Net sales¹
Supervisory Board Report_
190
Risk and Opportunity Report_
018
Supervisory Board_
187
Outlook
013
Executive Board
181
Business Performance by Segment_
009
022
Letter from the CEO
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ADIDAS ANNUAL REPORT 2021
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
TO OUR SHAREHOLDERS
6
Illustration of Risks
Declaration on Corporate Governance_
Consolidated Statement of Changes in Equity_217
092
Global Sales
216
Comprehensive Income_
087
Global Brands
Consolidated Statement of
083
Strategy.
215
Consolidated Income Statement
199
Consolidated Statement of Financial Position_213
CONSOLIDATED FINANCIAL STATEMENTS
GROUP MANAGEMENT REPORT
077
Our Share
209
Risks and Opportunities, and Outlook_
Management Assessment of Performance,
042
Compensation Report_
207
Illustration of Opportunities_
032
OUR COMPANY
Global Operations_
positively) from those expressed by such statements. adidas does not assume any obligation to update any
forward-looking statements made in the Group Management Report beyond statutory disclosure
obligations. SEE OUTLOOK SEE RISK AND OPPORTUNITY REPORT
FORWARD-LOOKING STATEMENTS
5
ABOUT THIS REPORT
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
4
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
6 Number of employees for 2021 excluding Reebok due to the expected divestiture of the Reebok business.
4 Based on shareholders' equity.
3 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Includes continuing and discontinued operations.
(1%)
195,155,924
(2%)
195,066,060
(1%)
62,285
61,401
191,594,855
194,172,984
(15%)
297.90
5 Subject to Annual General Meeting approval.
Our Group Management Report contains forward-looking statements that reflect Management's current
view with respect to the future development of our company. The outlook is based on estimates that we
have made on the basis of all the information available to us at the time of completion of this Annual
Report. In addition, such forward-looking statements are subject to uncertainties that are beyond the
control of the company. In case the underlying assumptions turn out to be incorrect or described risks or
opportunities materialize, actual results and developments may materially deviate (negatively or
With the Annual Report 2021, adidas communicates financial and non-financial information in a combined
publication. The report provides a comprehensive overview of the financial, environmental, and social
performance of adidas in the 2021 financial year.
To enhance readability, registered trademarks as well as references to rounding differences, which may
arise in percentages and totals, are omitted in this publication. In addition, we have used the masculine
form partially, although all such references are not intended to be gender-specific. The adidas Annual
Report 2021 is available in English and German.
► REPORT.ADIDAS-GROUP.COM
It was not part of KPMG's engagement to review the Online Report or references to external sources such
as our corporate website. SEE NON-FINANCIAL STATEMENT SEE LIMITED ASSURANCE REPORT OF THE INDEPENDENT AUDITOR
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
We publish our Annual Report exclusively in a digital format. It is available as a PDF and online version.
The Online Report can be found at REPORT.ADIDAS-GROUP.COM
adidas
LQ
In addition, this report contains a combined non-financial statement for adidas AG and the Group. The
content of the non-financial statement is covered by a separate limited assurance engagement of KPMG
AG Wirtschaftsprüfungsgesellschaft. The assurance was conducted using the International Standard on
Assurance Engagements ISAE 3000 (Revised). The content of the non-financial statement combined with
further information in this report and on our corporate website is prepared with reference to the Global
Reporting Initiative's (GRI) Standards. The GRI content index can be found in our Online Report.
The consolidated financial statements prepared by adidas AG, including the statement of financial position,
income statement, statement of comprehensive income, statement of changes in equity, statement of cash
flows, and the notes as well as the Group Management Report have been audited by KPMG AG
Wirtschaftsprüfungsgesellschaft. ▸ SEE REPRODUCTION OF THE INDEPENDENT AUDITOR'S REPORT
INDEPENDENT ASSURANCE
Internal Control over Financial Reporting (ICOFR) provides reasonable assurance regarding the reliability
of financial reporting and compliance with applicable laws and regulations. To monitor the effectiveness of
ICOFR, accounting-related processes are regularly reviewed.
The consolidated financial statements and the Group Management Report are prepared in accordance with
the principles of the International Financial Reporting Standards (IFRS), as adopted by the European Union
(EU), and additional requirements pursuant to the German Commercial Code (Handelsgesetzbuch – HGB).
The reporting period is the financial year from January 1 to December 31, 2021. To ensure this report is as
current as possible, it includes all relevant information available up to the date of the Responsibility
Statement, February 21, 2022.
DATA AND FINANCIAL REPORTING STANDARDS
Term underlined in green: There is a detailed definition of this term in the glossary.
These are parts of the non-financial statement that are covered by a separate limited assurance
engagement.
▶ There is more information online or on a different page within the report.
THE FOLLOWING SYMBOLS INDICATE IMPORTANT INFORMATION:
5
096
Consolidated Statement of Cash Flows
218
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
77
42
32
22
18
GROUP MANAGEMENT REPORT -
OUR COMPANY
13
OUR SHARE
COMPENSATION REPORT
DECLARATION ON CORPORATE GOVERNANCE
SUPERVISORY BOARD REPORT
SUPERVISORY BOARD
EXECUTIVE BOARD
LETTER FROM THE CEO
TO OUR
SHAREHOLDERS
ANNUAL REPORT 2021
adidas
175
7
8
§ 289a Section 1 of the German Commercial
Code and Explanatory Report_
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
KASPER RORSTED
The success of our athletes, teams and products underlined adidas' credibility as the best sports brand in
the world in 2021, which in turn translated into strong financial results. We ended the year with currency-
neutral sales up 16%. We saw a particularly strong development in markets that operated without major
covid-19 disruptions throughout the year. EMEA, North America, and Latin America recorded currency-
neutral sales increases of 24%, 17%, and 47% respectively - a testament to the strong consumer demand
for our brand and our products. The challenging market environment in Greater China (+3%) and the
extensive covid-19-related restrictions in Asia-Pacific (+8%) weighed on our results in these markets. All
markets were negatively impacted by industry-wide supply chain challenges. Combined, all external
factors reduced revenue growth for the year by more than € 1.5 billion.
STRONG FINANCIAL RESULTS
Our campus also provided the backdrop for yet another world-class sporting event: the 'adizero: Road to
Records, a race named after our signature performance running shoe. We invited 90 elite adidas runners
to compete in our half-marathon, 10k and 5k races and they didn't let us down, setting new world records
in both the 5k and 10k events. Overall, we had a fantastic year in running with more wins, more world
records and more podiums at major road races than all other brands combined. Peres Jepchirchir from
Kenya led the charge, becoming the first person to win both the Olympic and the New York City marathon
in the same year.
WINS AND WORLD RECORDS
Let me stay on the topic of sport because that's what adidas is all about. Sport defines our past, present
and future. I was so happy to see football returning to the stadiums - albeit with reduced capacities - at
the UEFA EURO 2020 last summer. For the first time, the tournament was played across the entire
continent, showcasing the unifying power of sport. For us, it was a particular pleasure to host the German
national football team in the newly built 'Home Ground' at our headquarters in Herzogenaurach, Germany.
Hosting a world-class team on our premises during such a major tournament was an industry first.
SPORT BACK ON THE GLOBAL STAGE
I can confidently say that 2021 was a much better year than 2020. On the back of successful vaccination
campaigns around the globe, the worldwide economy started to recover. Sport returned to the global
stage, with the UEFA EURO 2020 football tournament and the Tokyo 2020 Olympics finally taking place,
creating huge excitement around the world. That said, the covid-19 pandemic continued to impact lives
and businesses across the globe. At adidas, we delivered a set of strong results despite heavy disruptions
in supply and demand, with currency-neutral sales up 16% to more than € 21 billion and a net income
from continuing operations of € 1.492 billion - an improvement of more than € 1 billion compared to the
previous year. In addition, we launched our new 2025 strategy 'Own the Game' which will set us up for
long-term success in this attractive industry.
DEAR SHAREHOLDERS,
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
LETTER FROM THE CEO
TO OUR SHAREHOLDERS
3
2
ANNUAL REPORT 2021
1
adidas
9
I AM EXTREMELY PROUD TO BE PART OF
THIS WINNING TEAM.
MY HEARTFELT THANKS GO OUT TO ALL
OUR EMPLOYEES AROUND THE WORLD.
"
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
adidas
4
Disclosures Pursuant to § 315a Section 1 and
171
Financial Statements and Management Report
of adidas AG
315
Responsibility Statement_
130
Social Impacts_
312
Shareholdings_
127
Sustainable Finance
300
Additional Information_
119
Environmental Impacts_
Working Conditions in Our Supply Chain_
Notes to the Consolidated Income Statement_293
Sustainability as strategic focus area_
242
Financial Position
113
Sustainability
Notes to the Consolidated Statement of
107
Culture
220
Notes
101
Our People
113
132
Reproduction of the Independent
Auditor's Report_
166
Treasury
337
Financial Calendar
160
Statement of Cash Flows
333
Declaration of Support_
Statement of Financial Position and
330
Glossary
153
Income Statement
328
Ten-Year Overview
151
Business Performance_
ADDITIONAL INFORMATION
147
FINANCIAL REVIEW
324
Independent Auditor Regarding the
Combined Non-financial Statement
GROUP MANAGEMENT REPORT
Limited Assurance Report of the
144
Non-Financial Statement_
316
253.20
Despite higher supply chain costs and negative currency developments, both our gross margin and
operating margin improved significantly year-on-year to 50.7% and 9.4%, respectively. Net income from
continuing operations reached € 1.492 billion for the year. Based on our substantial cumulative free cash
flow, we returned nearly € 1.6 billion through dividend payments and share buybacks to you, our
shareholders.
10%
3.30
223%
1,492
to increase to a level of
between
5.3pp
9.4%
to increase to a level of
between 9% and 10%
50.7%
0.7pp
to increase to a level of
around 52%
mid- to high-teens rate
16%
to increase at a
2021 Results²
20.0%
2021 Targets 1,2
Capital expenditure
in % of net sales³
Average operating working capital
Net income from continuing operations
(€ in millions)
Operating margin
Gross margin
Currency-neutral sales development
TARGETS - RESULTS - OUTLOOK
TARGETS-RESULTS-OUTLOOK
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
(€ in millions)3,4
4
(5.3pp)
€ 1.25 billion and € 1.45 billion
to decrease to a level
below 20%
FINANCIAL HIGHLIGHTS 2021 (IFRS)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
667
to increase to a level of
up to € 900 million
to increase to a level of
between
to increase to a level of
between 10.5% and 11.0%
to increase to a level of
between 51.5% and 52.0%
to increase at a rate
between 12% and 14%
2022 Outlook²
3
4 Excluding acquisitions and leases.
3 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
2 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
around € 700 million
to increase to a level of
1 As published on March 10, 2021; the outlook was updated over the course of the year.
€ 1.8 billion and € 1.9 billion
to decrease to a level
below 20%
FINANCIAL HIGHLIGHTS 2021 (IFRS)
3
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
THROUGH
SPORT 
WE HAVE
THE POWER 
TO
CHANGE
OUR PURPOSE
25 202
2025
25 20
2025 20
25 20
2025
0252
$ 2022
025 20
25 20
5 202
LIVES
25 200
025 20
2025
25 2
25 202
2025 20
0252
$ 2022
025 20
2025
2021
ANNUAL
REPORT
adidas
20252
2
OUR MISSION
IN THE WORLD
5
ANNUAL REPORT 2021
1
adidas
02
2025 2025
2025 2025
25 2025 202
2025 2025 2025
25 20
$ 2025 2
2025 202
TO BE THE BEST
SPORTS 
COMPANY
2025 2022
25 2025 2
2025 2025
2025 202
2025 202
025 20252
2025 202
25 2025 20
2025 2025
5 2025 202
025 2025
25 2025 2
022025 2022
0202025 2025 20
IMPOSSIBLE IS NOTHING'
OUR ATTITUDE
45 2025 20
Operating Highlights (€ in millions)
Gross profit¹
Other operating expenses¹
Shareholders' equity
(2%)
3,960
3,890
Operating working capital³
8%
3,763
4,072
(9%)
4,397
4,009
5%
7,519
21,053
Receivables and other current assets³
Inventories³
Total assets
Balance Sheet and Cash Flow Data (€ in millions)
Return on equity2,4
21.4pp
6.7%
28.1%
Financial leverage³,4
(9.4pp)
48.8%
39.4%
22,137
Adjusted net borrowings/EBITDA 1.3
6,454
Capital expenditure³
111%
7.00
14.79
223%
2.31
7.47
223%
2.31
7.47
Average number of shares
Number of shares outstanding
Number of employees'
17%
Other (at year-end)
Dividend5
Net cash generated from operating activities¹
Diluted earnings¹
Basic earnings¹
Per Share of Common Stock (€)
110%
1,366
2,873
Net cash generated from operating activities¹
51%
442
667
Share price at year-end
n.a.
