adidas AG

Sebastian Steffen - VP, IR Herbert Hainer - CEO Robin Stalker - CFO

Antoine Belge - HSBC Adrian Rott - Deutsche Bank John Guy - MainFirst Jurgen Kolb - Kepler Cheuvreux Zuzanna Pusz - Berenberg Cedric Lecasble - Raymond James Omar Saad - Evercore ISI Chiara Battistini - JPMorgan Andreas Inderst - Macquarie Julian Easthope - Barclays

Thank you George, and good afternoon ladies and gentlemen and welcome to our 2015 full-year financial results conference call. Our presenters today are Herbert Hainer, adidas Group CEO; and Robin Stalker, Group CFO.

Let me remind you that as always all revenue-related growth rates that will be discussed on a currency neutral basis. In addition all figures will refer to the Group's continuing activities and be discussed excluding goodwill impairment losses.

It's been quite a busy year and we have a lot to cover today so we better get started and over to you Herbert.

Yes thanks very much Sebastian and good morning or good afternoon ladies and gentlemen. 2015 was a very successful year for the adidas Group.

We reached all our lower major financial goals and even exceeded our initial top and bottom line targets. This was made possible because we reacted like true champions after the severe challenges we have been facing in 2014.

We used our form crisis as an opportunity, analyze our weaknesses, realigned our business, rolled up our sleeves and took up the fight for gold. As a result, our 2015 performance is a picture perfect example of a successful comeback in sport.

And there is no doubt as a group, today we are stronger and in better shape than ever before. In 2015, Group sales increased by 10%.

In euro terms, revenues were up 16% or EUR2.4 billion to new record of EUR16.9 billion. Our core brand adidas by far our largest business drove the Group's topline expansion growing 12% in 2015 and reaching sales of EUR13.9 billion, the highest level ever with strong growth acceleration towards at the end.

This was particularly visible in Western Europe and North America where revenues grew 31% and 12% during the first quarter. While adidas Originals continued to be a major growth driver during the quarter, momentum in our sports performance business also increased as revenues grew at the high single-digit rate in Q4 with double-digit increases in Western Europe, North America, Greater China, and Middle East Africa and the rest of Asia.

Reebok reported 6% sales increase for the full year and now has 11 consecutive quarters of growth under its belt. Gross margin increased 60 basis points to 48.3%, which clearly reflects the strength of our brands as this was achieved despite negative currency effect and FOB increases.

Our underlying net income grew 12% to EUR720 million despite delivering on our promise to significantly step up marketing investments to spur revenue growth and price long-term brand desire. These financials provide clear evidence for the major progress the Group made in 2015, but our success goes way beyond financial figures.

With our new strategic business plan, creating the New, we have developed a new game plan aimed at accelerating our growth trajectory until 2020 by significantly increasing brand desirability. And while officially this plan only kicked in at the beginning of 2016 creating the New has already set free a lot of positive energy within our Group during the past year.

This is a result of the completely new mindset, brands first, which we are living internally and which is also reflected in the reorganization of roles and responsibilities within our sales and marketing teams. Following the implementation of brand leadership, today our global brands organization has a centralized role when it comes to key decision-making relating to the appearance of our brands and products around the globe.

With this approach, we ensure that our product offerings enjoys a high level of commonality worldwide while at the same time we guarantee that major initiatives such as product launches and communication activities are managed centrally before they are executed locally by the market. And I have absolutely no doubt that this new consumer obsessed mindset and organizational structure spurred the success of our brands in 2015 as it helped us to be much more impactful with the consumer in many areas of our business.

The stellar momentum we are seeing at the core brands adidas and Reebok ensured strong topline growth throughout the year and equally important also resulted in major margin improvements which is a clear testimony that those brands resonate extremely well with their respective target consumer. Prime example of our consumer obsessed mindset is our football category.

2015 saw a full reset of our football footwear business with the launch of Ace and X. This new football silos successfully replaced our iconic franchises the F50, the Predator, 11Pro, and Nitrocharge.

Focusing on the specific needs of two different types of football consumers was a bold decision that also came with some risk. But it proved to be right as evidenced by the double-digit increase in football footwear revenues last year.

In addition, we strong presence of our new cleats in the world’s top five football leagues with almost 40% of players wearing 3-Stripes. And as a result, we were able to significantly increase our market share last year particularly in the important battlegrounds Western Europe.

And this alone is great news. But let's not forget our unrivalled partnership portfolio with the world's most influential football teams which was expanded in 2015 by adding two of Europe's most iconic teams Manchester United and Juventus, Turin.

This helped us to fully compensate for the non-recurrence of the record World Cup related football sales which we generated in the prior-year period. As a consequence, 2015 was by far the most successful football year now in our history with revenues reaching a new all-time high of more than EUR2.2 billion.

But just imagine the potential we have this year once the excitement around the two major football events the UEFA 2016 Euro Cup and the Copa America kicks in. In 2015, we also made a bold statement in another major performance category running.

Here, we launched UltraBOOST which delivers unrivalled energy return, superior support and adaptive comfort to consumer. As we were so convinced of the performance attributes of this shoe, we called UltraBOOST the greatest running shoe ever even before it hit the market at the beginning of 2015.

Now a year after its official launch there is no better description for UltraBOOST then just said. Both the feedback we get from consumers as well as sell-through rates record there is no doubt that UltraBOOST was the best sneaker as awarded by both Running and Lifestyle magazine several times throughout the year.

At the same time direct record of BOOST in the world’s marathon scene speaks for itself. In total, BOOST running shoes has been on the feet of the winners in 17 major marathon races since we brought the franchise to the market.

In New York, Mary Keitany repeated her victory becoming the first woman with back-to-back wins in New York in a long time. And her margin of victory of 67 seconds is just as impressive.

And one thing is for sure, an outstanding performance like that can only be achieved if you have the best possible equipment. And it is not only the professional runners who boost their run with our unique technology.

In total, we saw more than 10 million pairs of BOOST running shoes in 2015. As a result, sales in our running category increased by 6% in 2015, with both footwear and apparel recording robust growth rate.

And the momentum in this important category is clearly accelerating as we are experiencing double-digit backlog growth. The tremendous success of our Originals business lies in our unique ability to recreate iconic sport moments and bring them to the street.

This is exactly what made our famous footwear franchises Stan Smith and Superstar driving forces of sneaker culture in 2015. The Superstar on its own was sold more than 15 million times in 2015 and was by far the best selling sneaker of the year.

And while we are going to keep some momentum up for those two franchises in the coming years, we will carefully manage their life cycles to ensure longevity. But it is not only the classic styles that adidas Originals is successfully, our newly introduced NMD fusion of well-proven adidas DNA with breakthrough technology from today has once again demonstrated the trendsetting capabilities and the influence adidas originals has on the street.

The initial volume was immediately sold out on the launch weekend. We also developed Tubular, which hadn't been as impactful initially as I had hoped but we developed into a success story.

Instead of abandoning the franchise office, the first disappointment, we remained committed to it as we strongly believe in its immense potential and we were absolutely right. After having taken it out of distribution for a while, redesigning the product, sharpening the communication around it, and launching it again, the refined Tubular hit the nerve of lifestyle consumers around the globe.

In New York, people were lining up in front of stores for three blocks during the record winter blizzard to get their pair of latest Tubular version. And not to forget the unprecedented demand around the easyBOOST, which we have developed in collaboration with Kanye West and that is enjoying unparalleled popularity.

