f o e l b Ta s t n e t con
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Letter From Our CEO Our Team Values
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OUR COMPANY 02–03 04–07 08–13
Key Points Financial Ambitions Company Initiatives
Overview Campaign Strategy The Power of Sports
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OUR STRATEGY 16–17 18–19 20–25
NEW CAMPAIGN 28–29 30–33 34–35
SUSTAINABLE WAY
Communities Green Teams
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OUR COMPANY
Letter From Our CEO Our Team Values
LETTER FROM OUR CEO
DEAR SHAREHOLDERS, In 2019, again we’ve used the power of sport to change lives and creates a real difference. We lead the way in sustainability and human rights. We will break down barriers to give girls better access to sport. We inspire people to be the best version of themselves. The list goes on, and it will only get longer.
KASPER RORSTED CEO
We’re getting closer to being the best sports company in the world. But in the end, it is the consumers who will let us know if we have made it by showing and sharing their love for all of our products. This is why consumer obsession and our brand desire sit at the heart of our strategic business plan, ‘Creating the New’. We’re making great strides toward our 2020 financial ambition, which makes for a clear goalpost: We need to continue driving our top and bottom lines the last two years our current strategy cycles. In the coming year, we will then zoom in on our strategic choices and acceleration topics, as outlined in Creating the New.
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ANNUAL REPORT 2020
PORTFOLIO AND DIGITAL To amplify the impact of our strategy brand desire, growth, and profit, we are now executing against an acceleration plan consisting of four pillars: Portfolio, adidas North America, ONE adidas, and Digital.
Every entity contributes to the success of our company, be it a brand, channel, or even the market. By regularly revisiting the performance of our portfolio, we identify opportunities for improvements and develop action plans to sharpen the business. For instance, through the ‘Muscle Up’ plan we have continued to set the stage for the Reebok brand to realize it is full potential and become more profitable. Excellence in operations is vital for creating flexibility and generating operating the leverage. Through a set of initiatives across three areas—brand leadership, marketing effectiveness, and operating efficiency—ONE adidas allowed working smarter and more efficiently, ultimately leading to a more scalable business model. The role of digital is clear: Through sport, we have the power to change lives and, to change lives, we have to create direct relationships with consumers. The best way to accelerate building those direct relationships is through digital. Digital transformation, however, is not only fundamentally changing the way we interact with all of our consumers. Gearing up for the future, we are driving digital transformation across the entire organization. In 2018, our global e-commerce business has continued to be our fastest-growing sales channel, with a 36% increase.
2020 OUTLOOK Staying true to our core belief, through sport we have the power to change lives, we will continue to create value in 2020. We plan to do this by executing upon our strategic choices and acceleration topics.
IN CLOSING It is our mission to be the best sports company in the world. This mission sets the bar for how we operate as a company and how we, as adidas employees, show up to work every day. One thing that’s for sure: We are only as good as what our consumers, athletes, teams, partners, shareholders, and even the media say about us. When all our stakeholders call us the best, market share, leadership, and profitability will follow. Going forward, we will now focus on what matters: connecting with our consumer and playing to win as one strong global team. Together, we will tackle any challenge with confidence. Thank you for all of your ongoing support. Sincerely yours,
KASPER RORSTED CEO
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OUR TEAM
h g u o r h t t a h t e v ie l W e be r e w o p e h t e v a h e w , t r o sp t o c hange l ive s .
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OUR TEAM
THE 3 C’S
LEADERSHIP
At adidas we have a winning culture. In order to win, physical power is not enough. Just like athletes, our own employees need mental strength within their game as well. We foster the athlete’s mindset through a set of behaviors that we want to see in our people and that are at the core of our unique company culture—the 3Cs: Confidence, collaboration, and creativity.
Leading people is a privilege that comes with many responsibilities. We know that it’s the performance, the well-being, and knowledge of our employees have a significant impact on the brand desire, the consumer satisfaction and even our financial performance. This means we must have great leaders in our company that constantly develops and inspires their teams and serve as role models for the leaders of the future. This leadership framework strongly supports our company culture and therefore is based on these three company behaviors: confidence, collaboration, creativity.
Confidence allows athletes to make quick decisions on the field, to reach higher. For us at adidas confidence means acknowledging we don’t have all the answers. But we are willing to take risks, we try new things. And if we fail, then this is part of our learning—it will only help us to improve.
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ANNUAL REPORT 2020
Collaboration. Every elite athlete relies on their partners: coaches, team mates, and nutritionists. We understand that we are stronger together. Winning as one team takes open and candid dialogue, inclusiveness and trust in each other’s abilities and talents. To be the best sports company in the world it takes Creativity. No great athlete succeeds by copying their predecessors’ training plans and strategies. We have to be open to new ideas, explore, gain an edge and stand out. Only then can we succeed.