1.6
1.0
223%
461
1,492
166%
746
1,986
56%
1,967
3,066
4%
8,580
8,892
2,116
17%
10,765
15%
18,435
21,234
Change
2020
2021
Key Ratios
Net income attributable to shareholders²
Net income from continuing operations¹
Operating profit¹
EBITDA¹
9,222
432
390%
50.7%
Equity ratio4
3.3pp
30.7%
34.0%
(5.3pp)
25.3%
20.0%
Average operating working capital in % of net sales 1.3
7.7pp
2.3%
10.0%
Net income attributable to shareholders in % of net sales1.2
Effective tax rate¹
(0.8pp)
20.2%
19.4%
Operating margin¹
5.3pp
4.0%
9.4%
Other operating expenses in % of net sales¹
(4.7pp)
46.5%
41.9%
Gross margin¹
0.7pp
50.0%
3.00
10
Internal Management System_
Footwear
Vietnam
30%
China
15%
Other
19%
Footwear
WORLDWIDE PRODUCTION VOLUMES BY COUNTRY'
The total accessories and gear sourcing volume was approximately 116 million units (2020: 100 million
units), with the largest factory accounting for 21% of production (2020: 21%).¬
Apparel
In 2021, 69% of our accessories and gear, such as balls and bags, were produced in Asia (2020: 77%).
China remained our largest sourcing country, accounting for 34% of the sourced volume (2020: 36%),
followed by Turkey with 29% (2020: 21%) and Pakistan with 15% (2020: 16%). ¬
In total, our manufacturing partners produced approximately 482 million units of apparel in 2021
(2020: 465 million units). The largest apparel factory produced approximately 11% of this apparel volume
(2020: 11%). Overall, apparel production is more fragmented than footwear.
In 2021, we sourced 91% of the total apparel volume from Asia (2020: 93%). Cambodia is the largest
sourcing country, representing 21% of the produced volume (2020: 22%), followed by China with 20%
(2020: 20%) and Vietnam with 15% (2020: 21%). ¬
CAMBODIA REMAINS LARGEST SOURCE COUNTRY FOR APPAREL
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CHINA REMAINS MAIN SOURCE COUNTRY FOR ACCESSORIES AND GEAR
GROUP MANAGEMENT REPORT -
OUR COMPANY
Indonesia
Other
44%
528
Apparel
in million units
Pakistan
15%
China
20%
Vietnam
15%
O
36%
34%
Other
22%
Cambodia
21%
Accessories and Gear
in million pairs
TOTAL PRODUCTION VOLUMES BY CATEGORY'
1 Figures reflect the expected divestiture of the Reebok business.
China
482
TO OUR SHAREHOLDERS
3
35%
18%
38%
29%
30%
Relationship 10 - 20 years
33%
43%
38%
35%
Relationship < 10 years
partner
19.2
18.7
29%
4
33%
Relationship > 20 years
2
ANNUAL REPORT 2021
1
adidas
97
96% of our total 2021 footwear volume was produced in Asia (2020: 97%). Production volumes in
Vietnam declined due to government-mandated covid-19 lockdowns. For that reason, Vietnam was not our
largest footwear sourcing country last year. In 2021, Indonesia represented our largest sourcing country
with 36% of the total volume (2020: 29%), followed by Vietnam with 30% (2020: 42%) and China with 15%
(2020: 15%). In 2021, our footwear manufacturing partners produced approximately 340 million pairs of
shoes (2020: 379 million pairs). Our largest footwear factory produced approximately 8% of the footwear
sourcing volume (2020: 8%). ¬
39%
INDONESIA BECOMES LARGEST FOOTWEAR SOURCING COUNTRY
All our manufacturing partners are subject to specific performance criteria which are regularly measured
and reviewed by Global Operations. To ensure the high quality that consumers expect from our products,
we enforce strict control and inspection procedures of our manufacturing partners and in our own
factories. Effectiveness of product-related standards is constantly measured through quality and material
claim procedures. In addition, we track the delivery and efficiency performance of our partners. Adherence
to social and environmental standards is also promoted throughout our supply chain. The current list of
our independent manufacturing partners can be found on our website. SEE SUSTAINABILITY
Overall, our independent manufacturing partners produced 938 million pieces of apparel, footwear, and
accessories and gear in 2021 (2020: 943 million pieces).
35%
Relationships >20 years
2 Includes one manufacturing partner who produces both footwear and apparel.
1 Figures reflect the expected divestiture of the Reebok business.
➤ ADIDAS-GROUP.COM/S/SUSTAINABILITY
22.7
465
409 403
59
4
Latin America
5 27
North America
7 11
27
4
10 14
4
Asia-Pacific
1626
10
EMEA
Greater China
ADIDAS VS. PARTNER-OWNED AND -OPERATED DISTRIBUTION CENTERS PER REGION'
40 67
partner-owned
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
adidas-owned
ANNUAL REPORT 2021
adidas
99
99
Global Operations strives to develop, produce, source, and distribute ordered articles on time and in full.
Therefore, we track two KPIs: 'On-Time-Available' ('OTA') and 'On-Time In-Full' ('OTIF'). OTA measures
on-time-available product for both our wholesale customers and own-retail stores. OTIF represents the
in-full delivery of our products by the request date of our own-retail stores only, as part of our DTC-led
strategy. With the introduction of OTA in 2021, we have changed the scope of OTIF compared to prior years
where wholesale and franchise customers were still included.
ON-TIME IN-FULL DELIVERY TO OUR CONSUMERS
1 Figures reflect continuing and discontinued operations.
1
457
To enable a broader range of products to be available at point of sale, 21 of our distribution centers are set
up to serve all our channels, 37 are specialized to serve our retail and wholesale customers, and nine
distribution centers are solely dedicated to servicing our e-commerce consumers. This diverse
combination of distribution centers allows us to be agile and efficient in distributing our products to our
customers and consumers across the globe.
26 distribution centers in EMEA, eleven in Greater China, 14 in Asia-Pacific, seven in North America, and
nine in Latin America.
100
110
113
116
127
in million units
2021 2020 2019 2018 2017
Accessories and Gear
2021 2020 2019 2018 2017
illi
448
379
340
404
Turkey
29%
Through own and partnership best-in-class execution, Global Operations ensures that the health and
safety of both employees and consumers is maintained equally. Of the 67 distribution centers that make
our global network, 27 are owned and operated by adidas, and 40 are owned and operated by logistics
partners, allowing for the operational flexibility and agility to best service our customers and consumers.
2021 2020 2019 2018 2017
98
Overall, our global distribution network consists of 67 distribution centers, enabling us to service our
global demand efficiently and effectively. We operate distribution centers in all our markets, with
By following a clear strategic framework, we enhanced our distribution center landscape in 2021 through
process automation, system upgrades, and distribution center capacity expansion. These enhancements
helped us to improve e-commerce service levels and provide more delivery choices with an overall
broader product availability.
AGILE AND EFFICIENT DISTRIBUTION CENTER NETWORK
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
1 2021 figures reflect the expected divestiture of the Reebok business.
4
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
3
19.6
Average years as independent manufacturing
manufacturing partners²
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
ANNUAL REPORT 2021
adidas
93
As our latest and most premium touchpoint for sneakerheads and style, we expanded the Confirmed app
to Europe, Japan, and Canada, continuing its contribution to revenue growth in digital and increased
consumer engagement. This app brings our most coveted and premium product to our consumers in the
easiest, fairest, and most elevated way.
We continued the work toward premium, connected, and personalized shopping experiences that enable
direct relationships with our consumers. In addition to our adidas e-commerce platform, which is available
in 58 countries, our adidas app strategy continued to fuel our mobile and member focus and has reached
over 45 countries across all major markets, achieving a significant share of business in the adidas digital
ecosystem. The adidas app is where we amplify our key brand territories such as sustainability and
innovation. It is our gateway between online and offline and it provides a premium experience with
immersive storytelling, personalized content, frictionless checkout, seamless order tracking, and access
to our membership program. Members collect points from interactions across all our touchpoints (.com,
apps, retail stores), climbing up different levels and unlocking rewards including personalized
experiences. One of these experiences is 'Members Week,' a digital week-long activation for members
only that we launched in 2020. To continue the success of 'Members Week 2020,' we decided to hold the
event twice in 2021. In addition, our sports apps contribute to amplifying our purpose 'Through sport we
have the power to change lives,' and sports engagement is proving to drive increased sales and
membership. As an example, in 2021, we have set new participation records in engagement activities such
as 'Run for the Oceans,' which reached five million participants with our sports apps and connected
partners. The success of our membership program is visible in key metrics such as increased consumer
satisfaction as well as a consumer lifetime value that is more than twice as high compared to non-
members.
In e-commerce, we showcase our brand differentiators such as exclusive products or engaging member
experiences. Through scaling and expanding our e-commerce platform, we create business impact and
efficiencies. Our own e-commerce grew 4% in 2021 to € 3.942 billion, as we leveraged strong momentum
from major sporting events like the UEFA EURO 2020 and Tokyo 2020 Olympics as well as 'Run for the
Oceans' and the launch of new product across our key categories. We continued to focus on digital
acceleration by moving available inventory to e-commerce, expanding our digital content studio in
Amsterdam, Portland, and Shanghai, as well as focusing our marketing and tech budget toward digital,
assuring our day-to-day decisions were data-driven with a clear focus on consumer insights and trends.
E-COMMERCE
1
62% Wholesale
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Our nearly 2,200 own retail stores are a vital part of the consumer journey. They are the best place for our
consumers to directly interact with our brand, product, and teams, and to touch and try our products, feel
inspired by our stories, and experience what we stand for as a brand. Through premium experiences and
the human connection with our teams and communities we aim to build brand loyalty and increase
consumer lifetime value. With our fleet of brand flagship stores focusing on premium experiences,
concept stores with a more commercial focus and factory outlet stores for the value-seeking consumer,
we provide an environment to satisfy all our consumers' needs when shopping for our product and
connecting with the essence of our brand.
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
RETAIL
adidas
95
94
We continued our focus on and invested into digital capabilities to team up with our accounts to win online
together. Our 'Partner Program' platform brings us one step closer to where the consumer shops by
providing strategic partners with access to our products by connecting our systems to their digital
platforms so they can gain access to our inventory. 2021 saw the roll-out of our 'Partner Program' to new
partners, markets, and locations, enabling us to fill gaps in their size availability and offer an extended
range of products to their consumers. Furthermore, our investments into digital capabilities have allowed
us to deliver an enhanced and consistent shopping experience in digital wholesale by making our product
images and descriptions flow seamlessly into their systems to power their website and app experiences.
In 2021, customers returned to an environment of digitally enabled physical multi-brand stores which led
to strong growth in wholesale. Our main objective in wholesale is to win market share in critical consumer
touchpoints on- and offline, especially in key trade zones and high streets. We continued to proactively
manage our orderbook to make stock accessible to all channels and customers, both online and offline.
We invested in further digitalizing our sales processes, leveraging our digital tools and infrastructure to
facilitate remote sell-in meetings, and we increased profitability by reducing the number of
undifferentiated accounts. We have identified our 80 most important multi-brand and franchise customers.
These 'Alliance Accounts' consist of 40 key accounts to deliver consumer reach and 40 influencers to
authenticate the brand. Our top Alliance Accounts in North America, EMEA, and Latin America drove the
2021 wholesale growth, and as part of our wholesale transformation, we will elevate our service level
towards the accounts to drive even further growth. Through leveraging our strong cross-functional
partnerships with the Alliance Accounts in sales and activation, we see considerable success in landing
our products, services, and stories. This is critical to ensure a holistic consumer journey.
WHOLESALE
In 2021, we again increased the number of flagship stores and brand centers with a clear focus on
digitalization, personalization, and a seamless premium consumer experience across all touchpoints.
Brand flagship stores continue to be our focus in 'Key Cities.' We continue to elevate these Key Cities with
additional flagship stores to drive premium experiences and next-level human connection. The new
flagship store in Berlin leads with a strong women focus and an enhanced sustainability area that supports
our global sustainability focus. The new flagship store in the center of Moscow will, for the first time,
provide dedicated space to our members, connecting the physical and digital space. In Shanghai, we
opened our first Terrex flagship store, designed as a destination that integrates sustainable design
concept and interactive digital technologies to push the limits of connecting the consumer experience with
outdoor adventure. Within our concept stores, we landed our latest retail concept, adidas 'Home of Sport.'
We opened our new brand beacon store in Hamburg in November, which celebrates our past and
embraces the future in retail. At the other end of the scale, we are working on shifting our factory outlet
business from a clearance-focused channel to a commercial engine driving profitability. In North America,
we piloted our first factory outlet store with 'The Pulse,' our newly developed retail concept for the value
channel, designed to elevate brand storytelling, showcasing our products and integrating omni-channel
solutions.
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1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
€ 21.2bn
In 2021, we continued the rapid acceleration of digital tools and omni-channel services. We also leveraged
our digital capabilities to allow for safe and convenient shopping experiences when stores reopened.