Also seven iterations released so far have not only sold out instantly but also played a major role in propelling adidas to the most popular sneaker brand on Instagram in 2015. It is also all of these products and the overwhelming response from the lifestyle consumer that drove an outstanding financial performance.

adidas Originals grew its standing 36% in 2015 with strong double-digit growth rates in each and every quarter. Momentum even accelerated to almost the end of the year as sales grew 45% during the first quarter.

In the context of creating the new winning the female consumer is an imperative for our group and offers tremendous growth potential. Therefore 2015 saw the complete reset of our women's business as we are now more focused on the female athlete than ever before.

As a result, we have made significant changes to our global product and marketing approach to enable us to create product and consumer experiences that address the very needs of women. As part of this effort, adidas recently launched PureBoost X, a high-performance meets high-fashion running shoe exclusively designed and developed for woman.

And while the official launch of the PureBoost X only took place a couple of weeks back, I'm encouraged a double-digit sell-through rate. In addition, within the scope of our new Sport 16 campaign, the first chapter of films I Am Here to Create is told through the lens of the world’s finest female athletes including tennis icon Caroline Wozniacki, supermodel Karlie Kloss as well as large number of local entrances.

And I'm sure you are just as excited as I am about our collaboration with former Lululemon CEO Christine Day. Who has been acting as a strategic advisor to our women's business for almost a year now.

As an expert in building an athletic brand for women, Christine has been instrumental in sharpening our game plan, asking the right questions and helping us develop this important part of our business in the right way. North America is another area where the other main major progress last year by moving closer to the consumer.

One of our main priorities in 2015 was to gain credibility in those categories that our important to authenticate our brand towards the US athlete. And indeed through grassroot events at the high school and college level, much higher visibility in all of the major US sports and highly engaging marketing campaigns we have become much more relevant for the US consumer in only a short period of time.

In American Football for example, our partnership with Denver Broncos for Miller, the most valuable player in Super Bowl 50 puts 3-Stripes right into the spotlight during the world’s biggest single sports event. Baseball, a number of players wearing our product has more than doubled within less than 12 months and now includes standouts such as 2015 Rookie of the year Kris Bryant.

And in basketball, we have teamed up with James Harden one of the most charismatic players in the game who has created a lot of buzz for us as he took center stage in the last episode of our Sports 15 campaign in December. Speaking about Sport 15, this has been by far our largest and most successful marketing initiative in the US ever.

Not only was this the first time that we had four major brand campaigns out in only year, in addition each of the four episodes had a clear focus on the American athlete, from the professionals down to the high school and created great excitement and unparalleled engagement amongst consumers. On YouTube alone, the four videos which were launched around major US sporting highlights such as NBA All-Star game and the start of the NFL season, on YouTube alone they reached more than 100 million viewers.

The third episode created new speed which was all about the American football has generated more retweets than any other Adidas campaign before including our highly successful World Cup campaigns. And as promised, we will continue with this consistent marketing approach that is tailored to the American athlete and aimed at building strong ties with US consumers.

When talking about connecting with the US consumer, we must of course not forget our unrivaled presence in the lifestyle arena with all of the YEEZY BOOST iterations, writing one success story after another. The YEEZY BOOST 350 even received the Prestigious Footwear News Shoe of the Year award.

No question that the collaboration with Kanye West has significantly elevated the perception of our brand, not only, but particularly in the US. And the impact goes far beyond the lifestyle part of our business.

I can tell you the major progress we have made in connecting with US consumer hasn’t gone unnoticed by the country’s most important retailers. They have become much more supportive of our product over the past 12 months which is reflected in the significant increase in shelf space in the stores.

In combination with the continued roll out of our own retail stores, this has also elevated the brand experience at the point of sale remarkably. All of this resulted in accelerating brand momentum through the year which culminated in a 12% revenue increase for brand Adidas during the fourth quarter.

We have clearly set the stage for the double digit growth ambition we have for 2016. Turning now to Reebok’s performance in more detail, this growth of 5% in Q4 the brand now looks back on 11 consecutive quarters of growth.

Without any doubt, this has proved positive of the successful repositioning of the brand and its rededication towards - clearly the brand’s bold shift from team sports to a focus on fitness is well accepted by consumers around the globe with Reebok’s international business growing at a double digit rate on average over the last 11 quarters. This is almost three years.

At the same time, the brand continues to face challenges in its home market. To reset the brand in North America and deliver sustainable and profitable business growth going forward, we started to streamline Reebok’s distribution footprint in North America during the course of 2015 by reducing the number of factory outlets.

And while we will continue to pursue the pass going forward, we will also ensure the increased retail visibility by significantly growing the amount of premium controlled space. 2016 will see shop-in-shop solutions expand into 100 Academy shops as well as through the Footaction, Champs and Lady Foot Locker stores across the entire nation In addition, by opening showrooms to introduce new Reebok to local communities and leveraging our relationship with highly influential brand ambassadors through grassroot activities, we will introduce new concept to better connect with our target consumer in the US.

And I have absolutely no doubt that we will see major progress for the Reebok brand in the US this year which will result in revenue growth in 2016 and I am convinced that over time the Reebok brand will become as successful in the US as it is already in all other parts of the world. Let me now move over to our golf business.

Following a decade of strong and profitable growth, TaylorMade-adidas Golf experience two very difficult years in 2014 and 2015 caused by a number of structural, commercial and operational issues. As a result, half way through last year we started analyzing future options for our golf business.

We expect the strategic review to be concluded by the end of the first quarter of 2016. At the same time, we also initiated a major restructuring program with the main objective to create the more nimble and more profitable organization while at the same time delivering upon its mission to be the innovative leader in golf.

The turnaround plan is in full execution as we speak and this is expected to deliver visible results and major operational and financial improvements in 2016. In the meantime, we have seen extremely good response to our latest product launches.

In its inaugural week on both the PGA Tour and the European Tour, TaylorMade’s M1 driver became the number one played model bringing TaylorMade back to the top spot in golf’s most important category, metalwoods. A multitude of players made an immediate switch based on the impressive results they saw in testing, the true testament to the unrivaled performance of M1.

But the M1 wasn’t only successful with our Tour stuff. Due to the strong early demand and quick sales through at retail our launch quantities were sold out quickly after its launch and much faster than we had anticipated.

But unlike in the past, we decided not to push further volumes into the market during the fourth quarter in order to the keep the product fresh and demand high for the next drop in the first quarter of 2016. So therefore the 15% revenue decline during the fourth quarter reflects this deliberate decision as well as our efforts to resize our golf business.

Consequently, revenues at TaylorMade-adidas Golf decreased by 13% in 2015. Ladies and gentlemen, this concludes my update about the successful year 2015 for the Adidas Group.

Let me hand you now over to Robin to complete the picture for 2015 by looking at the financials in much more detail.

Great. Thanks very much, Herbert, and good afternoon, ladies and gentlemen.

As you’ve just heard, 2015 was a very successful year for our Group. On an operational perspective we delivered a great performance and I will highlight now how this has played throughout the financials of the Group.

Top of our robust financial performance is clearly the broad-based top line momentum the Group witnessed throughout the entire year with strong sales increases in most regions. Particular standout areas in 2015 were Greater China, Western Europe, MEAA, and Latin America where revenues grew at a double-digit rate each much faster than initially expected.

Even more impressive, however, was our strong yearend finish with accelerating sales momentum in most of our key regions, amongst others Western Europe and North America where sales were up 30% and 8%, respectively, during the fourth quarter. Greater China, Latin America and MEAA also continued their growth path during the fourth quarter with double-digit increases each.

Let us dive deeper and have a more detailed look at the development of some of our major markets segments. Starting with Western Europe, after three already very successful quarters with accelerating momentum in each and every quarter, we were able to end the year on a high.