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VALUES
WE VALUE WATER Water is essential for life. It is also a key resource for our industry. In order to tackle the ever-growing issue of water scarcity and achieve water stewardship, we have developed an approach addressing water efficiency, quality and accessibility.
WATER SAVINGS AT OUR STRATEGIC SUPPLIERS (BASELINE 2008)
20%
WATER SAVINGS AT OUR OWN APPEARL MATERIAL
50%
ADIDAS ANNUAL REPORT 2020
SUPPLIERS (BASELINE 2008)
WATER SAVINGS PER EMPLOYEE AT OUR OWN SITES (BASELINE 2008)
35%
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VALUES
WE INNOVATE MATERIALS & PROCESSES We have always created the very best for the athlete, all while optimising our own environmental impact. We’re committed to steadily increasing the use of sustainable materials in our production, products and stores. At the same time, driving towards closed-loop solutions.
WASTE REDUCTION AT OUR STRATEGIC SUPPLIERS (BASELINE 2008)
20%
WASTE DIVERSION FOR OWNED OPERATIONS TO
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MINIMIZE LANDFILL
50%
PAPER REDUCTION PER EMPLOYEE AT OUR OWN SITES (BASELINE 2008)
75%
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VALUES
WE CONSERVE ENERGY Energy is the fuel for the body. In order to mitigate climate change, we’re committed to reducing our absolute energy consumption and CO 2 emissions, transitioning to clean energy and looking into energy harvesting opportunities.
ENERGY SAVINGS AT OUR STRATEGIC SUPPLIERS
20%
(BASELINE 2008)
ABSOLUTE ANNUAL
additionally , we will reduce
REDUCTION IN SCOPE 1 &
the environmental footprint
SCOPE 2 CO EMISSIONS AT
of all our consumer events .
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OUR OWN SITES
3%
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OUR STRATEGY
Strategy Financial Ambitions Company Initiatives
ADIDAS ANNUAL REPORT 2020
KEY POINTS
CULTURE
SPEED
We have the great talents within our own organizations working hard with passion for sports and in our brands. Our people continue to bring the strategy life along with the culture making all the difference in achieving our long-term goals. We are convinced that it’s the culture of creativity, collaboration, and confidence will be the key enablers for us to Create the New.
Driving our brand desirability begin with putting our consumers at the heart of everything we do, serving them in the best possible way. This involves ensuring that consumers always find fresh, desirable products where and when they will want them, with an unrivaled brand experience. Speed means that we are able to anticipate in what our consumers want and to react accordingly in a timely manner. The benefits of this will include higher product availability, a reduced inventory risk, incremental net sales and higher margins.
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OPEN SOURCE
CITIES
Open Source is a collaboration-based on innovation model aims to build brand advocacy by opening the doors of brands to the consumer and by inviting them to co-create the future of sport and sports culture with us. It’s about the learning and sharing, the external experts, about starting the conversations between the brand, consumers, and even about giving them the chance to have an impact on what we do.
Urbanization has continued to be a global megatrend. Most of the global population lives in these cities and already today cities account for around 80% of global GDP. To be successful in the future, we therefore will need to win consumers within the world’s most influential cities. We have identified six global megacities which we will over-proportionally invest to grow share of mind, share of market, share of trends: London, Los Angeles, New York, Paris, Shanghai and especially Tokyo.
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ADIDAS ANNUAL REPORT 2020
COMPANY INITIATIVES
ZERODYE FABRICS
PARLEY OCEAN PLASTIC
Gear designed for the nature should be as natural as possible, right? Our adidas ZeroDye sentiment becomes reality. “By leaving fibers within their natural color, our suppliers will then have a simpler process,” says Zwinger, “and we will have cleaner fabric with the performance characteristics that we want.” In the end, the consumer receives products that puts less environmental strain on the planet without compromising functionality. ZeroDye debuted in 2014 in the Terrex line, and by skipping the dying process and replacing with undyed polyester, adidas is able to cut back its water consumption.
Adidas’s partnership with Parley launched in 2015 and works like this: First, Parley and its partner organizations head into the field to reclaim a portion of the millions of tons of plastic littering shorelines throughout the world. Then adidas and Parley recycle it into apparel, shoes, and even clothing hangers. For Zwinger—for the rest of the teams working on the Terrex line—the raw material comes with a welcoming learning curve. “The recycled content in our shoes and clothes gets higher every year as we begin to learn how to reconstruct a product to use more and more recycled materials,” he says. “Ultimately, the goal is to make a shoe from 100% recycled materials that can be shredded and recycled into new products.
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ADIDAS ANNUAL REPORT 2020
COMPANY INITIATIVES
CALLING ALL THE CREATORS All creators are invited to take a part the opening of our company up for endless opportunities and creativity. This competitive landscape, at that border of sport and creativity in which we’ve set up camp, we’re the creators standing in front of a white canvas creating the very best for the athlete. We can adapt to today’s world and even the landscape in one of the most collaborative, confident, and creative in a way that we can—similar to our original creator Adi Dassler did.