Health and safety guidelines and processes were a priority to protect our staff and consumers and to
ensure our consumers felt safe upon returning to our stores.
To meet the challenges we had to face in our business, we continued our focus on e-commerce, as the one
fully operational store at all times. Through targeted consumer marketing, exclusive product launches,
and prioritized supply chain management we continued our sales efforts to drive continued e-commerce
growth even as the overall environment normalized and despite facing significantly higher sales compared
to prior year periods. SEE GLOBAL OPERATIONS
The global outbreak of the coronavirus in 2020 continued to impact our store network in 2021 with a
significant number of temporary store closures - both own and partner-operated, with some markets
more heavily impacted than others. The pronounced traffic reduction within the store fleet had a negative
impact on our sales development.
IMPACT OF THE CORONAVIRUS PANDEMIC
While 2021 saw a reduction of distribution points due to market consolidation and the impact of the
coronavirus pandemic on retailers, we continue to leverage a consistent global framework with nearly
2,200 own-retail stores and our own e-commerce channel, our single biggest store available to consumers
in nearly 60 countries.
Our Global Sales function drives the commercial performance of the company by converting brand
desire into profitable and sustained business growth. It is our ambition to deliver the best shopping
experience within the sporting goods industry across all consumer touchpoints. We strive to transform
the marketplace by actively shaping and accelerating the growth of our profitable and integrated trade
network. Our objective is to establish scalable business solutions in order to deliver premium
experiences, thereby meeting and surpassing consumer expectations with an integrated brand offering.
2021 CHANNEL MIX
TRANSFORMING THE MARKETPLACE
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GLOBAL SALES
20% Own retail
While we continued to drive the shift from Wholesale to DTC channels, we saw a normalization of the
channel mix in 2021. 2020 saw exceptional growth in e-commerce as a result of retail store closures,
which was counterbalanced in 2021 when stores reopened. In 2021, the share of DTC business, consisting
of own-retail and e-commerce sales, decreased to 38% (2020: 41%). Wholesale accounted for 62% of total
net sales (2020: 59%). Our 'Creators Club' membership program has reached 240 million members across
26 countries, enabling us to build direct relationships with our consumers.
adidas
19% E-commerce
Consumer (DTC)
38% Direct-to-
NET SALES BY CHANNEL'
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To keep our production costs competitive, we outsource almost 100% of our production to independent
manufacturing partners. While we provide our manufacturing partners with detailed specifications for
production and delivery, they possess excellent expertise in cost-efficient, high-volume production of
footwear, apparel, and accessories and gear.
PRODUCTION THROUGH INDEPENDENT MANUFACTURING PARTNERS
Taken together, these actions have limited the negative impact on product availability and consumer
delivery time.
We also faced inbound challenges related to availability of shipping containers and port congestions.
We acted swiftly, securing air freight and rail capacities, managing ocean freight carriers and adjusting
planning processes for early shipments.
Our manufacturing partners continued to deal with facility closures and reduced working hours due to
spikes in coronavirus cases and resulting government-administered lockdowns. The highest impact was
seen from closures in Vietnam. We took several measures to secure additional capacity, expedited transit
modes to avoid delays and moved production to our other source countries, leveraging the agility of our
global supply base. All measures taken maintained our suppliers' production capacities for upcoming
seasons and were managed with a cost-conscious view.
adidas
Global Operations continued to respond with speed and agility in addressing challenges emanating from
the ongoing coronavirus pandemic and inbound supply challenges.
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In 2021, we worked with 114 independent manufacturing partners (2020: 132) that were producing in
234 manufacturing facilities (2020: 277). The majority (71%) of our independent manufacturing partners
are located in Asia (2020: 68%).
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21
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and Gear
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Footwear
Accessories
Number of independent
RELATIONSHIPS WITH INDEPENDENT MANUFACTURING PARTNERS'
ד
years.
We value long-term relationships: 65% of our independent manufacturing partners have worked with
adidas for at least ten years and 35% have a tenure of more than 20
Total
IMPACT OF GLOBAL CRISES ON OUR OPERATIONS
Global Operations
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1,086 Factory outlets
2,184
987 Concept stores
111 Concession corners
STORES BY CONCEPT TYPE'
We have additionally invested into digitalizing our sales processes. In 2021, we have progressed well in
making our teams, tools, and processes future-proof to further scale in 2022. We continued to invest into
digitalization in wholesale through roll-outs and improvements of tools in new markets like North America
and China. There are now five out of six digital tools live and ready to scale: 'Click' - our B2B online shop,
'S.Core' ' – our one-stop-shop for sales, 'Assist' - our one-stop-shop for customer service, 'Marketing
Cloud' - our customer engagement and communication tool and lastly the 'Digital Showroom,' which has
allowed us to design our remote sell-in meetings in a much more engaging way using 3D digital samples
and even improve our orderbook compared to previous seasons.
1 Figures reflect the expected divestiture of the Reebok business.
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GLOBAL OPERATIONS
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Distribution
Manufacturing
Product
creation
Concept
Briefing
Global Sales
Supply chain
management
Sourcing
Product
development
Design
Marketing
GLOBAL OPERATIONS IN GO-TO-MARKET PROCESS
Global Operations delivers upon our mission to be the best sports brand in the world. The function creates
the best products by establishing state-of-the-art infrastructure, processes, and systems that enable us to
focus on innovative and sustainable materials and manufacturing capabilities. Moreover, Global
Operations is focused on delivering the best services through flexible and agile distribution capabilities,
enabling product availability through an omni-channel approach. Thereby, Global Operations contributes
to delivering the best experience to our customers and consumers.
Global Operations manages the development, production planning, sourcing, and distribution of our
company's products. The function strives to increase efficiency throughout the company's supply chain
and ensures the highest standards in product quality, availability, and delivery. With the consumer in
mind, we deliver competitively priced products that drive our sustainability ambitions and are available
when and where the consumer wants them.
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Events with global reach: FIFA Men's World Cup, UEFA Women's EURO, UEFA Champions League
(men's and women's), and the Boston and Berlin Marathons, among others.
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As a ripple effect of coronavirus restrictions, the factory shutdowns in Asia, container shortages, and port
congestions impacted our ability to provide the highest product availability in our distribution centers. This
heavily impacted our OTA KPI in the second half of the year as further lockdowns came into force. The
effects of these lockdowns could not be entirely mitigated despite diligent management and prioritization
in the first half of the year. In 2021, adidas deliveries were 87% on time for adidas brand products
(2020: 89%).
Despite availability challenges, OTIF exceeded its ambition through prioritization of product and an aligned
planning process. This resulted in stable delivery performance throughout the year of our own-retail
stores against the request dates. In 2021, adidas delivered 83% of its adidas brand products on time and in
full (2020: 68%), laying a strong foundation for the 2025 OTIF ambition of 90%.
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High-profile individuals: Football stars Lionel Messi, Mo Salah, Paul Pogba, Serge Gnabry, Manuel
Neuer, Heung-min Son, Vivianne Miedema, Wendie Renard and Jürgen Klopp; basketball stars
Candace Parker, Damian Lillard, Donovan Mitchell, James Harden, Trae Young and Derrick Rose;
American football players Patrick Mahomes, Aaron Rodgers, JuJu Smith-Schuster, and Trevor
Lawrence as well as tennis stars Garbiñe Muguruza, Alexander Zverev, Dominic Thiem and Stefanos
Tsitsipas, alpine skier Mikaela Shiffrin, and outdoor athletes Sasha DiGiulian and Danny MacAskill.
Members Week: To continue the success of 'Members Week 2020,' we held this week-long digital
festival twice in 2021 to celebrate the best of adidas, bringing together some of the biggest artists
and athletes for consumers. During Members Week in May, an exciting list of raffle opportunities
was offered to members to win exclusive products and experiences. Items included digital meet
and greets with top athletes such as Dominic Thiem and a giveaway of tickets for the UEFA EURO
final and semi-final games. The Members Week in August was kicked off with a celebration of
Lionel Messi as well as the Ivy Park Rodeo collection. Synced with Members Week, the
celebration was expanded to the Confirmed app for the sneakerheads and streetwear community.
Members were eligible to win tickets, which would get them a guaranteed shot at exclusive drops
of collaborations with Pharrell Williams, Kerwin Frost, and Jeremy Scott.
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In terms of partners and athletes, while being conscious of overall marketing spend, we will continue to
bring our products to the biggest stages in the world through:
adidas
High-profile teams: National association football teams of Argentina, Belgium, Colombia, Germany,
Japan, Mexico, and Spain, as well as top football clubs such as Arsenal London, Bayern Munich,
Flamengo Rio de Janeiro, Juventus Turin, Manchester United and Real Madrid, the New Zealand All
Blacks in rugby, national Olympic associations such as the British Olympic Association and German
Olympic Sports Confederation as well as American universities such as the University of Miami,
Arizona State University, University of Washington, and Texas A&M University.
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Out of the employees asked to participate, 72% completed the survey, with the rate for corporate
employees at 75% and retail at 70%. The overall engagement score was 70% favorable and our results
showed a high intent to stay' of employees, exceeding our external benchmark. Within the survey analysis
we were able to examine how experience moments and engagement drivers influence engagement, well-
being, inclusion, and intent to stay for our employees. This analysis showed our employees have strong
satisfaction with important topics such as the ability to perform their daily role and learning within adidas.
At the same time, it also highlighted several areas of opportunity based on which our HR department will
build action plans to focus on during 2022. It is our intention to run an annual Employee Listening Survey
moving forward.
We are convinced that listening to employees plays a crucial role in our pursuit of creating a best-in-
class employee experience and continuing to attract and retain top talent. We can only tell if we are
successful by asking our people, hence we empower them to share their feedback. In support of this
thinking, we launched the 'Employee Listening Survey' - our new approach to measure the level of
employee engagement and experience that adidas provides as an employer - for all employees in retail
and corporate globally, with distribution center employees being integrated in 2022.
EXPERIENCE AND ENGAGEMENT
With the launch of our new people strategy, we have defined primary KPIs by which we will measure its
success. These include our progress in relation to women in management positions, top talent turnover,
and employee sentiment, among others. Through regular tracking of our KPIs, we are able to remain agile
in our approach to initiatives, ensuring that we are responding to the needs of our employees, as well as
our business.
MEASURING THE SUCCESS OF OUR PEOPLE INITIATIVES
‣ SEE STRATEGY ADIDAS-GROUP.COM/S/EMPLOYEES
embedding 'DEI' even further into our culture.
recognizing and rewarding both individual and team performance,
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In 2021, we offered programs in several business areas, such as digital, e-commerce, digital media,
visual marketing, finance, IT, retail, logistics, or shoe finishing. At the end of 2021, we employed
47 apprentices in Germany (2020: 49) and 46 dual students (2020: 38). Of these apprentices and dual
students, ten were hired as a part of our 'Integration Program,' which provides opportunities for those
from underrepresented backgrounds to achieve equal and equitable opportunities in the workplace.
Internships: Our internship programs provide students with a three- to six-month work and
developmental opportunity within adidas, accompanied by robust internship programming elements
including professional development, mentorship and networking events. Our goal is to ensure we
retain top-performing interns and convert them into full-time employees. In 2021, we employed
70 interns based in Germany (2020: 114).
adidas saw multiple markets and functions expand in 2021, resulting in a 136% increase in hires from
2020. We have welcomed 73 executives for senior positions, coming from both internal movements and
a variety of companies including Nike, Lululemon, Nestlé, Starbucks, Amazon, Tapestry, Zalando, and
BCG.
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who want to join our company directly out of school the opportunity to gain business experience in a
two- to three-year rotation program. In cooperation with various universities, the 'Dual Study
Program'offers students theoretical and practical experience at adidas. It consists of a three- to three-
and-a-half-year rotation program, including at least one three- to six-month international rotation.
Apprenticeship Program and Dual Study Program: The adidas 'Apprenticeship Program' offers pupils
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a wide variety of learning opportunities, build on their strengths, and improve their professional skills.
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ATTRACTION AND RETENTION OF TALENT
2021 brought global social and economic changes which also impacted business landscapes and
candidate markets. Talent attraction in 2021 intensified with hyper-competitive market conditions. To
remain competitive, adidas focused on what makes our company a top place to work, while simultaneously
striving to meet the ambitious growth targets set forth by our 2025 'Own the Game' strategy.
instilling a mindset of continuous learning,
Our employer of choice' status continues to garner worldwide recognition as we were named in Forbes'
'The World's Best Employers 2021' as top in our category and 14th overall. Additionally, we remain on
Universum's 'World's Most Attractive Employers 2021' rankings for Business, IT, and Engineering students
worldwide.
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―
eliminate hiring bias,
create employment pathways for retail employees to access corporate career opportunities,
partner with other organizations and our internal Employee Resource Groups ('ERGs') to drive key
messages around inclusive hiring, and
continue the education of our stakeholders on an inclusive hiring mindset.