Currency neutral sales grew at a blistering rate of 30% in the fourth quarter with all key markets growing at double-digit rates, first and foremost the UK, Italy and Germany. More importantly, however, we were able to translate the strong top line performance during the year into an even stronger bottom line performance.

Operating profit in Western Europe increased 36% in 2015 translating into an operating margin of 20.0% and that’s up 2.5 percentage points versus the prior year period. Moving over to North America, Herbert has already mentioned that we are successfully increasing our visibility in this all-important market.

I am encouraged to see that our efforts are already bearing fruit when looking at our top line development in 2015. Currency neutral sales growth saw a further deceleration towards yearend reaching 8% in the fourth quarter adding up to 5% increase for the full year.

This development was due to a strong 12% increase at Adidas in Q4, the strongest growth we saw throughout 2015, confirming our improving success in authenticating our brand towards the US consumer. Reebok revenues declined 5% in Q4 reflecting the brand’s continued efforts to further streamline Reebok's factory outlet business in North America.

As already mentioned, in 2015, we significantly increased our marketing investments by more than 50% to support the company's growth in the region. Consequently, operating expenses were up 39% to EUR977 million.

This in turn weighed on our profitability in North America which decreased 2.9 percentage points to 2.5%. Let’s move over to Greater China where we were able to maintain our strong momentum at both Adidas and Reebok with currency neutral sales up 16% in Q4 representing the seventh consecutive quarter of double-digit growth.

At Adidas, where revenues increased 14% in the fourth quarter, growth was driven by double-digit improvements in both our performance and our lifestyle business. So while we are still leveraging the strong successes of Originals and Neo, we also continued to take increasing advantage of the structural trend towards a healthier lifestyle.

2015, Greater China was both our fastest-growing market with currency neutral sales up 18% and indeed the most profitable market with an operating margin of 35.1%, up another 50 basis points versus the prior year. Supported by the ongoing robust demand for sporting goods as well as increased sports participation, we have every confidence that we will be able to keep the double-digit growth momentum going into 2016.

Let’s now have a look at Latin America where we were able to record another year of double digit growth in 2015. This is actually more impressive considering the tough comparisons we were exposed to resulting from the non-recurrence of prior year World Cup related sales.

Revenues increased 12% during the quarter both the quarter and the full year reflecting double-digit growth at both Adidas and Reebok. Supported by the strong brand momentum, we recorded a gross margin improvement of 2.2 percentage points to 42.4% in 2015.

As a result, despite an increase in operating expenses, operating margin increased 80 basis points to 13.2%. Our markets that had to deal with major economic challenges in 2015 was Russia CIS where consumer sentiment and spending were heavily impacted throughout the year.

Against this background, we recorded a sales decline of 11% in Russia CIS in 2015. The sales development in the region was significantly impacted by the rationalization of our store network resulting in 167 net store closures during the year.

In light of the significant ruble devaluation, as well as higher input costs, gross margin in Russia CIS decreased 2.6 percentage points to 56% in 2015. To compensate for the gross margin decline, we carefully managed our cost base resulting in a 30% operating expense reduction.

As a percentage of sales, however, operating expenses increased 1.6 percentage points to 44.6%. Despite the gross margin decline and higher operating expenses as a percentage of sales, our operations in Russia CIS remained profitable in each and every quarter in 2015 with an operating profit of EUR85 million and an operating margin of 11.4%.

This is a great achievement on the part of our local management team highlighting our ability to maneuver our market organizations through difficult times. To finish our detailed review on our operating segments, let’s have a quick look at other businesses which declined 3% in the fourth quarter of 2015.

This development is mainly due to the 15% decline, a TaylorMade-adidas Golf as Herbert already mentioned. While revenues of ReebokCCM Hockey declined 1%, sales in other centrally managed businesses increased at a double-digit rate in Q4.

For the full year, sales in other businesses decreased 3% as a result of about 13% decrease at TaylorMade-adidas Golf, which more than offset increases at ReebokCCM Hockey and another centrally managed businesses. Gross margin in other businesses decreased 80 basis points to 33.9% in 2015 reflecting gross margin declines at TaylorMade-adidas Golf.

Due to the gross margin decline and ongoing restructuring efforts at TaylorMade-adidas Golf, other businesses recorded an operating loss EUR89 million in 2015 compared to a loss of EUR57 million in the prior year period. Now, let’s have a closer look at the Group’s other P&L items starting with the development of our gross margin.

Despite ongoing pressure from unfavorable foreign exchange trends and higher input costs, the positive effects from a more favorable pricing channel and product mix, strongly supported our group gross margin, which expanded by 2.3 percentage points to 47.2% in the fourth quarter. As a result, we ended the full year 2015 with a gross margin of 48.3% and that’s 60 basis points above the prior year level, a strong achievement considering the fact that negative currency effects and higher input costs together wiped out close to 200 basis points of gross margin.

Our operating expenses recorded an increase of 23% in the fourth quarter. As already mentioned during our nine months results conference, we made a deliberate decision to further increase our marketing investments in the fourth quarter to leverage the strong brand momentum at adidas and Reebok.

As a result, marketing investments increased 31% in Q4 compared to the prior year. Additionally, higher operating overhead cost partly due to the restructuring program at TaylorMade-adidas Golf contributed to this development.

From a full year perspective operating expenses increased 18% or 40 basis points as a percentage of sales. This development was once again due to the Group’s planned efforts to further strengthen brand desirability by stepping up brand building investments, which grew 22% or 60 basis points to 13.9% of sales in 2015.

Against the background of our strong topline development, we were able to leverage operating overhead costs, which as a percentage of sales were down 20 basis points during the year. As you saw earlier today, the 2015 financial year was impacted by non-operational goodwill impairment losses totaling EUR34 million, mainly related to the Group’s Russia CIS and Latin America cash generating units.

Of this total, EUR18 million occurred in the first quarter and EUR16 million occurred in the fourth quarter. Impairment losses were non-cash in nature and do not affect the Group’s liquidity.

Excluding these goodwill impairment losses, the Group’s operating profit increased 14% to EUR1.1 billion in 2015. The Group’s operating margin decreased 10 basis points to 6.5% for the full year reflecting the increase in marketing investments, which more than offset the gross margin improvement.

As already planned with the release of our nine months results, we generated a slight operating loss during the fourth quarter as we decided to take advantage of the dynamic topline development by further investing into our brands. Turning now to the non-operating items of P&L.

Full year net financial expenses decreased to EUR21 million versus EUR48 million in the prior year driven by positive exchange rate effects as well as the non-recurrence of negative exchange rate effects from the prior year. Due to the non-recognition of deferred tax assets, the full year effective tax rate increased 3.2 percentage points to 32.9%.

This is well above historical levels and we expect to return to more normalized level of around 30% in 2016. Despite the fact that the effective tax rate for 2015 was higher than expected, we were able to exceed our bottom line target.

Net income increased 12% well above the initially projected 7% to 10% improvement to EUR720 million in 2015. This translates into basic and diluted earnings per share for the full year of EUR3.54, up 16% compared to the prior year.

Looking at the performance of the retail part of our business, both the fourth quarter and the full year showed strong improvement. Revenues for the fourth quarter up 13% and full year sales increasing 11%.

The development in both periods was driven by double-digit growth at adidas. Comparable store sales were up 5% in Q4 with double-digit growth in most of the regions.

Excluding Russia CIS, comparable store sales even increased 10%. For the full year, comparable store sales were up 3% growing in every market except Russia CIS.

