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Future of sportswear: Adidas, Reebok, Nike

By : New Cloth Market
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As major sport brands are increasingly adding new functions to products, sportswear for kids and the fast -growing China market are expected to draw much of their attention.

Two of the biggest brand stories over the past 12 months have been the impact of sportswear sales as a result of the 2006 FIFA World Cup held in Germany, and the US$3.8 billion acquisition and integration of Reebok into the Adidas Group.

These events have left Adidas buoyant, recently announcing that it expects its net income in 2006 to approach 500 million euros from sales of 10 billion euros. For the first nine months of 2006, Adidas sales were up 52% and operating profit climbed 23%.

The group will further increase investment in Reebok in 2007, having allocated extra cash for advertising, new media, point-of-sale communication, product development and initiatives to grow the brand in emerging markets. "We have made significant progress in the Reebok integration so that today it is in much better shape than it was at the time of the acquisition in January 2006," says Chairman and CEO Herbert Hainer. "We intend to increase our investment in the brand in 2007. For the Adidas Group, 2007 will again be a year of record sales and earnings."

The 2006 FIFA World Cup was without doubt a gravy train for the German-headquartered group, which were the official sponsor, supplier and licensee of the event.

"We exceeded all of our football and business goals for the World Cup," said Mr Hainer.

In fact, a record three million replica Adidas football shirts were sold prior to the event, which included 1.5 million German national team shirts. By comparison, Adidas sold 1.5 million football shirts and 250,000 German shirts at the last World Cup held in Japan and South Korea in 2002.

"One trend confirmed at this year's World Cup is that the fans are going to the games in the shirts of their team," added Mr Hainer.

In addition, over one million pairs of Adidas+Predator Absolute football boots and 750,000 +F50Tunit football boots were sold.

Even following the integration of Reebok, however, the Adidas Group still lags behind Nike, which achieved 2006 sales of US$14.9 billion (11.3 billion euros) and profit of US$1.39 billion (just over 1 billion euros).

Recently Nike's President Charlie Denson announced an aggressive growth strategy with the goal of achieving clear brand dominance in football by 2010.

"In a little over a decade, we've built Nike football from nothing to a $1.5 billion business that saw 20% growth last year," he said. "Now we're ready to separate from the pack and create competitive distance. Everywhere in the world, we intend Nike to be the brand consumers think of when they think football."

Nike also currently sponsors many football clubs and players, including two-time FIFA Player of the Year Ronaldinho, and in November introduced its signature line of Ronaldinho footwear and apparel- the first signature collection Nike has ever introduced for the sport.


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