We also offer entry-level programs to ensure new joiners can have the best possible start, choose between
Throughout 2021, we focused on embedding 'DEI' into our recruitment processes, through various
specialized programs that aim to:
creating a premier employee experience,
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attracting and engaging key talent,
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Vaccination: We encouraged all employees who can to get vaccinated to protect themselves, our
colleagues, families and friends. In Germany, we were able to have our own vaccination centers on site
(available for corporate, retail, and distribution center employees) to accelerate the vaccination
progress, as well as extending the flu shot campaign in some countries. When governments around the
world asked for companies to facilitate and/or fund the vaccination of their employees, we readily did
this and funded vaccination for our employees in the United States, Colombia, Russia, Ukraine, and
India.
HR training and alignment: To enable our HR Business Partners to report on covid-19 cases, conduct
contact tracing, and manage any employee-related crisis issues, we introduced global trainings for
them. These trainings are repeated as often as necessary to ensure our HR Business Partners are able
to act upon the most recent developments at any time. To create alignment and awareness of new
processes or emerging situations in the markets, we have also set up a weekly call for market HR
leaders, where any employee- or covid-19-related issues are discussed and decisions are made on
necessary actions.
Retail: In our own-retail stores, safety protocols include social distancing rules and the installation of
plexiglass screens. Our retail staff have been trained on these safety measures, contact tracing, and
case reporting to guarantee sufficient response actions to ensure the safety of all employees and
customers. In addition, we created so called 'Retail Response Teams' to ensure the implementation of
regulations and standards in our stores in a timely manner.
REWARDS
Principles of our rewards and recognition strategy: The key focus of the adidas 'Total Rewards and
Recognition Strategy' is to attract, retain, and motivate individuals through remuneration, benefits, and
recognition programs that are inclusive, fit for purpose, and competitive in the marketplace, enabling the
achievement of adidas' strategic objectives. In order to further enhance the rewards and recognition
approach at adidas, a comprehensive review will be undertaken in 2022.
Remuneration: Remuneration at adidas has a dual focus of ensuring employees are remunerated fairly
and equitably for the role they perform, while also creating a culture of rewarding for performance.' This
is supported by the adidas Total Compensation Management philosophy, together with the development of
an internal Job Architecture, both of which have been designed to enable educated compensation
decisions based on external market reference and internal equity, while also taking into account the skills,
experience, and responsibility of individuals.
In order to motivate and engage our employees, while also driving performance, adidas offers the
following variable compensation plans:
Short-Term Incentive (STI) programs,
Profit participation program – 'Champions Bonus' (Germany),
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Long-Term Incentive (LTI) Plan for senior management.
Benefits: At adidas, most benefits are offered on a location-specific basis, driven by local practices or
needs, and statutory requirements. This includes a 401-K Retirement Plan (US), Long-Term Working Time
Account and the adidas Company Pension Plan (Germany). As a global company, our benefits reflect our
cultural diversity. Programs may vary from country to country, but follow a defined global standard to
enable a comparable benefits experience, which is enabled through flexibility and technology.
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adidas
building role model leaders that empower people,
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Crisis management team: To monitor and assess the impacts and potential spread of the coronavirus
globally, we have continued to work with a dedicated Steering Committee since February 2020. The
task of this HR-led, cross-functional team is to provide guidance to our markets on emerging issues,
standards, and company policies to ensure alignment in our response to covid-19. The team also
tracks internal covid-19 cases globally on an anonymous basis, and reports these to the Executive
Board. This measure enables us to determine any actions needed at all locations globally. The Steering
Committee meets up to two times per week to review employee case numbers, impacts to the
business, emerging issues, and review current policies, guidelines, and direction to the business and
our workforce. Updates are provided to the Executive Board on a regular basis, at least once a month.
These pillars seek to focus our efforts on people and culture through:
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Flexible work: Based on the good experience we have made with our worldwide off-campus-working
approach, which allows our employees to work up to 40% of their working hours remotely, adidas has
been well prepared and equipped for the transition to full home-office mode during the pandemic. At
the same time, we experienced the importance of social and personal interaction first-hand during the
pandemic. As we think about the future, we want to provide flexibility to support employees' unique
needs and experiences. ¬
HEALTH MANAGEMENT
We support our employees by aiming to provide the best possible conditions to ensure that they feel
good and stay healthy. Our holistic approach includes people's physical, mental, and social well-being, and
focuses on four pillars: mindset, nutrition, movement, and medical services. We provide employees access
to various sports activities and facilities, and lockers and showers in many office buildings allow people to
run or cycle to work. Employees in Herzogenaurach, Portland, Boston, Moscow, Gurgaon, and Manchester,
and at other locations across the globe, have access to a corporate gym. However, with the ongoing
coronavirus pandemic throughout 2021, we continued to follow a cautious approach and keep programs
stopped and gyms closed where necessary. Our focus remained on digital offers for employees to support
a healthy lifestyle at home. This included an online sports program as well as broad virtual offerings on
nutrition, mental health, remote work, and resilience. In addition, our Employee Assistance Programs
were extended over the past months; the offering now fully covers nearly every market, including North
and Latin America, Emerging Markets, Asia Pacific, and various countries in Europe.
Mental Health Week 2021: As part of our focus on holistic well-being and an inclusive culture, following
World Mental Health Day, we provided employees worldwide with support, tools, and information to
proactively recognize and manage their own mental health and that of those around them. 'Mental Health
Week 2021' had – based on the motto 'Mind your mind' - a focus on creating productive conversations,
showing support, and giving a call to action for prevention and positivity with regard to mental health.
NAVIGATING THROUGH THE CORONAVIRUS PANDEMIC
Since the beginning of the covid-19 pandemic, the safety and well-being of our employees, consumers,
and partners has been our top priority. In our offices, stores, and warehouses around the globe, we have
installed a variety of measures to ensure the ongoing safety of our people and limit the risk of infections at
the workplace or while traveling.
Return to the office: In 2021, we slowly started to re-open some locations, with limited capacity
according to local regulations, and attendance on site is on a voluntary basis. All regulations regarding
safety protocols were extended, such as wearing masks, social distancing, and meeting room
limitations. Additionally, we are continuously monitoring the development of the situation by market
and keep transparent communication to our employees every week, as well as reinforcing the strict
rules of conduct in place in our workplaces to ensure maximum safety levels.
Our learning and development offerings focus on developing the leadership behaviors and essential
skills needed to ensure our continued success and the execution of our 'Own the Game' strategy. Our
ambition is to inspire and nurture talented and diverse leaders who exemplify our leadership behaviors.
At adidas, we believe that our people are the key to the company's success. Their performance, well-
being, and personal development have a significant impact on brand desire, consumer satisfaction, and,
ultimately, our financial performance. To support the execution of our new strategy ‘Own the Game,' the
people strategy comprises three key pillars: Leadership, Betterment, and Performance, all
underpinned by 'Diversity, Equity, and Inclusion' ('DEI'). ¬
SUCCESSION MANAGEMENT AND LEADERSHIP GROUPS
In 2021, we made increasing use of virtual capabilities not only in the delivery of learning content, but also
in its development. We have developed and launched a new virtual learning creation that allows rapid
design, quick implementation, and delivery of content at scale within a short period of time. With this
approach, we were for example able to launch our 'Essentials – Think and Act Sustainably' program,
resulting in a registration of more than 4,000 employees in 2021.
We offer a portfolio of leadership development experiences designed for every level of management
across all markets and functions. These include the 'People Leader Experience' ('PLE') 'Manager
Development Experience' ('MDE') 'Director Development Experience' ('DDE'), and 'Executive Development
Experience' ('EDE'). These interactive learning experiences support the development of leadership skills
that are directly linked to the participants' current roles and responsibilities, as well as being aligned to
our values. In 2021, 1,885 employees enrolled in 'MDE' or 'DDE,' and of those 1,444 employees graduated
the programs through a virtual experience. Additionally, 1,705 people leaders and/or those who aspire to
lead people enrolled in 'PLE,' with 1,437 completing the program through a virtual, collaborative
experience.
This year, we have premiered a platform for employees that provides access to all learning initiatives
within adidas. It contains curated content based on employee development needs.
We are convinced that employee development enables a high-performance culture. To achieve this, we
offer a wide range of learning and development opportunities. These include online learning resources and
interactive learning experiences that are designed to increase the personal and professional effectiveness
of our employees.
LEARNING
It is our goal to develop a culture that values the experience, well-being, and performance of our
employees. Our people and our culture are key to delivering our 'Own the Game' strategy; and one of the
ways we are supporting our people is by introducing six new values that will guide our behaviors. Our new
values are: Ownership, Courage, and Innovation, as well as Team Play, Respect, and Integrity. In 2022, we
will focus on implementing and embedding these values across our people policies and processes,
including the way we hire, promote and evaluate performance.
CULTURE
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While we have a clear target for female representation in management positions, we commit to supporting
inclusivity across all diversity dimensions and across different intersectionalities, both in our brand
offerings and internally. We also plan to significantly increase the diversity of our leadership groups, such
as our CLG and ELG. To assist us in understanding the demographics and diversity of our talent across our
organization, we will launch a 'Diversity Dimension Data Collection' project in 2022. For adidas AG, we also
have legally required target figures for the percentage of female representation on the Executive Board,
including corresponding deadlines for their achievement, as well as for the first two management levels
below the Executive Board. ▶ SEE DECLARATION ON CORPORATE GOVERNANCE
37%
Women in management positions
As part of our people strategy, adidas has established a concrete and measurable goal to assist in
realizing our DEl ambitions. We have committed to increase the share of women in management positions
(Director level and above) globally to more than 40% by 2025. At the end of 2021, that number was 37% for
adidas. This new goal also reflects our consumer focus, where women are a priority.
FEMALE LEADERSHIP AND DIVERSITY OF TALENT
To assist with global coordination and sponsorship of ERGs and to optimize potential for cross-market
communication and education, adidas will introduce the ERG Global Council in early 2022.
Throughout the company, we continue to support and grow our Employee Resource Groups (ERGS) - these
are specific networks that give employees from various walks of life a voice and serve members by
fostering a diverse and inclusive workplace. We now have more than 40 ERGs around the globe, as well as
Diversity Ambassador teams, with different focuses on diversity dimensions such as Ethnicity, Gender,
LGBTQ+, Experienced Generation, Faith, and Disability and Mental Health. Participation in the groups is
voluntary and open to all employees. This year we launched our ERG Framework. Through these
guidelines, we assist our ERGs and business leads to understand the important role ERGS play in creating
an inclusive culture.
Implementation of global and local Cultural Review Teams with an adidas Cultural Guidance Playbook
for all branded content creation to ensure we live our values through our partnerships, product,
imagery, and messaging.
Increasing our focus on delivering 'DEI' change through market-led initiatives. Local 'DEI' market
leads are charged with the responsibility of understanding, adapting, and implementing global
initiatives into their regional areas, along with supporting the local implementation of DEI activations.
Establishing at our headquarters in Herzogenaurach a Refugee Employment Program to provide
employment pathways for political and war-affected refugees.
Going virtual has not only enabled access to a wider audience across the organization, but also allowed for
even more diversity of thought, experience, and knowledge in the learning groups, bringing the learning
exchange to all different levels. Consequently, we saw an extended use of our digitally enabled learning
tools, but also of other learning offers across adidas, with a significant increase in learning hours.
INFORMAL LEARNING AND MENTORING
Another investment has been in networking and informal learning. For example, we have partnered
with 'Ten Thousand Coffees' on an adidas virtual café to enable connection and peer-to-peer learning.
At the beginning of the year, we also relaunched our internal adidas Mentoring Program (aMP) to answer
the development needs of our employees. aMP is a self-driven program open to all adidas employees to
connect with mentors and mentees outside of their location and/or function, learn from each other, and
grow together.
5
4
3
2
ANNUAL REPORT 2021
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108
13 Employees in Germany continue to have four evaluations based on the current company agreement.
Parental leave: For parental leave and re-entry, programs are in place to provide employees with
advice early on and options for their return to work, also taking into consideration flexible working
hours and work locations. In Germany, we guarantee our employees on parental leave their positions,
which are only filled temporarily. In the US, in addition to regular parental leave for new parents (up to
ten weeks at home, 70% of their salary), adidas offers an extra two weeks of paid parental leave for
parents. Furthermore, adidas' special parental bonding leave provides parents with the opportunity to
stay home for up to six months within the first twelve months after the child's birth or placement.
While unpaid, it offers parents the opportunity to stay home longer and take care of their new arrival
and new life together. Latin America provides for an extended parental leave approach across the
market where mothers will be provided 24 paid weeks in total to spend with their children, and
fathers/partners will be provided 20 paid days in total. On top of this, mothers are allowed to work
fewer hours one month before and after their maternity leave period.
Childcare: In addition to providing flexible working opportunities such as work from home and
sabbaticals, we cater for a family-friendly environment and infrastructure. At our headquarters in
Herzogenaurach, we offer parent-child offices, and provide for a childcare facility, the 'World of Kids.'