Our e-commerce business continued to grow strongly and posted an increase of 42% in full year. As a result, revenues generated through our own e-com platforms grew to over EUR600 million, more than EUR100 million above our 2015 target.

In addition, our retail business continues to see significant profitability improvements. While gross margin increased a strong 2.5 percentage points to 61.6% in Q4, operating margin climbed 1.2 percentage points to 18.6%.

As a result, our retail operations into the full year was 61.8% gross margin, up 2.4 percentage points compared to the prior year. The operating margin reached a level of 20.3% reflecting a 2.8 percentage point improvement year-over-year.

Now, last, but certainly not least, ladies and gentlemen, let me give you some insight into our balance sheet and cash flow development. While inventories and accounts payable on a currency neutral basis increased 25% and 22% respectively, reflecting higher stock levels to support the Group’s topline momentum in early 2016.

Average operating working capital as a percentage of sales decreased a strong 1.9 percentage points to 20.5% at year-end. In 2015, we ended the year with net borrowings of EUR460 million, an increase of EUR275 million versus the last year.

This development is mainly a result of the utilization of cash for the share buyback program in an amount of EUR301 million. Now, with the great operational performance in 2015, the Group’s strong financial position as well as our confidence in the Group’s long-term growth aspirations we will propose a dividend of EUR1.60 at our Annual General Meeting in May.

This would reflect a payout ratio of 47.9%, which is at the upper end of the increased target range of between 30% and 50% as defined in our dividend policy. This concludes my review of 2015 financial year.

Let me now hand you back over to Herbert who will share with you some very exciting news on upcoming product launches and events that will spur our growth in 2016. Thank you for your attention, and now back to you Herbert.

Yes, thank you very much, Robin. So ladies and gentlemen, let me now spend a few minutes to show case what you can expect from the adidas Group in 2016.

And I am excited to share with you some of our upcoming product launches and major initiatives that will fuel our growth this year. Without doubt, innovation will remain at the heart of everything we do.

Therefore, in 2016, we will continue to drive the new, be it in product, concepts or processes. We are looking at new ways of how we design our product using 3D technology to create shoes the world hasn’t seen before.

This context, I am proud that with our Futurecraft series, we are once again demonstrating our leadership on the innovation side. Futurecraft is a forward-looking initiatives to drive innovation across all elements of production process.

Back in October, we presented the first groundbreaking innovations of this series, Futurecraft 3D and Futurecraft Leather. The newest step of our Futurecraft series is Futurecraft Tailored Fibre, while originally launched in the automotive and the aerospace sector, Futurecraft Tailored Fibre will enable unique footwear designs that can be modified to the individual needs of any athlete.

The Tailored Fiber technology allows the upper itself to be ergonomically tuned to the athlete’s foot. Running will be a focus area for us in 2016.

With our unique Boost material, we have revolutionized the entire running market. For me, there is no doubt that Boost has a power to make EVA, the industry’s synthetics material standard for 35 years to make EVA obsolete.

And Ultra Boost is a very good example, which shows how we turned unequaled innovations into premium product franchises. The 2016 will keep up our focus in running on the Ultra Boost franchise by bringing the next chapter of Ultra Boost to life, Ultra Boost ST.

These running shoes will provide the ultimate experience and luxurious stability. Whether an athlete is training or full marathon, the unique midsole will keep every step charged with energy.

In addition, the adaptive adidas Primeknit upper gives lightweight support exactly where it’s needed while the outsole provides a smooth stable heel-to-toe transition. And I can promise you that this by far not the only new member of the Ultra Boost family that will come to life in 2016.

But one thing at a time. Following our intensified focus on the female athlete, we just recently introduced Avenue A, a women-only subscription service that offers curated box containing premium running and training product.

Avenue A will help us to improve shopping experience by providing seasonal looks directly to female athletes in unique and customized way. Each shipment is a surprise, and the box will filled with three to five premium items, which can be a mix of footwear, apparel and accessories appropriate for the respective season.

In addition, we just recently announced an integrated multiyear partnership with Wanderlust. Wanderlust is a producer of the largest yoga lifestyle events in the world nudging the energy of the music festival into the community atmosphere of a yoga and fitness event.

We are very excited to partner up to reach the female athlete in a new and exciting way. At the beginning of this year, after dominating headlines for so many weeks, ACE 16+ Pure Control, the first laceless football boot officially hit the market and soon started to dominate pitches around the globe.

A few weeks later, I am proud to share with you that the boot is already set to become one of our most iconic releases ever. We have taken away something that has been present in every pair of football boot the industry has released before.

The laces, the result is a really pure silhouette and a beautiful shape. That shape not only makes it visually stunning, but most importantly gives our players an unparalleled strike surface.

Worn on the pitch by some of the best football players in the world such as Mesut Özil or Ivan Rakitic, the boot is enjoying great visibility across the globe. Talking about great football players, we cannot go without mentioning the ultimate greater Leo Messi.

After winning a record Ballon d'Or, Leo has clearly cemented his place as the greatest player in the history of football. adidas football marked the moment with the launch of a new platinum boot containing real platinum elements never seen before on a football boot, the Platinum Messi 50.

On top of the introduction of some most innovative footwear concepts, our football category will experience strong support from this year’s upcoming events. Starting with by far the biggest football event in 2016 UEFA Euro 2016 Championship.

This is not just an exciting event, but the most efficient platform that demonstrate our leadership in football on and off the field of play. Being the official sponsor, the outfitter and licensee of the event, as well as the partner of nine high caliber teams including favorites Germany, Spain and Belgium, we expect high visibility, great leverage from the Euro throughout 2016.

And that’s not only within our football category, but also through halo effect on many other categories. Besides the UEFA Euro 2016, we are looking at another major opportunity in 2016 to focus our strength in the football business.

Hosted by the US, the Copa America will for the first time take place outside of South America. Thanks to our unique partnership portfolio around South America’s most successful federations and the region’s most admired football players, amongst others, Leo Messi, Luis Suarez, and James Rodriguez, the adidas brand will not only shine during the event, but we will also make sure it leverages its football excellence in North and South America.

And there is another event which I have not mentioned yet where adidas will again play a key role, the Rio 2016 Olympic Games. Just like every Olympics for more than 8 years, we will be outfitting our partners, including the world’s best known athletes and federations, with innovative performance products, enabling them to reach the personal best during the games.

Commercially not as relevant as the two football events, the Olympic Games will provide an excellent platform for the adidas brand to present its performance credentials to consumers globally, while at the same time increasing its overall presence across Latin America. Let’s move over to our lifestyle business, where 2015 was undoubtedly a tremendous year for adidas Originals.

We experienced great success stories throughout the year as our exclusive partnerships with superstars such as Pharrell, Kanye or NIGO created huge hype for our products. Going forward, we will continue to build upon this hype and leverage our strong collaborations and endorsements to further strengthen the perception and the relevance of our brand amongst the lifestyle consumer.

Two footwear franchises that will take center stage in 2016 are both collective memory from our past. They have been reinvented and will now be developed over the next couple of years, Tubular and NMD.

I already mentioned the hype that the reshaped Tubular created amongst [indiscernible] around the globe at the beginning of the year. And the NMD is just as successful.

After the first launch in December, the next silhouette, the new NMD R1 Primeknit hit the market in January and like its predecessors was sold out in a short period of time. But the good news for all disappointed sneaker heads is that the next drop is already around the corner.

2016 will of course also see the continuation of the unique collaboration between adidas Originals and Kanye West. With the launch of the black version of the Easy Boost 350 in February, we have once again pushed boundaries by offering an unparalleled level of comfort, performance and style.