Calling all the creators, we are looking for those who will actively participate in the process. It is a new way of working, a glimpse into a future full of innovative product possibilities that can change the athletic world and even unleash the creativity in all of us. And most importantly, it is a commitment continue breaking boundaries for our athletes so that they have the best possible equipment and, in turn, do the same.
Think of it as a cycle: Creating a new production methods that enables creators from all over the world, including our partners, collaborators, and consumers, customize, personalize, and tailor their own design. These creators in return inspire each other and the next generation for all the future adidas products.
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NEW CAMPAIGN
Overview Campaign Strategy The Power of Sports
OVERVIEW
CAMPAIGN OVERVIEW Every person in and out of sports, in every role, has the right to participate in an environment that is fun, safe, healthy, and to also be treated with respect, dignity, and fairness. Bullying denies participants these rights and result in feelings of disgrace, embarrassment, shame, or intimidation. Bullying can also affect an individual’s athletic performance, level of enjoyment, work or school life, one’s academic achievement, their physical health, along with their mental health.
adidas created #GOODSPORT to be a global campaign. The main goal for this new campaign is to bring people together through the power of sport. We know that sport has the power to change the world. Since our research shows that active kids do better in every possible way, we’re helping schools and communities set up and run programs dedicated to play and physical activity.
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p i h s n a m sport s
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CAMPAIGN STRATEGY
GAME PLAN Leveraging the power of sport as a unifying force, we’re committed to helping kids reach their greatest potential and by creating more equal playing fields for all. Our gameplan to combat bullying while ensuring fun includes:
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ANNUAL REPORT 2020
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WE EMPOWER PEOPLE People are at the heart of everything we do. Like a coach ensures that all of the players on the pitch are in the right position for the best results, empower people to exercise their rights and unlock their potential. WE IMPROVE HEALTH Sport is the key to an individual’s health and happiness. Our aim is to enable people around the world to participate in sports, while educating them on physical and mental health, fitness and nutrition. This will ultimately allow them to lead a healthier and more fulfilled lifestyle. WE INSPIRE ACTION We work hard every day to inspire and enable people to harness the power of sport in their lives. Likewise, we want to keep driving change in our industry by leading by example.
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k r o w t eam
CAMPAIGN STRATEGY
TARGET AUDIENCE From the start, community has been at the core of who we are and what we do. Our new campaign, #goodsport, will continue to focus on the youth empowerment. We plan to tackle bullying in a way that will encourage the youth to strive to act kind towards each other, on and off the fileds of play. Whether it is by giving back to the local communities or encouraging the creative passion of the next generation.
Our goal is to empower youth culture with individuality and self-expression. Continuing to evolve the brand’s legacy through our commitment to product innovation, our ability to filter creativity, and courage found on courts and even the sporting arenas through the lens of contemporary youth culture. Leveraging the power of sport as a unifying force, we’re committed to helping children reach their greatest potential by creating more equal playing fields for all.
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THE POWER OF SPORTS
HEALTH BENEFITS •
Kids are more likely to be fit.
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Kids are less likely to develop type 2 diabetes.
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The habit of physical exercise is more likely to carry over to adulthood.
ADIDAS ANNUAL REPORT 2020
ACADEMIC BENEFITS •
Playing sports in high school can increase chance of academic success.
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Children become more likely to graduate high school.
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More likely to attend college.
SOCIAL BENEFITS •
Sports can help in preventing drug and alcohol abuse.
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Making friends and opening up to others becomes easier.
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Playing sports can improve selfesteem and boost confidence.
PSYCHOLOGICAL BENEFITS •
Children will learn that there you won’t always win.
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The stress and depression levels are significantly reduced.
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Leadership skills gained carry on through adulthood.
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SUSTAINABLE WAY
Green Teams Communities
ADIDAS ANNUAL REPORT 2020
SUSTAINABLE WAY
GREEN TEAMS
COMMUNITIES
Around the world, our Green Teams have spearheaded the sustainability experience for all employees powered by their passion for the environment. Regardless if it is organizing internal hands—on initiatives such as local clean-ups or even teaming up with external partners for larger scale projects—offer an open platform for every colleague who’ all in for the good cause. The Green Teams don’t only serve local environmental needs, but they also play in the overall sustainability roadmap.
As a sports company, we believe that, through sport, we have the power to change lives. And nowhere is this more profound than in our own community engagement efforts. For years, adidas has been working closely with a handful of organizations on both local and global levels, has been actively supporting and positively impacting communities. Our programs are built on these three complementary pillars, which includes: community involvement, employee engagement, and corporate giving. This is all determined by the local cultural, economic, and social factors. It is our community engagement is essential towards our overall approach to sustainability. Additionionally, this focuses on these three strategic ‘People’ priorities: empower people, improve health, and to inspire action.
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t r o p s #good
ADIDAS CSR 2020
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