It offers space for 270 children and includes an outdoor group and ad-hoc childcare to support parents
in emergency situations or during transition phases and short-term assignments. During school
holidays, kids' camps are very popular and offered at various locations across the globe. Due to the
ongoing coronavirus pandemic throughout 2021, we were forced to adjust well-established offers in
many locations. Different solutions were implemented to assist parents working from home in
challenging times while catering for childcare and home-schooling. These included coronavirus
hotlines for parents and caregivers, interactive online sessions, and presentations from experts, as
well as tutoring for pupils.
-
We aim to harmonize the commercial interests of the company with the professional, private, and family
needs of our employees. Our work-life integration initiatives and programs include the provision of flexible
working times and locations, personal development, and leadership competence related to work-life
integration, as well as family-oriented services:
WORK-LIFE INTEGRATION
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
#MYBEST is the global performance development approach at adidas and is a key enabler of a high-
performance culture. The four elements of #MYBEST encourage regular high-quality conversations
between the employee and the line manager, provide a framework for regular upward and peer feedback
exchange, and ensure goals are set and reviewed quarterly. A formal performance evaluation takes place
twice a year,
, 
13 and development is the focus of every monthly 'Touch Base' conversation. The voice of
employees is critical in the evolution of #MYBEST. In 2021, we introduced new tools to make the
performance evaluation and potential assessment processes more equitable and continued to build our
line managers' capabilities to engage in meaningful performance standard conversations. In August, our
new people strategy was launched, with a key focus on performance. During the fourth quarter of 2021, we
initiated a review of our performance development approach to include our new values. This review will
continue in 2022 and will focus on the future of performance at adidas.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
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OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
ANNUAL REPORT 2021
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107
In 2021, we have also partnered with former track and field athlete Edwin C. Moses to pilot a mentoring
experience to help selected employees elevate their ability to reinforce our cultural aspirations.
Participants comprised a small and diverse cohort of high-potential leaders across North America. This
initiative will be extended to a larger group across the organization in 2022. ¬
In addition, in 2021 the CEO Mentoring Circle that originally started in 2017 was expanded to become the
Board Mentoring Circle. With this program, the adidas Executive Board members are investing their time
to support the development of selected and upcoming leaders in our organization.
PERFORMANCE MANAGEMENT
GROUP MANAGEMENT REPORT -
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Our investments in learning and development opportunities have focused on access to digital learning
content such as LinkedIn Learning, Udemy, Circus Street, and Arizona State University. To pursue our
effort of equitable access to career development, we have also invested in a self-directed language
platform.
TO OUR SHAREHOLDERS
3
2
1
ANNUAL REPORT 2021
adidas
103
The 'Local High Potential Group' ('LHIPO') enables us to identify and develop local high-potential
leaders who have the ability to take on more complex, demanding, and higher-level responsibilities at
a global or regional leadership level. The program is designed to build peer relationships and to give
The ‘Global High Potential Group' ('GHIPO') enables us to identify and develop global high-potential
leaders who have the ability to take on more complex, demanding, and higher-level responsibilities at
an executive level. The second 'GHIPO' generation with approximately 40 members and a balanced
gender split completed their development experience in the first quarter of 2021. At the end of 2021,
85% of the active and alumni 'GHIPO' participants made positive career movements through either a
promotion to the next level or lateral, cross-cultural, or cross-functional moves.
The 'Extended Leadership Group' has approximately 110 members. The 'ELG' collaborates across
markets and functions to lead the execution of our strategic initiatives and to drive continuous
improvement and consistency throughout the organization. The 'ELG' also mentors and sponsors the
'Global High Potential Group' and 'Local High Potential Group.' In addition, selected members are
potential successors for the 'CLG.'
4
The 'Core Leadership Group' is made up of approximately 20 members of our senior leadership
population. Members of this group jointly represent critical positions and roles across our company
worldwide. This group partners with the Executive Board in leading the execution of our business
strategy. The CLG' is also responsible for developing and inspiring the next generation of leaders. In
addition, selected members of this group are potential successors for the Executive Board.
Our succession management approach aims to ensure stability and certainty in business continuity
through the development of strong internal pipelines of talent for critical leadership positions. We achieve
this through a globally consistent succession process that identifies these critical leadership positions
within the organization and matches top talent as successors for these roles. Furthermore, we drive the
translation of succession planning into realizable development plans to prepare successors for their next
steps. The leadership groups we have established serve as succession pools for the executive roles of our
organization.
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
ADIDAS 'DEI COUNCIL'
We have five standing groups to ensure leadership excellence and develop future leaders. The first two
groups, the 'Core Leadership Group' ('CLG') and the 'Extended Leadership Group' ('ELG'), focus on
excellence in execution of our strategy and ensuring global consistency. The remaining three groups focus
on developing global, regional, local, and functional succession pipelines at different levels.
In the fourth quarter of 2021, adidas launched the 'Global DEI Council.' The Council drives the increase
of representation, retention, and advancement of diverse talents within our global workforce. It is
responsible for business ownership and accountability on global 'DEI' initiatives and leads, advocates, and
drives the strategic implementation of adidas' 'DEI' mission.
5
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OUR COMPANY
ANNUAL REPORT 2021
1
adidas
104
12 This does not include local, 'ERG' or individual volunteering hours.
We strongly believe that 'Diversity, Equity, and Inclusion' ('DEI') are key to the success of our company. To
be the best sports brand in the world, we need the best diverse talent that reflects the diversity of our
customers and consumers. We celebrate this diversity as it helps us better serve the communities we
work in, while also providing a competitive business advantage. Through embedding 'DEI' across all pillars
of our people strategy, we aim to create the most inclusive workplace and ensure that everyone has the
same career opportunities by helping to eliminate barriers.
'Equity' has been newly added to our diversity and inclusion commitment in 2021. At adidas, we
recognize that, historically, we live in a society that has generated an unequal playing field, which we do
not want to replicate or sustain. We want to give each of our employees, irrespective of their diversity and
intersectionality, the opportunity to be able to perform at their best, be consistently and fairly developed,
recognized, and rewarded for their efforts.
DIVERSITY, EQUITY, AND INCLUSION
Employee donations: Using the community impact platform 'DEED,' whose reach we continued to extend
to our global employees in 2021, the Community Impact Team launches and executes fundraising
campaigns allowing employee contributions to selected non-profits aligned to key cultural moments. This
further demonstrates our collective support as one adidas family.
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
adidas employees collectively delivered 1,084 volunteering hours. 12
-
Volunteering: In 2021, our 'Community Impact Team' organized global volunteering opportunities
programmed around key cultural moments such as International Women's Day and 'Pride Month.'
Different virtual volunteering activations allowed employees around the world to take collective ownership
in fostering 'DEI,' role modelling our values and bringing our purpose to life. Throughout the volunteering
programs organized by the Community Impact Team, we achieved the following:
Together with our employees, partners, communities, and consumers, we act on our company purpose
by fostering a culture of inclusion, impact, and shared opportunity. To maximize impact, we leverage brand
moments to raise awareness and create opportunities for our people to engage and get involved, such as
by providing volunteering and donation opportunities.
COMMITMENT TO IMPACT
The 'Future High Potential Group' ('FHIPO') was formed in the fourth quarter of 2021 and enables us
to identify and develop selected employees at an early career stage who show high potential. The
twelve-month program is designed to build on participants' skills, further evolve their capabilities,
strengthen their behaviors, and expand their business perspective. The first 'FHIPO' generation with
approximately 50 members, 60% of whom are female, from all functions is locally driven in Portland.
participants cross-functional and cross-cultural exposure. The second 'LHIPO' generation, made up of
approximately 170 members of 41 different nationalities, representing all markets and functions,
concluded their development journey in the fourth quarter of 2021. 55% of the members of this group
are female. By the end of 2021, nearly half of the active and alumni 'LHIPO' participants made positive
career movements through either a promotion to the next level or a lateral, cross-cultural, or cross-
functional move.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
14 non-profit organizations or social ventures received support through volunteering.
The Council members will drive 'DEI' change initiatives within their functions and markets and identify,
escalate, and remove cross-functional and market-based barriers, while providing the necessary
resources for successful ‘DEI' strategy implementation. The Council is made up of a diverse group across
the organization, including all of the Management Board members and strategic 'DEI' representatives
across functions and regions; employee representatives will also actively participate through elected
representatives of the 'Global ERG Council' and representatives of the 'Works Council' taking a rotating
seat on the 'DEI Council.'
GROUP MANAGEMENT REPORT -
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We have always been and will always be against discrimination in all forms and stand united against
racism. To emphasize this principle, we shared a list of global commitments in June 2020. They describe
how we aim to contribute to creating lasting change. The commitments include, among others, investing
$120 million in the US toward ending racism and supporting Black communities through to 2025, and
funding 50 university scholarships in the US each year for Black and LatinX students. We also set new
targets for increased representation of Black and LatinX people within our US workforce. Our aim is to fill
at least 30% of all new positions in the US with Black and LatinX people.
Formation of the 'United Against Racism Accountability Council' in North America to implement and
inform our targets and policy, that hold us accountable and adhere to our financial commitments, and
fast-track programs aimed at increasing representation and support of Black and LatinX communities,
who represent the consumers we serve.
Formation of our 'Global DEI Council' to provide strategic 'DEI' direction and ensure Board, functional,
and market-level accountability to strengthen our inclusive culture.
Expansion upon our 2020 Global Day of Inclusion with a Global Week of Inclusion in 2021 that was
complemented through the year by other diversity moments, to celebrate and educate our employees
on diversity. This included recognizing and supporting employees through Ramadan and Eid al-Fitr,
managing mental health and well-being, LGBTQ+ Pride Month activations, International Day of People
with Disabilities, Black History Month (US and UK), and International Women's Day.
Analysis of our overarching strategic approach to supplier diversity including setting targets for diverse
supplier representation.
UNITED AGAINST RACISM AND OUR GLOBAL DEI COMMITMENTS
adidas
ANNUAL REPORT 2021
1
105
3
4
5
Creation of key learning programs and e-learning modules for new and existing employees. These
encompassed, among others, training on what ‘DEI' means at adidas, and on our anti-harassment and
anti-discrimination policy.
Company-wide completion of the nearly 30 hours per employee, team-led 'Creating a Culture of
Inclusivity' development program, including expanding it to our Retail and DC employees. This created
a level set in our organization to ensure a consistent understanding of 'DEI' terms, concepts, and
principles, and the impact they have on workplace culture and individual employee experiences.
In 2021, we have made further strides in strengthening our inclusive culture with an increased ownership
across our global business functions. This has included:
2
3
116
adidas
1
ANNUAL REPORT 2021
5
3
4
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
CORRELATION BETWEEN UN SUSTAINABLE DEVELOPMENT GOALS AND OUR SUSTAINABILITY ROADMAP
TO OUR SHAREHOLDERS
2
adidas participates in a variety of industry associations, multi-stakeholder organizations, and non-profit
initiatives. Through these memberships, we work closely with leading companies from different sectors to
develop sustainable business approaches and to debate social and environmental topics on a global and
local level. We use collaborations and partnerships to build leverage for systemic change in our industry,
such as for efforts to mitigate the carbon footprint in our industry's supply chain, strengthening chemical
management practices, and raising standards in the cotton supply chain. In addition, we build awareness,
capacity, and knowledge of laws and rights among factory management and workers by partnering with
leading providers such as the International Labour Organization's ('ILO') 'Better Work' program, as well as
with the United Nations International Organization for Migration ('IOM') with the objective to ensure that
the labor rights of foreign and migrant workers are upheld in the adidas supply chain.
STAKEHOLDER DIALOGUE AND TRANSPARENCY
QO
5
7
AFFORDABLE AND
CLEAN ENERGY
8
DECENT WORK AND
ECONOMIC GROWTH
9
CLEAN WATER
AND SANITATION
6
GENDER
EQUALITY
5
AND WELL-BEING
GOOD HEALTH
INDUSTRY, INNOVATION
10
REDUCED
INEQUALITIES
12
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
13
CLIMATE
ACTION
14
LIFE
BELOW WATER
17
PARTNERSHIPS
FOR THE GOALS
Engaging openly with stakeholders and establishing ways to increase transparency and disclosure has
long been central to our approach. Our stakeholders are those people or organizations who affect or are
affected by our operations, including our employees, consumers, suppliers and their workers, customers,
investors, media, governments, and NGOs. The adidas 'Stakeholder Relations Guideline' specifies key
principles for the development of stakeholder relations and details the different forms of stakeholder
engagement.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
3 The fair wage benchmarks include industry wages, minimum wages and living wages. These benchmarks are set and tracked through a 'Fair Labor Association Fair
Compensation Tool,' which has broad industry adoption and is being rolled out progressively to strategic Tier 1 supplier partners.