Let me now spend a few minutes in North America where we will build on the strong momentum that the adidas brand is currently enjoying in the marketplace to further gain credibility with the US consumer. To achieve this, we will make sure to further increase our visibility in the most relevant US sports and continue to be disruptive with our marketing initiatives.

Starting with American football, we will celebrate Super Bowl 50 MVP Von Miller from the Denver Broncos with a customized set of cleat. In addition, as the official phase of our FREAK franchise, Miller will be featured in a variety of adidas marketing initiatives this year and will play a central role in the development of a FREAK range, which will include footwear apparel and accessories.

Let’s turn to basketball, where 2016 has had an impactful start with the next set of Creators Never Follow campaign. Following on the launch of the first episode, featuring James Harden in December, the second chapter starring Portland Trail Blazers superstar Damian Lillard will release or was released in January.

Through the lens of the basketball and one of the game’s most unique talent, the films shows adidas vision of inspiring athletes to celebrate every moment in sport as an opportunity to create, redefine themselves and ultimately lead and never follow. Baseball as well, 2016 is shaping up to the best season for adidas in quite some time.

We are excited that we were able to add some notable new signings for the next MBL, MLB season amongst others Carlos Correa ranked number 13 of the MLB’s top 100 players. For 2016, we will increase our roaster of baseball players to over 100 athletes and thus reach new levels of brand visibility which will spur consumer engagement.

In addition to significantly increasing the visibility on the field of play, we will also make further progress on the appearance of our brands and products at the point of sale. 2016 will see the introduction of new in-store solutions with the stores of our wholesale partners.

At Foot Locker, for example, we are planning to install new shop in shop applications in close to 300 stores. In addition, we will have more than 700 apparel pets, a blend of men’s and women’s, at Dick’s.

On top of that, we will continue to roll out of our own stores with a clear focus on key cities, such as New York, Los Angeles, Chicago, Atlanta and Miami. 2016, this will include a new neighborhood store in New York’s Soho district as well as our first 4,000 square meters stadium store on New York’s Fifth avenue.

Those stores will have an enormous impact not only on sales, but also by defining our flight level and distribution, raising the standards of other stores in the country. And taking all of this together, in 2016, our new brands and products will connect with a US consumer in multiple dimensions and in a more impactful way than ever before.

Let me now turn to Reebok, as we have already illustrated throughout this presentation, Reebok enjoys increasing brand recognition within the fitness generation, which is ultimately also shown in the brand’s solid top and bottom line improvement. In 2016 and beyond, we will further leverage this strong positioning and keep addressing the most relevant fitness movement in the sporting goods industry.

Our unique and unrivalled partnership portfolio with the UFC, with Les Mills and CrossFit will give us the perfect platform to showcase the depth of the Reebok’s product offering in the years to come. On the classic side, Reebok will kick off the spring summer 2016 season with the release of the dual-gender Furylite sneaker.

The release is backed by a dynamic new campaign with a series of images named Free Your Fury. The campaign was shot by Warwick Saint, one of the most renowned international photographers and directors in the field of fashion, celebrity and music shots, helping to underline Reebok’s fusion of standout fashion sneakers with technologically advanced features.

Last, but not least, let’s take a few steps on the green where our Golf business continues to execute its turnaround plan, which is focused on establishing market leadership in our core equipment categories, improving operating efficiencies across our core brands, driving margin enhancements through the business and stabilizing our product launch cycle to align with the seasonal nature of the Golf category. We’re starting to see signs of recovery with our metalwoods offering, the largest equipment category gaining strength and significantly expanding its global market share following the launch of the M1 in October.

In the US, for example, by far, the biggest Golf market globally, our market share in this all important category increased by more than 10 percentage points until the end of the year. In February, TaylorMade completed its M family offering by unveiling the M2 product line, consisting of drivers, fairways, and rescue clubs.

But the M1 and the M2 feature truly revolutionary multimaterial construction highlighted by a 7 layer carbon composite grown. With the M family of products, it is silhouette M that now defines distance and forgiveness in the industry.

The response to our recent product introductions was very positive. The encouraging demand across different products and categories in combination with cleaner inventory levels and continued strong performances of our products on the tour makes me very confident that we will be able to realize significant margin and profitability improvements in our Golf business in 2016.

So summing it all up, ladies and gentlemen, I have no doubt that 2016 will be another important and successful stage in our race to become the best sports company in the world and achieve the group’s long term financial ambition. Our brands are benefiting from the ever increasing relevance of sport in the lives of people around the globe.

Our products are in high demand with consumers in every part of the world. Our order books are full across all major performance and lifestyle categories and our brands are set to shine at this year’s major sporting events.

This gives us every confident that we will again grow the top and bottom line at a double digit rate this year. Looking at the top line in detail, we expect group sales to increase at the rate between 10% and 12%.

From a segmental perspective, we will increase revenues in all regions, except Russia, CIS with particularly strong performance again in Western Europe, North America and Greater China, where sales are expected to grow at the double digit rate each. Other businesses are expected to be slightly below the prior year level as a result of sales declines at TaylorMade adidas Golf.

This development however is solely related to the expected revenue declines at the Adams and Ashworth brands which will more than offset sales increases at the TaylorMade and adidas Golf brand. As you have seen ladies and gentlemen, we are in great shape and well prepared to fully compensate the cost pressure that we and the entire industry will be facing in 2016 as a result of a surge in input costs due to labor cost increases in our supply chain as well as the strong appreciation of the US dollar against most major currencies.

As discussed in detail during our second IR tutorial workshop in December last year, we focus our gross margin to contract at the rate between 50 and 100 basis points to a level of between 47.3 and 47.8. This means that we will be able to compensate the vast majority of the expected headwinds through sourcing efficiencies as well as the positive effect from a more favorable pricing, product channel and regional mix.

On top of that, we expect significant leverage on operating overhead costs while keeping marketing investments as a percentage of sales around the prior year level. As a result, we have every confident that the group’s operating profit will grow at a double digit rate as well with the operating margin remaining at least stable compared to the prior year.

Net income is expected to increase at the rate of between 10% and 12% to around EUR800 million. This will be a major achievement considering the severity of this year’s sourcing cost increase.

But make no mistake, the measures we have implemented to counterbalances are not of short term nature. We will definitely sacrifice the long term development of the group and the desirability of our brands for short term margin optimization.

In fact, the opposite is true. All of the initiatives aiming to support our margin development in 2016, which will sustainably increase our operating efficiency and significantly strengthen our foundation for profitable growth in the future.

At the same time, in line with our firm belief that the desirability of our brands and products will be the decisive factor to significantly increase revenues and profits over time, we will further increase our brand building investments this year. And with this in mind, I have no doubt that creating the new will not only be off to a great start in 2016, but will also make major progress in the years to come.

So now, ladies and gentlemen, we are happy to take all your questions.

Yes, hi. It's Antoine Belge at HSBC.

Good afternoon. Three questions, if I may.

First of all, would it be possible for you to quantify the main driver of the gross margin in 2015? I think there are four main drivers.

One is the FX. The other one is FOB.

The third one would be pricing. And the fourth one would be the channel mix.

So, any granularity on this would be appreciated. Second question, I think you just mentioned that Russia would still see a decline in 2016.

I think the business achieved EUR85 million operating profit in 2015. Do you still expect that business to be profitable in 2016?

And finally, a question on - more specifically on the US. I think you had good traction with Foot Locker, especially with shop-in shops.

How many shop-in shops within Foot Locker did you have end of 2015? And how do you think this figure will evolve throughout 2016?

Thank you.

Great. Thanks, Antoine.

Thanks very much. Yeah.

