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Group StrategyMinimize article

The adidas Group strives to be the global leader in the sporting goods industry

with brands built upon a passion for sports and a sporting lifestyle.

Inspired by our heritage, we know that a profound understanding of the consumer and customer

is essential to achieving this goal. To anticipate and respond to their needs, we continuously

strive to create a culture of innovation, challenging ourselves to break with convention and

embrace change. By harnessing this culture, we push the boundaries of products, services and

processes to strengthen our competitiveness and maximise the Groups operational and financial

performance. This, in turn, will drive long-term value creation for our shareholders. To achieve

this goal, we have made strategic choices and will prioritise our investments under our six key

strategic pillars.

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Creating long-term shareholder value

Creating long-term value for our shareholders through significant operating cash flow generation

drives our overall decision-making process. Therefore, we are focused on rigorously managing

those factors under our control, making strategic choices that will drive sustainable revenue and

earnings growth, and ultimately operating cash f low. Across our operations, we pursue the

avenues for growth which we expect to be most value-enhancing, with particular emphasis on

improving Group profitability. In addition, rigorously managing working capital and optimising our

capital structure remain key priorities for us. Furthermore, we are committed to increasing returns

to shareholders with above-industry-average share price performance and dividends.

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Diverse brand portfolio

Consumers want choice. Whether it is the athlete looking for the best possible equipment, or thecasual consumer searching for the next fashion trend, we are inspired to develop and create

experiences that engage consumers in long-lasting relationships with our brands. To maximise

our consumer reach, we have embraced a multi-brand strategy. This approach allows us to tackle

opportunities from several perspectives, as both a mass and a niche player, providing distinct and

relevant products to a wide spectrum of consumers. In this way, each brand is able to keep a

unique identity and focus on its core competencies, while simultaneously providing our Group

with a broad product offering, increasing our leverage in the marketplace.

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Investments focused on highest-potential markets and channels

As a Group, we target leading market positions in all markets where we compete. However, we

have prioritised our investments based on those markets which offer the best medium- to long-

term growth and profitability opportunities. In this respect, we place a considerable emphasis on

expanding our activities in the emerging markets, particularly China and Russia, as well as

building our market share in underpenetrated markets for the Group such as the United States.

No matter in which market we operate, we recognise that consumer buying behaviour and the

retail landscape are unique. Therefore, to fully exploit market opportunities, we tailor our

distribution strategy to present our brands to the consumer in the most impactful way. This is

achieved by following a distinctive but coordinated channel approach. To this end, we strive to

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provide our customers with superior service to secure prime shelf space for our brands, while

continuing our commitment to building a strategic competency in own retail and e-commerce.

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Creating a flexible supply chain

Speed and agility are key to outpacing the competition. We are committed to meeting the fullrange of customer and consumer needs by ensuring constant product availability in the correct

size and colour, providing game-changing technical innovations and also the latest high-end

fashion products to the highest quality standards.

A key strategic priority is to enable faster product creation and production by continuously

improving our infrastructure, processes and systems. By sharing information from point of sale to

source and vice versa, we strive to connect and more closely integrate the various elements of

our supply chain, to enable quick reaction to changing consumer trends. To this end, we focus on

building maximum flexibility. While leveraging the efficiency of common infrastructure and

processes, the Group strives to provide tailored solutions for all our business models, be it the

wholesale or retail channels, or the performance-oriented or style-oriented businesses.

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Leading through innovation

Every adidas Group employee is responsible for driving innovation. Therefore, we foster a culture

of challenging convention and embracing change, and require all areas of the Group to generate

at least one new innovation or meaningful improvement per year. In particular, we believe that

technological evolution and cutting-edge design in our products are essential to achieving

sustainable leadership in our industry. Beyond this, enhancing services for our customers, and

implementing more efficient and effective internal processes are other areas where our

organisation strives to innovate.

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Develop a team grounded in our heritage

Our culture is continuously shaped by influences from the past and the present as well as our

future aspirations. We perpetuate our founders commitment to the athlete/consumer, pride in

what we do, quality and love of sport. We win as a team through open communication,

collaboration and our shared values found in sport. Therefore, we foster a corporate culture of

performance, passion, integrity and diversity by creating a work environment that stimulates

innovation, team spirit and achievement based on strong leadership and employee engagement.

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Becoming a sustainable company

Like any global business, the adidas Group must manage wide-ranging commercial and

competitive pressure to deliver increased financial returns and growth. At the same time, we areaccountable for our employees and have a high degree of responsibility towards the workers in

our suppliers factories and also for the environment. We are committed to striking the balance

between shareholder interests and the needs and concerns of employees and workers, and the

environment, or, in short, to becoming a sustainable company. We report publicly on the steps we

take to have a more positive impact on society and the planet on our website at:www.adidas-

group.com/sustainability.

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Route 2015 strategic business plan

In November 2010, the Group unveiled its 2015 strategic business plan named Route 2015,

which defines strategies and objectives for the period up to 2015. This plan is the most

comprehensive the adidas Group has ever developed, incorporating all brands, sales channels

and Group functions globally. The key aspirations and targets of this plan are set out in the

section Subsequent Events and Outlook, and also in various other sections of this AnnualReport.

Subsequently, at the beginning of 2011, we launched Driving Route 2015, to act as a key enabler

to reach our Route 2015 aspirations. It addresses solutions for optimising our organisational set-

up as, over the years, it has become too complex and inconsistent. The objectives of Driving

Route 2015 are very clear: speed, consistency and consumer focus.

- Speed by implementing a leaner organisation that allows faster decision-making.

- Consistency by establishing a more aligned and efficient organisation across functions and

geographies.

- Consumer focus by reducing internal complexity, enabling us to put more of our energy into

what really matters the consumer.

We have already taken key decisions in the f irst phase of Driving Route 2015, setting up clear

roles and responsibilities for our brands, markets, channels and Group functions.