TO OUR SHAREHOLDERS
521
447
499
Research and development
1,028
2
973
956
903
climate neutrality (CO2e)
114
adidas
1
ANNUAL REPORT 2021
5
1
464
Production
4,909
GROUP MANAGEMENT REPORT -
OUR COMPANY
2017
2020
15% reduction of GHG emissions
Decarbonization
2017
per product
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2030
30% reduction of GHG emissions
2017
2050
(from raw material production to
own operations)
Achievement of
5,143
4,871
Entire value chain
GROUP MANAGEMENT REPORT -
OUR COMPANY
2
4
System in place to identify and manage high-risk
human rights issues in 100% of value chain 5
1 According to 'US Bureau of Labor Statistics Code.'
2 The S-KPI measures a set of social indicators, such as accident rates, worker satisfaction and worker empowerment. The target seeks to achieve 100% adherence
to/70% overachievement against these foundational social impact measures, with '3S' being the minimum expected supplier performance.
4 The measurement of wage parity for production line workers and their immediate supervisors (i.e., line leaders] forms part of a broader gender strategy rollout to
applicable Tier 1 strategic partners who complete self-assessments to identify and then close gender gaps in operating practices and procedures.
5 In conducting due diligence we seek to identify, prevent or mitigate potential adverse human rights or environmental impacts, with priority given to addressing the
most severe impacts.
MATERIAL TOPICS
We seek to ensure that we address the topics that are most salient to our business and our
stakeholders, and the challenges ahead. To identify these topics, we openly engage with our stakeholders
and consider their views and opinions in decisions that shape our day-to-day-operations. In addition, we
regularly perform stakeholder consultations to confirm the selection of our material topics. We use
insights gained from past assessments and from engagements we hold with multiple organizations
throughout the year, review and categorize potential new topics and validate these through discussions
with experts and stakeholders across the entire business. Ultimately, we want to better understand the
importance a topic has for our business performance and stakeholders, but also gain more visibility about
the impact we have on these topics. There were no material changes in 2021, compared to the list of topics
in 2020. SEE NON-FINANCIAL STATEMENT
We also make use of the United Nations Sustainable Development Goals (SDGs) as a framework to map
their correlation with our own commitment to sustainable development and human rights. We have been
able to link prioritized SDGs with both the environmental priorities related to, for example, the selection of
materials, manufacturing, use, and disposal of our products, and the needs and concerns of people in the
adidas value chain.
115
adidas
ANNUAL REPORT 2021
1
2
3
4
measured by fair wage benchmarks
across our strategic Tier 1 suppliers³
Achieve gender wage parity
for workers and their supervisors
in our strategic Tier 1 suppliers4
Progressive improvement in compensation,
70% of Tier 1 strategic suppliers
achieve at minimum '4S;'
100% of Tier 1 strategic suppliers
achieve '3S' or better²
Entire value chain
(from raw material production
to own operations)
Human Rights and Environmental
Due Diligence ('HREDD')
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TARGETS FOR 2025 AND BEYOND: SOCIAL IMPACTS
Target year
2025
Impact area
3
Own operations
Target
Lost-Time Incident Rate ('LTIR')
below industry average¹;
Zero fatal accidents;
Occupational Illness Frequency
Rate ('OIFR'): Zero
Supply Chain
Social impact ('S-KPI')
Fair wages
Gender
Health and Safety
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
chain'
Key memberships:
Manu-
facturing,
dyeing, and
materials Spinning
production
Raw
Total
2021
End of
Life
Own
Operations
Logistics
T1
T2
T3
T4+
9 out of 10 articles will be
sustainable, meaning that they are
- to a significant degree - made
with environmentally
preferred materials
the value
S
Assembling
throughout
impact of
Environmental
ENVIRONMENTAL FOOTPRINT'
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
adidas
119
finishing
Offices,
distribution
centers,
own
120
Increasing adoption of renewable energy: We have seen progress following our 2025 target to keep
emissions flat on 2017 levels through increased adoption of renewable energy. After we had conducted
feasibility studies with positive results in 2020, we encouraged suppliers in our environmental program
to install rooftop solar panels and successfully increased the rooftop solar power in our supply chain to
93 MWp in 2021. We have also contractually secured additional capacity and aim at achieving coverage
of 50% of the total potential in 2022. We will continue to identify and strengthen additional potential in
2022 to gradually include more of our Tier 2 suppliers.
In 2021, we engaged with our suppliers enrolled in the environmental program and empowered them to
develop decarbonization business plans on their own, considering they best understand their respective
situation and can find the most appropriate measures for their future GHG emission reduction plans. In
addition, we encouraged all suppliers to enroll in the 'UNFCCC Climate Action Training' to equip them with
the knowledge they need to effectively mitigate climate change and achieve climate neutrality (CO2e).
Beyond that, we drove various initiatives to help suppliers scale the use of renewable energy and increase
their energy efficiency.
As a substantial portion of environmental impact occurs, at different intensities, throughout the supply
chain, sourcing at adidas is not only about ensuring high product quality and timely delivery. It also means
working with our suppliers to ensure they are continuously optimizing their environmental footprint in the
area of energy use and carbon emissions, water, wastewater, chemicals, and waste. Strategic suppliers at
Tier 1 and Tier 2 level producing most of our products and materials are enrolled in our environmental
program, which means we partner closely with them and provide suitable training to achieve their targets
and progressively improve their footprint.
SUPPLY CHAIN
1 Values reported cover production seasons SS21 and FW21. Raw materials production and processing (Tier 4+, Tier 3, Tier 2]: Impacts are estimated based on
quantities of materials and life cycle analysis data. All key production processes are considered. Primary, secondary, and tertiary packaging material quantities
are included. The quantities are estimated based on sales volumes, using composition and weight assumptions from the 'Product Environmental Footprint
Category Rules' ('PEFCR'). Assembling (Tier 1): Impacts are estimated by applying emission factors to reported energy consumption from Tier 1 strategic
suppliers. Sourcing volume data is used to estimate the impact of non-strategic suppliers (<20%). Logistics: Quantities of goods for specified distribution routes
are combined with transport emissions factors. Own Operations: Impacts are estimated based on reported environmental quantities in the workplace
governance data system and business travel data system. End of Life: Emissions caused by disposal of our products by consumers are estimated based on sales
volumes and typical waste disposal routes (e.g., landfill and incineration).
2%
2%
5%
10%
49%
9%
23%
GHGs
Inbound
and
outbound
logistics
6.0
0.1
0.3
0.6
2.9
0.5
1.4
2021 [MtCO₂e]
business
travel
retail, and
processes
Including
all stages
of product
life cycle
sites, own
End-of-life
treatments
production
0.2
Results for 2021 clearly show that our estimated environmental impacts are distributed somewhat
unequally across the value chain, with the most significant impacts generated in the supply chain (more
than 90%), particularly raw materials production and processing. Collaborating with our extended supply
chain partners to help them reduce their GHG emissions and continuing to seek more sustainable versions
of the raw materials that we use for our products has thus become core to our program.
The tool has been instrumental in understanding our impact caused by GHG emissions, and to setting
appropriate GHG emission reduction targets. We believe it is essential to thoroughly track and measure
our progress toward our targets and to conduct scenario analyses to make fact-based decisions. In 2022,
we aim to fully integrate the tool into our existing data-tracking systems to enable real-time simulations.
At the same time, we acknowledge that the tool will experience further developments to meet the
required, more complex methods to calculate our footprint in the future.
Moving toward achieving our ambitious target requires reliable data. We developed an 'Environmental
Footprint Tool' that enables us to quantify, monitor, and be transparent about our environmental impacts
not only across our own operations, but along our entire value chain. This covers all stages from
extraction, production and processing of materials, product assembly, own operations, and logistics, to the
disposal of our products at the end of their lifetime.
EXTERNAL RECOGNITION
We have set up regular sustainability networking calls for all employees involved in sustainability projects
and programs in the organization to ensure company-wide alignment on all levels. On top of this, adidas
developed a company-wide sustainability training program available to all employees, educating them on
how to think and act sustainably, enabling them to become sustainability ambassadors and encouraging
everyone to make personal and professional commitments to contribute to a cleaner planet. Thousands of
colleagues have gone through the training in 2021. We also initiated sustainability training for our retail
colleagues, with the objective of informing, engaging, and inspiring our entire team and all consumers we
interact with on a daily basis, around the globe. ▶ SEE OUR PEOPLE
A robust governance structure ensures timely and direct execution of programs that drive the
achievement of our new set of targets for 2025 and beyond. The head of Sustainability is responsible for
the development, coordination and execution of our sustainability strategy and reports to the member of
the Executive Board responsible for Global Operations. This person also leads the 'Sustainability Sponsor
Board, which is composed of senior representatives from Global Brands, Global Operations, Digital, Sales,
and other relevant functions across the company. The 'Sustainability Sponsor Board' ensures cross-
functional alignment, transparent end-to-end management and execution of agreed-upon sustainability
goals within their functions. This includes reviewing and signing-off on policies as required. We also
maintain a separate compliance function which is operated as the Social and Environmental Affairs ('SEA')
Team to evaluate supplier-facing social and environmental compliance performance and human rights
impacts, reporting, through the General Counsel, to the CEO.
GOVERNANCE STRUCTURE
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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TO OUR SHAREHOLDERS
5
4
3
2
ANNUAL REPORT 2021
1
adidas continuously receives positive recognition from international institutions, rating agencies, NGOs,
and socially responsible investment analysts for its holistic approach to managing sustainability. In 2021,
adidas was again subject to comprehensive corporate environmental, social, and governance ('ESG')
assessments, and took part in focused thematic disclosure benchmarks for environmental or social
performance. As a result, adidas was represented in a number of high-profile sustainability indices,
ratings, and disclosure benchmark evaluations.
adidas
We believe that with our long-standing commitment to and strategic focus on sustainability we are already
covering elements of the four thematic areas in various sections of our Annual Report. adidas has chosen
sustainability as a focus area in its company strategy 'Own the Game' and therefore a comprehensive
roadmap with clear targets is in place. The Sustainability Sponsor Board ensures end-to-end management
of this strategy. As part of our risk identification process, we monitor physical risks related to climate
change as well as risks and opportunities resulting from the transition to a low-carbon economy. To
further refine and develop the core reporting elements in line with the TCFD recommendations, a cross-
functional project team was set up in 2021. This team will proceed with establishing solid governance
processes around the TCFD and will particularly focus on establishing climate-related scenario analyses.
Given the complex nature of the topic, further preparation will be needed to build more granularity and to
ensure high quality for more extensive external reporting. SEE RISK AND OPPORTUNITY REPORT
We acknowledge the value of climate-related reporting and for many years have been reporting into well-
established frameworks. Based on its international accreditation, we are aiming to stepwise include the
'Task Force on Climate-related Financial Disclosures' ('TCFD') recommendations that enable companies
to improve reporting of climate-related financial information, especially climate-related risks and
opportunities. The TCFD is structured around four thematic areas that represent core elements of how
organizations operate: governance, strategy, risk management as well as metrics and targets.
We believe transparent communication with our stakeholders is critical. For that reason, we use global
reporting standards such as the guidelines of the Global Reporting Initiative ('GRI') and the Sustainability
Accountability Standards Board ('SASB') to inform our external non-financial reporting. We regularly
disclose additional information to public-facing social and environmental benchmarks and reporting
platforms, and publish important sustainability updates about our work throughout the year on our
corporate channels, including our corporate website. A key element is the publication of our global
supplier factory list which are updated twice a year. In addition, we disclose the names of the factories of
suppliers that process materials for our primary suppliers and subcontractors, where the majority of wet
processes are carried out.
Zero Discharge of Hazardous Chemicals ('ZDHC') working group
World Federation of the Sporting Goods Industry ('WFSGI')
United Nations Fashion Industry Charter for Climate Action ('UNFCCC')
The International Accord for Health and Safety in the Textile and Garment Industry
Textile Exchange
German government-led Partnership for Sustainable Textiles ('Textilbündnis')
Leather Working Group ('LWG')
Fashion Pact
Fair Labor Association ('FLA')
Fair Factories Clearinghouse ('FFC')
Better Cotton ('BC')
Apparel and Footwear International RSL Management ('AFIRM') working group
117
Notably, following a thorough assessment by rating agency S&P in 2021, adidas was awarded with an
overall ESG Evaluation Score of 85, placing us among the top ten in the entire S&P Global Rating Universe.
In its comprehensive assessment, S&P emphasized our industry-leading approach to innovation, supply
chain management, and consumer engagement. ▶ SEE OUR SHARE
EXTERNAL RECOGNITION 2021
Environmental, Social,
30%
2030 Goal: GHG emissions reduction across entire value chain by
According to the United Nations, climate change presents the most pressing long-term challenge
facing civilization. For that reason, it was critical for us to set science-based decarbonization targets that
help limit global temperature rise. adidas committed to achieving climate neutrality (CO2e) across its own
operations by 2025, reducing absolute greenhouse gas (GHG) emissions across its entire value chain by
30% by 2030, measured against a baseline of 2017, and, with that, paving the way for climate neutrality
(CO2e) across its entire value chain by 2050. We support global initiatives that aim to drive change for our
industry, such as the Fashion Pact and the UN Fashion Industry Charter for Climate Action ('UNFCCC'). We
also committed to the Science Based Targets initiative ('SBTi') in 2020 and received SBTI approval of our
targets in spring of 2021.