Indeed the gross margin is tremendous use for us and it is indicating that although we’ve had this considerable headwinds from sourcing and the currencies, the brands are really showing pricing power and that together with the mix in terms of channel and product is really helping us to compensate for that prices. So basically, if I was to look at the fourth quarter, you pretty much break it down a third coming from the pricing the channel and the product mix and that stays pretty much the same for the full year.

In terms of the Russian business and our profitability there, as I said in my prepared comments, I mean we’re really pleased that we were able to maintain a strong profitability there despite a significant decrease in top line and the economic pressures there and I think that shows that our management there has been able to manage their costs very diligently. We took 30% out of the operating expenses in 2015 and we’re very confident that even with continued challenges in the Russian market, we can match our costs to keep the business profitable.

We will continue to show some closures in some of the shops there and we will keep the Russian business profitable in 2016 I’m sure.

And Antoine, on your third question, in terms of, yes, you’re absolutely right that we see traction already in US and on Foot Locker, we have increased our shop-in shops to 200 from 20 a year ago and of course, this will develop further, but it’s not only Foot Locker, it’s also around 600 shop-in shops for our football segment within Dick’s and a lot going on with the other customers as well. Though we will definitely increase significantly our presence in the US retail going forward.

Okay. Thank you.

Maybe just a follow up on the gross margin. In 2015, if I said that the - just the FX headwind was around 200 basis points minus, is it a fair assumption?

Yeah. That is correct.

Yeah.

Hi, everyone. Thanks for the update so far.

Just two questions, please. Firstly, on growth in the US, you mentioned how brand adidas accelerating to 12% was chiefly driven by Originals and NEO.

So, I was wondering how the performance side of the brand is doing. And I'm thinking of running above all.

It's been remarkable to see the Ultra Boost on top of weekly sell-through tables in the broader running category a couple of times, actually, year to date. But, however, the sell-through and orders looking for the commercial, really commercial price points, let's say, from Bounce up to Energy Boost, and have inventories at retail normalized in running in the US?

And then secondly, on cash and CapEx, so besides the working capital measures that Robin has talked about, lower CapEx has helped free cash flow, too, in 2015. I think you've been right about EUR90 million below guidance, which I suspect are some bigger projects that have just been moved into 2016.

But, can you maybe decompose your CapEx guidance of EUR750 million for this year a little bit and share some thoughts on how you've prioritized them? Thank you.

Hey, Adrian. Let me take the first question and Robin takes the second one.

Though US running, first and foremost, let me also remind you that we have been growing our performance business by 10% in the US on the fourth quarter, it was not only Originals and you are absolutely right, that was running, Ultra Boost is running through also in the US and obviously as you mentioned already, some other models which we now bring into better price points, we definitely believe that running as a category in general will grow double-digit for our company in 2016 , and the US will definitely help us in that respect, because Ultra Boost and then all the other Boost models have an extremely good acceptance by the consumer.

And you're right, the CapEx, the timing of CapEx is often related obviously to the availability of retail and indeed for 2016, the significant increase in our CapEx plans there relates to direct to consumer investments and this is the Roll Avenue shops, some of which have it also mentioned in terms of the highlight shops on the key cities. So over 70% of the CapEx is probably in this direction with the rest being warehousing and system investments in some headquarter structure.

Hi, so, good afternoon, Herbert and Robin. It's John Guy from MainFirst.

Just three questions, please. The first question with regards to TaylorMade-adidas Golf, I appreciate that the review is ongoing and will be finalized over the first quarter.

But, is there any clarification that you can give today that, effectively, you'll be reviewing just the TaylorMade part of TaylorMade-adidas Golf and that the adidas Golf element will effectively stay within the adidas brand? Herbert, with your letter to shareholders, you talk about how the business being in great shape, and you talk about that you're prepared to fully compensate the cost pressures and input costs, labor costs, et cetera, into 2016.

So, with regards to your gross margin guidance of down 50 to 100 basis points, say relative to one of your peers Puma, for example, which has guided to flat gross margin, from an FOB perspective, you're facing very similar trends. So, could you just explain why you're still effectively guiding to a decline in the gross margin?

And with regards to the CapEx allocation, maybe just on the stores, if you could give us a little bit more clarification as to exactly where the main bulk of the CapEx is going on a regional basis, I know you've talked about some key cities. But, if I think about your store network in China, for example, that's significantly elevated in terms of, I guess, store format relative to some of your Western European and North American stores.

So, is that where the bulk of the CapEx is going to effectively upgrade your store network? Thank you.

Hey, John. Yeah.

You're absolutely right. We definitely will not talk and discuss about the adidas-Golf brand because this would mean we separate the adidas brand and this would definitely not be a wise decision, no.

If we talk, then it is only TaylorMade and obviously Adams and Ashworth.

So coming to your question about gross margin, actually, John, I'm surprised I think if we can keep the reduction in the gross margin to this level of 50 to 100 basis points, I think that's tremendous, and I don't think it's appropriate to confirm with other companies who may be in a totally different situation and may have totally different hedging, not just this year, but maybe previous years also. And for us, it's very clear that there is a significant FOB pressure also because of the change in currency, remember, in our tutorial, we said that the hedge rate will be about 13% worse in 2016 than it was in 15 and now, pricing strength, the product and also channel mix that you've seen being very strong in the end of 2015, I think that gives us great hope that we will definitely be able to manage our gross margin in 2016 within the levels that we have guided to.

And your third question about the allocation of CapEx basically, says, where we're investing in shops and that continues to obviously be in the more emerging markets so MEAA and also China, but Western Europe this is year is also a significant allocation of CapEx.

That's great. Thanks, Robin.

If I could just have one follow up just with regards to a comment that's in the annual report talking about significant opportunities to streamline the cost structures going forward, and you had about a 20 basis point reduction in the operating overheads. Could you maybe just talk about or maybe even quantify where you see the opportunity in 2016?

I appreciate that there's sales and marketing.

That’s great question, John, because I think that’s based on the other part of your previous question about how we compensate for that FOB and pressure on the gross margin. And in fact, we have already started to benefit from the initiatives we took as part of 2015 in terms of restructuring and streamlining a lot of our operating expense.

If you think of services, we have been able to combine above market, the consolidation of warehousing, all that sort of stuff. Our efforts at the end of last year and also this year to streamline our product offering and to build on our particularly key product franchises, that all helps us.

I think overall, brand leadership that we’re making now in terms of how we run the operations, that also gives us some opportunities for improved efficiency. The other capital areas are the consolidation of the operating units.

You saw the consolidation of our five key operating units in Europe into one part of Western Europe. That takes cost out of the business, and we’re looking for continued leverage in improvements coming from e-commerce and further improvements in our retail profitability.

Thank you very much. That’s very clear.

Thanks very much. Just on the flagship store, Herbert, you mentioned in the US and New York 4,000 square meters.

Are you planning to have additional of these sizes - size stores open either in the US or maybe in China of that magnitude, of that size, in 2016 or 2017, first question? Secondly, when we look at the key stars, especially Superstar or Stan Smith, ZX Flux, and Tubular, you said that or you mentioned that you want to control distribution and volumes, 15 million pairs of Superstar, obviously a big number.

Will we see that already in 2016, or is that something you want to reduce volumes in 2017 then when maybe the NMD gets more volume? And so, how is the unit size traction that you're seeing?

And one last one on just understanding when you - in your annual report, you talk about TaylorMade-adidas Golf as a multi-brand category. But, would it be possible still to keep the TaylorMade hardware and then, obviously, the adidas products and just separate Ashworth and Adams Golf so that it's not anymore a real multi-brand, but just a concentrated single-brand category?

