximity. But my understanding is that you should expect a continuation of a fine-tuning of our platform. We have over 2,400 stores at the moment and closing a couple of hundreds and opening a couple of hundred will continue to be part of our management of our Retail footprint. And we’re definitely getting more data points. We’re definitely understanding more about where it’s appropriate to invest. And we have also a very sophisticated view together with our Wholesale guys about our integrated distribution plan for all of our major markets, major cities as to where we want to be in Retail or where we want to be in franchising or where we want to be with our Wholesale business. And so that’s getting more and more sophisticated, but you should continue to expect us to continue to be closing stores in the future as well.

John-Paul O’Meara

So Bernd, please?

Bernd George Müll – Landesbank Baden-Wurttemberg, Research Division

Bernd Müll of LBBW. Just a question on the gross margin once again. I mean, you’re guiding for another increase this year, and we briefly talked about the input costs. How do you see things evolve? I guess the pressure on labor cost will continue, seeing Cambodian workers rejecting pay hikes of 18% recently. So I guess, the pressure is on here. How do you see material prices evolve in 2013? And do you see — I mean, you’re guiding for an increase. So do you feel that your countermeasures, i.e., accelerated growth in Retail and all the other factors that you’ve explained to us recently, do you see that going strong in 2013, too? Perhaps you can just enlighten us a little bit more on that.

Robin J. Stalker

So fundamentally, I think we believe in our industry that we will continue over the next few years to see FOB — increased pressures on our FOBs. So I mean, the fundamentals both in wages but also in raw materials are such that it’s likely that rubber or other oil-based derivatives are going to continue to be at this high cost level or maybe even get more expensive. Definitely, as you commented yourself on the wages, that’s clearly the case. However, for 2013, we don’t see through the negotiations we’ve had or the visibility we already have for 2013 significant increases in the raw materials. We do see continued pressure on wages. But we are confident that not just through the efforts that we make to continue to be even better in our supply chain but also through the dynamics of our business and product mix, as you highlighted, retail growing faster, emerging markets also with higher margins, that that will overcompensate for whatever those pressures are. But I don’t think we can see them going away.

Herbert Hainer

Maybe I can add one more point. As we have told you already 18 months ago, we’re also looking at all our products, how we can reengineer them and put more value with lower costs into the business. Just knitted footwear piece is one of the initiatives, but we have a lot of others. And they all have helped already in 2012, despite the high cost pressures, which we had from the FOB side to keep our margin.

John-Paul O’Meara

So operator, we’ll take our last question today from the telephone, please.

Operator

We will now take our next question from Louise Singlehurst of Morgan Stanley.

Louise Singlehurst – Morgan Stanley, Research Division

Two questions for me, please. Just firstly, focus on the U.S. market. Now there’s clearly a huge amount of market share for adidas Group when we look at some of the share data in that market. Can you just talk about the discussions with wholesalers? Are you taking more floor space within those stores? And when we think about the new launches, i.e., Boost, this year, is that incremental? Or does it start to replace something like the lightweight running that seems to be waning in terms of popularity? And then my second question is slightly related to that, just thinking about the advertising spend. I was impressed to see that advertising as a percentage of sales slightly came down in 2012. Should we expect that to be ramped up, particularly in the U.S. over the next couple of years as you take market share?

Herbert Hainer

Let me answer the first question in terms of market growth in U.S. and floor space. I mean, the one growth we see in my opinion. When you have seen what we have done in the last 3 years in the U.S. market, where we have grown more or less every year double-digit, 9% last year, this means that we are winning shelf space and we are winning the minds and the hearts of the consumer, especially of the high school kid. And this will further help us to drive our sales. Yes, we are doing more shop-in-shop solutions with key customers in U.S., especially in the mall and in the sporting goods channel, where we find our high school kids consumer. And this you will see in the future that we will have a stronger presence in the stores through the different categories. And this obviously will help us to get better sales and therefore also better market shares. And in terms of advertising or marketing spend in the U.S., we definitely do believe that we have found the right formula to spend what is necessary to drive our sales in a quality way in the U.S., which means on the one hand that we drive our sales and build further our business, but we also want to drive our margin in the U.S. And this you see year-by-year getting better. And once again, it all comes back to that what we said in the presentation. We want to have quality growth, not just volume.

John-Paul O’Meara

So ladies and gentlemen, that completes our conference call for today. Thank you for those who joined on the line. You may now disconnect. And if you give us guys in the room a few seconds to reset, we’ll start at 3:30 with our adidas performance presentation on running. Our next date will be May 3 for our Q1 results. And thank you very much for coming to Herzo on person today. We really appreciate that.

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Created by : ellenora willy (group 3)

PUMA’S STRATEGY IN CREATIVITY

The foundation for our activities is PUMAVision – a concept that we intend to guide our work with its three core programs PUMA.Creative, PUMA.Safe and PUMA.Peace.

PUMA.Safe comprises our initiatives and commitment for environmental protection and improved working conditions that have been in place for many years now.They will be complemented by new programs, which focus on implementing cleaner, safer and more sustainable systems and processes within the supply chain.

PUMA.Peace supports the global Day of Ceasefire on September 21 every year through its initiative “One Day One Goal”, which aims at getting people to play football with the idea that the power of sports will unite people in peace. The initiatives of PUMA.Creative – creativity as the core competence of the brand – aim at bringing together artists and different organizations for a mutual creative exchange and offering them an international platform. We are delighted to announce a new long-term partnership between The BRITDOC Foundation and PUMA.Creative. We’ve created a series of awards providing financial support, creative counsel and industry recognition to international documentary filmmakers, whose creative storytelling highlights social justice, peace or environmental issues.We are committed to working in ways that contribute to the world by supporting creativity, sustainability and peace and by staying true to the values of being Fair, Honest, Positive and Creative in decisions made and actions taken.

This is additional video of one PUMA’s vision which is PUMA creative. This video tells us how they design their products in creativity.

Created by: nelly wijaya ( group 3)