DECARBONIZATION
Managing the environmental impacts at our own sites and along the entire value chain is a key focus of
our work. We are committed to decarbonization by reducing our absolute energy consumption and CO2e
emissions as well as transitioning to clean energy. We are also committed to steadily increasing the use of
more sustainable materials in our products and expanding our circular services. We continue to address
water efficiency and quality, with an advanced chemical management program in place.
ENVIRONMENTAL IMPACTS
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Governance Performance (ESG)
MSCI ESG Rating
('AAA,' upper score: 'AAA')
S&P Global ESG Evaluation
(85/100, upper score:100)
Sustainalytics ESG Risk Rating
(13.3/100, upper score: 0)
Environmental
Performance
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CDP Climate Change
('B' score, upper score: 'A')
('B' score, upper score: 'A')
Corporate Information
Transparency Index
(among top 10 in our industry)
Social
Performance
Corporate Human Rights Benchmark
(first in our industry)
KnowTheChain Benchmark
(among top 3 in our industry)
World Benchmarking Alliance
Gender Benchmark
(among top 3 in our industry)
118
CDP Water
ZDHC 'Wastewater
Foundational Level'
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40% intensity reduction at
Tier 2 supplier facilities
80% of supplier facilities to achieve
the highest level of compliance
(level 3) with ZDHC 'Manufacturing
Restricted Substances List'
for 80% of the chemicals used for
production
Marketing
8,225
8,359
8,548
14
8,733 (
Logistics
3,617
3,180
3,709
5
3,281
Sales
4,633
29,384
35,910
56
34,163
Own retail
2020
2021
2020
in %
2021
Full-time equivalents
Employees²
10% Asia-Pacific
13% North America
28,061
8
6,028
4,382
5
SUSTAINABILITY
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1 At year-end. 2021 figures reflect expected divestiture of the Reebok business.
2 Number of employees on a headcount basis.
54,722
53,870
62,285
100%
61,401
Total
1,417
3,614
1,453
7
4,003 (
IT
8
5,096 (
Central administration
5,766
30% EMEA
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NUMBER OF EMPLOYEES BY FUNCTION'
1 At year-end. 2021 figures reflect expected divestiture of the Reebok business.
Average length of service (in years)
Average age of employees (in years)
Female
Male
Management positions³
Female
Male
Total employees
Total number of employees²
EMPLOYEE STATISTICS'
▶ SEE TEN-YEAR OVERVIEW SEE NOTE 40
61,401
Employees worldwide
On December 31, 2021, the company had 61,401 employees (2020: 62,285).14 Thereof, 8,096 were
employed at adidas AG (2020: 7,694). On a full-time equivalent basis, our company had 53,870 employees
on December 31, 2021 (2020: 54,722), thereof 7,241 at adidas AG (2020: 6,963). In 2021, personnel
expenses decreased slightly to € 2.451 billion (2020: € 2.483 billion), representing 12% of sales (2020:
13%). In 2022, adidas plans to hire more than 2,800 new employees.
GLOBAL EMPLOYEE POPULATION
Stock Purchase Plan: Participation in the Stock Purchase Plan is open to employees in Germany, the US,
the Netherlands, and Greater China (China mainland, Taiwan, and Hong Kong), offering almost half of our
employees globally (excluding retail) the possibility to participate. 5,230 employees participated in the
program in 2021 (2020: 5,400). ¬
Cross-border employment: adidas is investing in international relocations to fill local skill gaps, enable
knowledge transfer, develop talent to build a more diverse workforce, enable location strategy, and to
enforce our learning company culture. Our cross-border employment ambition is to enable 'Own the
Game' through desired movement of talent that both enhance employee experience and align to business
purpose and impact. To support this ambition, in June 2021, adidas launched a new global policy for cross-
border employment.
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61,401
Being a sustainable business is about striking a balance between shareholder expectations and the
needs and concerns of our employees, consumers, and communities, as well as the workers in our
supply chain and the environment. We believe that acting as a responsible company will contribute to
lasting economic success.
2020
47%
1 At year-end.
16% Greater China
7% Latin America
24% Group functions
EMPLOYEE SPLIT'
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80% of suppliers that operate
on-site effluents plants to achieve
3 Calculated in accordance with German Act on Equal Participation of Women and Men in Leadership Positions in the Private and Public Sector in Germany.
2 Number of employees on a headcount basis.
4
5
31
32
35%
37%
65%
63%
55%
53%
45%
62,285
SUSTAINABILITY AS STRATEGIC FOCUS AREA
14 The decline in employees is solely related to the expected divestiture of the Reebok business.
Consequently, we have doubled down on our commitment to sustainability and defined a roadmap for 2025
and beyond that allows us to create a positive impact across relevant areas, always focusing on the most
material topics - for us and our stakeholders. We will move to a comprehensive, consumer-facing
sustainable article offering at scale, expand our circular services, and work toward achieving climate
neutrality (CO2e) across our entire value chain. We will empower our employees to become sustainability
ambassadors, just as we invite consumers globally to engage and connect with us on the topic of
sustainability. Lastly, we aim to uphold the highest social compliance standards in our supply chain.
Wastewater (Output)
Chemicals (Input)
2025
2017
Adoption of renewable energy at
strategic Tier 1 and Tier 2 supplier
facilities to keep emissions flat
Energy
Supply chain
2019
95% diversion rate
Waste
(m³/m²)
2019
Water
15% consumption reduction
climate neutrality (CO2e)
Achievement of
Baseline
Target
Emissions
Own operations
Area
Target year
TARGETS FOR 2025 AND BEYOND: ENVIRONMENTAL IMPACTS
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Product
Sustainable article offering
Water
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Our commitment to sustainability is embedded into how we have done business for over two decades. It
is rooted in our purpose 'Through sport, we have the power to change lives.' In 2021, sustainability was
defined as a strategic focus area of our strategy 'Own the Game.'
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We believe that moving toward achieving the targets we have defined for 2025 will set us up for future
success. Yet we know that we cannot achieve these alone. We will leverage our long-term relationships
with suppliers to ensure they can continue moving with us in alignment with our decarbonization efforts,
and work closely with partners to scale innovative materials and recycling technologies. The table below
provides an overview of the targets we have set for 2025, supporting our drive for positive environmental
and social impact. ‣ SEE STRATEGY ADIDAS-GROUP.COM/S/SUSTAINABILITY
For 2021, the first year of reporting in the new strategic cycle, we applied a different standard 16 and were
able to increase the percentage of sustainable articles by eight percentage points for the Spring/Summer
2022 season compared with the Spring/Summer 2021 season. 16
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As part of 'Own the Game' we aim to move to a comprehensive sustainable offering at scale. Our ambition
is that 90% of our articles will be sustainable by 2025. We define articles as sustainable when they show
environmental benefits versus conventional articles due to the materials used, meaning that they are - to
a significant degree - made with environmentally preferred materials. The majority of the environmentally
preferred materials currently used are recycled materials or more sustainable cotton. Additionally,
innovative materials such as biobased synthetics, and more sustainably grown natural materials are used
on a small scale already and will become increasingly relevant in the future.
CIRCULAR SERVICES
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To qualify as a sustainable article, environmentally preferred materials have to exceed a certain pre-
defined percentage of the article weight. The applied criteria for environmentally preferred materials and
the percentage of the article weight are defined based on standards reflecting the latest developments in
our industry, competitor benchmarks, and expert opinions: For apparel, the environmentally preferred
material content is required to amount to at least 70% of the article weight, for accessories and gear at
least 50%, and for footwear at least 20%. 15 This standard will be applied for the years 2022 onwards.
-
SEE COMPENSATION REPORT
The following materials build the foundation of the environmentally preferred materials we use:
More sustainable cotton: adidas has steadily increased the sourcing of more sustainable cotton
throughout the last several years and already manages to source 100% more sustainable cotton since
the end of 2018.
-
We are committed to steadily increasing the use of more sustainable materials in our production,
products, and stores. We push toward sustainable innovation and circular business solutions.
Recycled polyester: To increase the use of recycled polyester is yet another way we seek to improve
our environmental footprint while still making high-performance products for athletes. Polyester is the
most common single-used material in adidas products and, by 2024, we aim to replace all virgin
polyester with recycled polyester in all products where a solution exists. We set clear internal
milestones for product creation teams and have seen progress throughout the last several seasons.
91% of all polyester used in 2021 was recycled. With that, we are on track to use only recycled
polyester from 2024 onward.
Parley Ocean Plastic: Since 2015, adidas has partnered up with the environmental organization 'Parley
for the Oceans' and uses 'Parley Ocean Plastic' as an eco-innovative replacement for virgin polyester.
In 2021, we continued to roll out Parley Ocean Plastic across key categories, both in 'Performance' and
'Lifestyle products across footwear, apparel, and accessories. In 2021, we produced close to 18 million
pairs of shoes containing Parley Ocean Plastic. SEE GLOBAL BRANDS
Synthetic fibers are widely used in our industry due to their unique performance properties such as
elasticity, light weight, and high durability. We are aware that products made out of synthetic fibers can
have a negative environmental impact during the production of materials and their use phase, and
acknowledge fiber fragmentation as a complex challenge for our industry - one we are proactively
addressing. adidas is co-founder of 'The Microfibre Consortium' ('TMC'), which has developed a test
method and in future aims to give guidance to the textile industry to mitigate the impact of fiber
fragmentation.
15 Percentage of sustainable articles (by count) offered at the points-of-sale (average of Fall/Winter season of the current financial year and Spring/Summer
season of the following financial year). For the calculation of the article weight, trims are excluded for apparel and accessories and gear. Only articles with
verified environmentally preferred material contents are included. Licensed articles are excluded. Without Reebok.
16 For apparel and accessories and gear, the environmentally preferred material content is based on the article weight (at least 25% recycled content or 50%
sustainable cotton; excluding trims), for footwear (only upper part) it is based on material components (at least 25% of the components used contain 50% or
more recycled content) or article weight (at least 25%). The percentage of sustainable articles (by count) offered at the points-of-sale in Spring/Summer 2021
amounted to 60.6%. Only articles with verified environmentally preferred material contents are included. Licensed articles are excluded. Without Reebok.
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By the end of 2022, we aim to have seven out of ten of our articles sustainable.
MORE SUSTAINABLE MATERIALS
Monitoring output chemical management: Pollution abatement is critically important for the textile
industry, which is why we have also set targets for suppliers for managing their wastewater discharge
performance. To support facilities in their continuous improvement on wastewater discharge quality,
we rolled out an effluent treatment plant evaluation that supports them to strengthen their quality
controls on wastewater discharge. We are also partnering with ZDHC to integrate this assessment tool
into their industry platform. Despite the challenges our facilities experienced during the pandemic due
to country lockdowns and severe disruption of on-site wastewater sampling, we observed a significant
improvement with 87% of our suppliers achieving ZDHC Wastewater 'foundational level' in 2021. With
that, we have already exceeded our 2025 target of 80% of our suppliers operating on-site effluent
plants to achieve ZDHC Wastewater 'foundational level."
TRANSPORTATION
adidas
126
18 Decrease in emissions from electricity consumption in part as a result of the purchase of 'Renewable Energy Certificates."
17 Renewable energy is accounted for with zero emissions.
Implementing sustainable processes: The Integrated Management System (IMS) helps us to secure
relevant ISO management certifications for key locations, such as environmental management (ISO
14001), health and safety management (ISO 45001), energy management (ISO 50001), and - introduced
in 2021 and planned to obtain for 2022 - facility management (ISO 41001). adidas aims to further
expand these certifications to more key sites through implementation of the standards and both
internal and external audits, as these support us to achieve our energy, water, waste, and health and
safety targets. As of 2021, 64 sites were certified for ISO 14001, 63 sites for ISO 45001, 327 sites for ISO
50001 (applies to locations with more than 50 employees or space exceeding 4,500m²).
Increasing waste diversion rates: Data collection for waste streams and volumes contributable to
adidas remains a challenge, as our offices are mostly located in shared buildings for which we do not
have direct control over waste management. As of 2021, 74% of our own operations are monitoring and
tracking waste. By the end of 2021, a total of 32,951t waste was generated and we achieved an
accumulated diversion rate of 92% for own operations, measured against 2019.
Improving water efficiency: In 2021, we invested in the installation of more efficient sprinkler systems,
water submeters, and a wastewater segregation system at our headquarters in Portland. We will keep
investing in water efficiency and wastewater projects in the coming years. In 2021, our water
consumption at own operations totaled 0.128 m³/m², and we achieved an accumulative water reduction
of 34% compared to 2019.