Thanks.

Hello, Jurgen. So let me start with the first question.

Yes, you’re right in our key city strategy is flagship store included. We start with New York, then we go to London.

Obviously, we have already won in Paris, as you know, and this will be the format where we really take this five to six flagship stores as showcasing to the world what the adidas brand will be all about, so it will be much less commercial, but much more brand building. Secondly to the Original, Stan Smith, ZX Flux, you have seen already that we played this instrument very well in the recent years.

We took Stan Smith out for a certain time of the market, we took the Superstar out for a certain period of the market. We limited very much the Easy Boost collection with Kanye West to really spur this demand from the consumer and the same we do with NMD with Tubular and you can definitely rely that we keep a very close eye on how we develop our Originals business.

To make it also clear, we will definitely further grow our Originals business because there is a huge demand now in the market and we do believe by selectively distributing it around the globe, there is definitely potential. But with all the requirements which I just mentioned.

And last but not the least, your third question, yes of course, everything is possible. This is why we exactly do the structural reviewing, the strategic review that we know at the end of the quarter what exactly we want to do with Golf business.

The only thing which is a testament is that the adidas Golf will stay within the adidas Group, everything else will be analyzed.

Very good. Okay, thanks very much.

Hello, everyone. Just three questions for me, please.

First of all, on the female business, so you say that this is one of your areas of focus. I was just wondering where you could give us a bit more color on what actually percentage of your total business is female consumer, and then what are your expectations in terms of growth going forward?

And then secondly, on Boost, clearly, the Boost franchise is seeing some great momentum. So, I was just wondering whether you could share with us a total size of the Boost franchise in terms of sales and your aspirations for the future.

And then the final question. I think you mentioned during the Q3 call that you'd be limiting a distribution of the key successful footwear franchises in Q4.

But, nevertheless, I think you saw an acceleration of growth in Originals with sales up 45%. So, I was just wondering if this pickup caused by the new product launches, such as NMD, or have you actually decided to continue pushing Stan Smith and Superstar to the market?

So, maybe any comments on that would be very helpful. Thank you.

Let me start with your third question. No, there is less volume coming from the new introductions because we did it later into the year.

In 2015, it was mainly the Stan Smith, the Superstar, the ZX Flux and a lot of other models, which we might know that - especially, the LA Trainer is very popular in Italy and so on and so forth. We do expect the full impact of NMD in 2016, and obviously also Tubular.

In terms of Boost, we have done around 12 million pairs of Boost in 2015, over 10 million pairs of running shoes and in some other categories where we had limited editions, obviously, to further increase these numbers as we spread our Boost technology to other categories and also to other price points. And as I said this morning, but also think, I said this afternoon, we do believe that Boost long-term can replace EVA completely, because the material is so great and there isn’t any consumer [ph] who is not excited when he steps into the Boost shoes.

And your first question was on the women and the female consumer, obviously, I can’t give an exact number what our business is on the female consumer because sometimes it’s hard to differentiate when it comes to T-shirts, et cetera. But let me put it that way, there is definitely a lot of potential for our women’s business.

And this is why we take a clear focus on the women’s side with a lot of initiatives, which I mentioned already. Also, with the contribution of Christine Day because you all know that she built the Lululemon business with especially designed and developed products only for women, which is our Pure Boost X, which we just launched.

So, all in all, we definitely see a huge potential for us in the women’s business and this is what we want to unlock in the next few years.

Okay. Perfect.

Thank you very much.

I think we have more questions, right, George?

Yes, thank you. Good afternoon, Herbert, Robin, and Sebastian.

This is Cedric Lecasble from Raymond James. I have three questions, if I may.

So, first one, on your US traction, could you give us some market share indications in North America in footwear and apparel? And what are the main metrics you're closely looking at in the US?

That's the first question. The second question is a kind of a follow up of this one.

You have a lot of events in 2016. You're putting some great efforts in North America.

We saw that at the end of 2015. You guide on stable marketing expenditure, if it's correct, in a percentage of sales.

How do you manage doing all that at the same time in 2016? And the last question has to do with Golf.

Just to be sure, you mentioned Golf as a potential gross margin driver in 2016 as to the restructuring. Is Golf in your gross margin assumptions of 47.3%, 47.8% for the Group, how should we understand Golf in this guidance?

Thank you.

Okay, Cedric, let me start with US. We have lot of KPIs to track the business in the US, of course financials, but also NPS which is net promoter score where we can really measure the desirability of our brand and as we have told you, this is one of the key metrics which we also charge our managers in the future and incentivize them in their bonus scheme.

I don’t have any market share numbers here for footwear. We don’t have any for apparel, but I also don’t have any for footwear here.

Even let me tell you that market shares in the US is a little bit as not every retailer is in the panel. Your second question was, how do we manage lot of great events and sport, expanding more in America and still keeping our marketing expense at the same level.

As you know from the previous times and you know us quite well, we’ve always differentiated in so called event and non-event years. In non-event years we bring more individual product innovations to the market and spend the money behind there.

In the event years, obviously some more money goes to the events and this is exactly what we are doing in 2016 as well. We’ll definitely be disciplined as Robin here on my side noted already that we don’t spend more than what we have guided to you.

But we do believe with increase in revenues which gets us in an absolute much more money that this money is good enough to achieve all our expectations which we have set for 2016.

Just following on that point, obviously we have already upped our marketing spend in Americas, we are talking about higher base in any case. We are up 50% in spend on America and NWB 22% the whole year.

Your third question, Cedric, was about golf and the margin, but let me make clear for the whole profitability process. Obviously our assumption at the moment is it includes the TaylorMade and the numbers that we have guided too.

And we expect the TaylorMade and adidas Golf businesses to grow in 2016 and we expect them also to be profitable in 2016 and we still have some restructuring ahead for us for TaylorMade in 2016 of low double digit number that may lead to a loss in the segment, but definitely the underlying business TaylorMade and adidas Golf will be profitable in ‘16.

Thank you.

Thank you for taking my question. Very nice year, congratulations.

Thank you.

You are welcome. Herbert, I was hoping you could expand upon some of the comments you made upfront shifting to more of a brands first management strategy.

Maybe elaborate how that’s different than some of the tactics used in the past and how we could expect to see that expressed in terms of, I don’t know whether it’s marketing or category management or distribution et cetera going forward?

Yeah, Omar, thanks very much for that question, because this gives me the opportunity to go a little bit more in detail. I would call it that way that in the past we have been more federalistic organization where all of the countries had a certain say and this sometimes ended that we didn’t have a homogenous product offering around the globe.

We didn’t have an homogenous advertising effort over the globe and we did not always speak with one question, though there is no doubt that this industry is brand and product driven and therefore we have completely reorganized our organization. And as I said, brands first, though, definitely the brand which mean the marketing department is deciding what kind of product which we are offering which means we will have a harmonized range around the world which gives us the side effect that we definitely can scale down SKUs significantly, but will - the consumer will see our products and our branding the same way around the world be it on product offerings, be it on marketing activities et cetera.

And as I said in my little speech, brand will decide and then we focus completely the markets on the local execution.

Thank you. That’s helpful.

And then can I ask a follow-up too on the shift in more - the management structure, the shift you’ve been doing towards more sports specific category management, if you will? Can you give us a update on how that’s progressing and what we should expect there in the next year or two?

Yeah, absolutely. As we have said, we definitely make our former called business unit managers as general managers, specifically vertically toward their category.

So we will have category P&L calculated completely through with all costs related from all the different fields that we can make the GMs, as we call them in the future, responsible, but they also get power with all the, how should I say, the tools that again drives their category forward. This means that as an example the football general manager will also decide what kind of offering we have in Brazil or in Argentina on the football boot side and how we activate that there and what kind of advertising we put behind.

When should we expect it to - this approach to be implemented?

It is already implemented, Omar, and I definitely do believe that we see the first results out of that already. As I have said, officially creating the new concept is starting officially on the 1st of January 2016, but we have already started with brand leadership a year ago and we have completely completed the organizational change in 2015 already, so the people are working already under this regime and for 2016 the goals and the incentives have already catered towards that new organization with lot of financial KPIs, but also MPS as I said.

Thank you. That’s very helpful.

Good luck.

We try our best.

Hello. Hi, thank you for taking my question.

Just very two quick questions. One on the - maybe if we can go back to the gross margin for Russia, if you could tell us to what extent this was helped by pricing power and price increases in Q4 and to what extent it was product mix, because I was very impressed to see gross margin up in Q4 given the very strong forex headwinds.

And then on US and on the margin to come back to that, operating margin was under a lot of pressure in Q4, so how are you thinking about because of the marketing expenses mainly? How are you thinking about the profitability of US for full year ‘16, please?

Thank you.

Okay, Chiara, good. At first looking to the nitty-gritty of Russian - yes, indeed it is positive and that obviously speaks to the trend that I was telling you before when I was talking about the whole group and the pricing power that we are experiencing with the particularly the Adidas brand, although we also have a very strong offering of the Reebok brand obviously in Russia.

For America, in terms of the profitability there, yes, as I said in my prepared comments, the profitability was impacted because we have deliberately chosen to invest more in marketing in this important market for us. That level of investment will continue in 2016, but we are growing the business there also.

And as you can see, we were profitable for the full year of 2015 and we expect to remain profitable in 2016 in that market.

And so then should we see already an improvement because operating leverage starts coming through or should margin should stay flat in full year ‘16 and then see an improvement from 2017 in North America?

Look, I mean, the profit at the moment in 2015 was I think 2.5%. So I mean, yes, we should see an improvement on that but I mean as Herbert said earlier all the efforts that we take in the moment we investment that we are taking is not short term based, this is all to grow the business long-term sustainably, so the real improvement you should expect to be coming after 2016.

But, yes, it's encouraging to see that we are already in a good topline growth development and I'm sure you'll see further improvements performance in our profitability in that market as we go through the next quarters.

And just maybe if I can actually have another question on running in Q4 breakout lead correctly the running was roughly flat for the Q4 and if that is correct because I am in implying it from the full-year up 6% how come in Q4 that slow just the timing issue as you are waiting to ship in Q1 for just if you could comment on that slowdown in Q4 running?

I think it was low single digit if I'm correct for running, so we were still growing but please keep also in mind that big part of our running success is BOOST. I think we have told you during the year that we had some allocation on BOOST material and you will definitely see double-digit increase as I said before in running in 2016 through the whole company.

We are absolutely excited about how running is going, I think we have set the stage with BOOST and also successes is around the BOOST shoes which I mentioned before in the marathon scene, Mary Keitany in New York twice in a row et cetera, et cetera for a double-digit growth in running in 2016.

Yes, good afternoon, everyone. I have a follow-up question on TaylorMade-adidas Golf and the other segment, EUR89 million loss on EBIT, which is quite significant against EUR1.5 billion sales.

Is it fair to assume a loss for the total growth category of around EUR114 million? And maybe you can better elaborate the dynamics in terms of gross margin, EBIT margins, restructuring, which have taken place in 2015 and you also indicated in 2016.

And I struggle to get to a profitable number in 2016. So, maybe you can give us a bit more insight about the dynamics here.

That's my first question. My second question is on inventories, up 25% FX adjusted year on year.

How much of the growth is backed up by the order - by order backlogs? Thank you.

Okay Andreas, in fact the other businesses obviously are overwhelmingly impacted by the performance of the TaylorMade-adidas Golf segment. And in fact I think we’ve said previously that we had a loss in that area approaching EUR100 million in 2014 and it was around about the same sort of figure in 2015.

In addition, however in ‘15 we had some restructuring costs in the TaylorMade units of low double-digit million. And I think I’ve already answered the question about profitability for TaylorMadea-adidas Golf segment for 2016, we believe it's going to be operational positive but we still have some restructuring costs for 2016.

Just in addition to what Robin just said we also used some money to clear inventories in 2015 bring the inventory in the market and also in our own warehouse down. So please don’t forget that with the new product which we are launching in 2016 M1 and M2 family [indiscernible] achieved higher prices and therefore better margin and this is what Robin said will definitely give us profitability for our core TaylorMade and adidas Golf business in 2016.

And your second question regarding inventories, the inventory is a really clean, we've got obviously good order books although we don't tend to talk about the detail about the order books, Herbert has already said on various occasions, I repeated it that our order books are full. We are very confident that we've got good growth in the next couple of quarters and we need these inventories for that.

There is a lot of goods in transit in this figure but now the inventories are looking very clean and very good at the moment.

Okay. Very good.

Just a follow-up question on the Golf segment. Herbert, you mentioned clean - cleaning activities, inventory cleaning activities, for TaylorMade.

Can you quantify the impact on the gross margins of the clearance activities in 2015?

No Andreas, I can't quantify because of the gross margin consume a lot of different initiatives as we had on the one hand to price down current products like the SLDR drivers and the JetSpeed products then we had to give markdown money to retailers to help them drive the products which I can't give you any quantification of the each and individual measures we took to drive the inventory down.

Okay that's enough thank you very much and see you next week in London.

See you then Andreas. George, we have time one more question please.

Hi, yes, thank you very much. I've got two questions, if that's okay.

The first one concerns 2015. Basically, in H1, you saw 7% organic growth.

And then it went up to 12% or thereabouts in H2. You've given your guidance of double digit for the year.

Can we assume, therefore, there will be little bit more first half related on the basis that the second half has quite a lot stronger growth from last year? And I guess that's - that would be - you be - have reasonable confidence on the first half, given the order book.

The second thing just comes through in terms the influence that you have with your two new shareholders on the Board. Have they sort of indicated what they would like and what they plan to do with their Board seats and how much influence they can actually have?

Thank you very much.

Okay Julian let me ask me ask question, absolutely we have seen an acceleration of our growth in first quarter and definitely this will continue in the first half as you can imagine that we know already our order book very detailed for the first half. But honestly I'm quite optimistic for the second half as well because all the indications which we have got so far and we have sold Q3 already as you know is very promising as well.

So I don't think that this first half loaded we will definitely see a nice second half as well. To your second question of course we are in a dialog with hopefully our new people on the supervisory board because they have to be elected at the annual shareholder meeting but we talk with them as investors as we talk with all the other investors.

And obviously we are talking about the business and what we can to do to further accelerate and we try to find the best arguments. For example GBL is a much longer term investor to us and we have seen them more or less every quarter.

I'm sure they have the same interest as we have growing our business to see the potential with the business and this is why they are investing into our business and we welcome everybody who believes in our growth story and is investing money into our company.

I think that's a perfect ending. Thank you very much for Herbert and Robin.

So ladies and gentlemen this completes our conference call for today. As you will be aware our next reporting date will be 4th of May for our first-quarter results.

But Andreas has already mentioned I'm sure that we're going to catch up not only with him but with many of you over the couple of years - weeks over the phone or during our upcoming road shows in Europe and also the US and Asia. As always, if you have any questions please feel free to contact any member of the IR team and with that I would like to thank you for your participation and wish you a very good day.

Talk to your soon bye, bye.