Moving toward decarbonization: We defined a clear roadmap to achieve our emission reduction
targets, including measures such as implementing on-site renewable energy production, improving
energy use efficiency, sourcing renewable energy, 17 and renewable energy certificates. 18 In 2021, we
kept investing in own operations and offered Green Funds to subsidize local projects to improve energy
efficiency as well as on-site renewable energy production. During 2021, we implemented 13
decarbonization initiatives that included, for example, three on-site solar renewable energy projects in
Herzogenaurach and Moscow, and energy efficiency projects at distribution centers such as LED
retrofit, HVAC (heating, ventilation, and air conditioning) equipment upgrade, and energy monitoring
systems. In 2021, for the first time, we collected electricity consumption data for our own retail stores
globally. Data coverage with primary data for own operations was 98%, and for own retail 21%. In 2021,
total energy consumption across own operations globally was 512,050 MWh, equivalent to a total of
138,411 tCO2e (12,908 tCO2e in Scope 1 and 125,502 tCO2e in Scope 2), equivalent to 0.038 tCO2e/m²
(25,731 tCO2e for own operations, 112,680 tCO2e own retail stores (including own showrooms)). We
continue our transition toward renewable sources. 100% of our electricity consumption in Europe and
North America comes from renewable energy sources in part supported by certificates for renewable
energy.
Our efforts are underpinned by clear targets we have set. By 2025, we aim to achieve climate neutrality
(CO2e) for both own operations and own retail stores. We will also continue to improve the water efficiency
at our highest-consuming sites, aiming for a 15% reduction in water consumption per square meter for
own operations, measured against 2019, while working to achieve a waste diversion rate of 95% at own
operations. We aim to steadily increase our overall environmental performance data coverage and
continue to push implementing eco-efficiency standards through a holistic integrated management system
(IMS) at key sites. All of these efforts will support us on our way to achieve a 30% reduction of GHG
emissions across our entire value chain by 2030, measured against the baseline of 2017.
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The following summary outlines selected environmental and social impact KPIs in accordance with
chapter 7 ‘Reporting' of the ‘adidas Sustainability Bond Framework.' The proceeds listed in the Allocation
Report have contributed to these impact KPIs.
In 2020, adidas successfully placed its first sustainability bond. Proceeds from the offering are used in
accordance with our created Sustainability Bond Framework. adidas has committed to provide annual
updates on the allocation of proceeds and the impact KPIs driven by the proceeds. ‣ SEE TREASURY
SUSTAINABILITY BOND
The challenges posed by the impact of climate change and social developments in our societies and supply
chains are huge. Responding to these will require dedicated funding of sustainability initiatives. In this
section of the report we provide an overview on our sustainability bond as well as on our approach to
comply with the requirements of the EU Taxonomy that has the objective to channel investments in the
right direction.
SUSTAINABLE FINANCE
Tracking occupational health and safety: Health and safety, especially regarding the workplace and
our people, has always been a priority at adidas. We ensure that our infrastructure, assets, and
operations are compliant with the ISO standard 45001, by providing a safe, secure, and healthy work
environment. Monitoring our performance closely helps us keep track of our progress and identify
areas where we need to increase our efforts. We have implemented training and guidelines and scaled
these through the entire organization. In 2021, we recorded zero fatal accidents (2020: 0), a Lost Time
Incident Rate of 0.40 for employees (2020: 0.53), and 0.97 for external workforce (2020: 0.67), as well as
a zero Occupational Illness Frequency Rate ('OIFR'). ¬
Continuing Green Building certification: 'Green Building' certifications are a key enabler to reduce
carbon emissions and enhance resource efficiency in the construction of facilities. adidas has been
using predominantly 'LEED' ('Leadership in Energy and Environmental Design') and 'BREEAM'
('Building Research Establishment Environmental Assessment Method') certifications for new
construction and renovations for own retail stores as well as corporate facilities. As 'Green Building'
certification is used for strategically relevant projects, a set of internal eco-efficiency standards have
been implemented for all projects which mirror the priorities of the LEED certification. The ultimate
goal is to achieve energy reduction through investment in high energy-efficient equipment and energy
monitoring.
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CHEMICAL MANAGEMENT
adidas has been building and implementing a holistic chemical management program in its supply chain
for years. We have defined an end-to-end-approach spanning the management of chemical input,
monitoring the chemical management in our supply chain, and reporting supplier performance data
publicly, to controlling the finished end product.
Ensuring robust input chemical management: To avoid hazardous chemicals entering into our supply
chain we require our suppliers to increase the usage of chemicals that have achieved the highest level
of conformance (level 3) of the Zero Discharge of Hazardous Chemicals ('ZDHC') Manufacturing
Restricted Substances List ('MRSL'). In 2021, we guided our suppliers to report their chemical
inventory and consumption through a ZDHC-approved third-party online platform on a monthly basis.
Suppliers were provided with performance reports through which we could enhance overall visibility on
chemical inventory management in our supply chain. By the end of 2021, 42% of supplier facilities
achieved chemical use compliant with ZDHC MRSL level 3, taking us closer to our 2025 target of 80%
of facilities to be compliant.
In addition to using recycled content or more sustainable material for our products, we steadily expand
our circular service offering. Since we introduced Futurecraft.Loop - our first fully recyclable running
shoe - as a beta program in 2019, it has developed into a concept within the business that spans multiple
categories, and April 2021 saw the first commercial launch with the Ultraboost 'Made To Be Remade'
('MTBR'). The shoe features a prominently displayed QR code that can be scanned using the adidas app
and is guiding consumers through the take-back process. Other MTBR models launched this year are the
Stan Smith MTBR and Terrex Free Hiker MTBR, and MTBR apparel products for Running and adidas Stella
McCartney. Additional products will follow in 2022, such as the Terrex MTBR Anorak.
Collaborating with the industry to improve chemical management processes: Together with industry
partners, we supported ZDHC on the development of their technical industry guideline. The publication
of this guideline further strengthened industry collaboration on driving one standard on chemical
management practice for suppliers. We also joined an industry collaboration to better understand and
get more visibility on the hazardous chemicals that may exist in recycled materials.
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As we accelerate our sustainability efforts, we continue to support our supplier partners to improve their
performance and ensure that this is underpinned by sound environmental management systems and
accurate data disclosure.
We also continued to work toward optimizing landfill diversion, achieving a 93% waste diversion rate at the
end of 2021 for suppliers enrolled in our environmental program. This success was supported, among
others, by a program we set up in 2019 in major sourcing countries including Cambodia and Vietnam to
use production waste as an energy source in the cement industry. While this solution has its limitations
due to a lack of logistics in some countries, it enabled us to identify suppliers that had a low diversion rate,
challenging them to engage with service providers for waste processing. adidas has developed a waste
management guideline, waste co-processing due diligence guideline and environmental good practices
guideline showing how to improve waste segregation to increase its market value, and minimize overall
waste generation.
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We regularly track the environmental impact related to the transport of our goods. Compared to the
previous year, performance remained relatively stable. While the use of air freight increased in 2021 as
part of our efforts to counterbalance covid-19-related supply chain challenges, the vast majority of our
transportation continued to take place via sea freight, with 97% of footwear, 93% of apparel and 72% of
accessories and gear being shipped via sea freight in 2021.
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Phasing out coal-fired boilers: Eliminating the use of coal-fired boilers at all direct supplier facilities
at Tier 1 and Tier 2 will result in a proportionally high positive environmental impact. We committed to
not installing any new coal-fired boilers, heaters, and power generation from 2022 onward, as well as
to phasing out existing on-site coal-fired equipment at all direct suppliers at Tier 1 and Tier 2 level by
latest 2025. Enforcement methods are in place in case of non-achievement. We are supporting our
suppliers with on-site coal-fired equipment for the phase-out by completing feasibility studies,
outlining replacement alternatives, and defining a clear roadmap and developing adequate training for
2022.
Preparing suppliers to purchase renewable energy in Vietnam: adidas has continued to work closely
with key suppliers in Vietnam, providing the technical guidance and expertise to enroll and access the
first off-site renewable project. Once approved, the pilot program will feature direct power purchase
agreement ('DPPA') mechanisms between renewable energy developers/power generation companies
and private power buyers/consumers. DPPA mechanisms are surging around the world as a new
driver and catalyst for renewable energy projects.
Continuing to increase energy efficiency: Further optimizing energy efficiency remains important
going forward. We moved to a supplier self-governance model in 2021, which means that suppliers
take full responsibility for their efforts and achievements, while adidas keeps tracking and monitoring
their energy efficiency performance. We successfully achieved a 3% reduction, comparing to 2019
baseline.
Developing industry-wide training in Asia: We co-developed an online climate action training program
with 'Deutsche Gesellschaft für Internationale Zusammenarbeit' ('GIZ') that was rolled out to all Tier 1
and Tier 2 suppliers covered in our environmental program in 2021. The training's objective is to
upskill the fashion supply chain on GHG emissions, show how to set targets, and identify reduction
measures such as adopting renewable energy and improving energy efficiency. Through annual on-site
audits we will track progress to ensure that the suppliers have qualified staff in place.
In 2021, we expanded on our water reduction efforts to include additional, high-consuming Tier 2 suppliers
in our program. Through the application of new technologies, among others, we aim to achieve a 40%
reduction in water intensity against the 2017 baseline by 2025. In 2021, Tier 1 suppliers achieved a 15%
reduction in water intensity, and Tier 2 suppliers an 18% reduction. We moved toward a supplier self-
governance model in 2021, which means that suppliers take full responsibility for their efforts and
achievements, while adidas is still tracking and monitoring performance. Guided by our ambition to
support our suppliers in the best possible way, we have developed environmental good practice guidelines
with water-saving initiatives.
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Complementing its recyclable product offering, adidas innovates with new business models as we expand
our take-back services. We introduced 'Choose to Give Back' which is aimed at helping to extend the
lifecycle of worn sportswear apparel and footwear. Under this program that started in October 2021 in the
United States, products in any condition and made by any brand can be sent in. Products in good condition
are resold through our collaborator, thredUP, with the aim of finding a new owner for as many products as
possible. Going forward, we will scale the program and roll it out to more markets.
2
In collaboration with US running shoe manufacturer Allbirds, adidas developed its most climate-friendly
performance running shoe ever with a carbon footprint (CO2e) of merely 2.94kg (measured against a
comparable running shoe: adizero RC3 at 7.86kg CO2e emissions), offering a limited number for sale. For
example, the upper is made with recycled polyester from adidas and only renewable energy is used to
produce the shoe. SEE GLOBAL BRANDS
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19 Taxonomy-eligible economic activity' means an economic activity that is described in the delegated acts adopted pursuant to Article 10(3), Article 11(3),
Article 12[2], Article 13(2), Article 14(2), and Article 15(2), of Regulation (EU) 2020/852, irrespective of whether that economic activity meets any or all of the
technical screening criteria laid down in those delegated acts. 'Taxonomy-non-eligible economic activity' means any economic activity that is not described
within these delegated acts. For 2021, adidas is only required to report on the proportion of taxonomy-eligible and non-eligible economic activities of net sales,
CAPEX and OPEX.
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Based on the current publications, the main economic activities of our industry sector are not classified as
taxonomy-eligible 19 with regard to the first two environmental objectives, climate change mitigation and
climate change adaptation, as laid out in the Delegated Regulation on Climate. Details on the remaining
four environmental objectives are expected to be published in 2022. Due to the first application of the EU
Taxonomy Regulation, there are still considerable uncertainties with regard to the interpretation of its
components. We are well aware of these circumstances and provide further details on the interpretation
Over the course of 2020 and 2021, the EU has developed and issued the EU Taxonomy Regulation. In
order to direct investments toward sustainable projects and activities that support the achievement of the
EU's climate and energy as well as the 'European Green Deal' targets, the taxonomy has the objective to
provide a common language and a clear definition of what is considered 'sustainable."
EU TAXONOMY
5 Grants distribution for Black-owned small businesses as part of 'BeyGOOD' which is managed by a third party postponed to 2022.
adidas has already made its first prototypes using innovative materials, proving that a reliance on finite
fossil fuels, such as crude oil, might be reduced in the future. The adidas Stan Smith Mylo, presented in
2021, is created with a natural, renewable material made from mycelium, developed in collaboration with
'Bolt Threads.' adidas is also collaborating with startups, such as 'Infinited Fiber,' 'Spinnova,' and 'Pond,'
to work on materials made of natural resources that we can use in our product. Together, we are striving
to substitute fossil-based plastic materials with plant-based raw materials - all without compromising our
performance proposition.
3 2020 data not comparable due to new and increased scope in 2021 (addition of retail stores). 2020 absolute annual COze Scope 1 and Scope 2 net emissions in
own operations (administrative offices, distribution centers, production sites): 26,756 tCOze, including Reebok.
108
55
316
5
34
34
2 Own operations include administrative offices, distribution centers, production sites and retail stores. Excluding Reebok.
The Delegated Regulation on Article 8 of the taxonomy specifies the content, methodology, and
presentation of information to be disclosed by financial and non-financial undertakings concerning the
proportion of environmentally sustainable economic activities in their business, investments, or lending
activities.
1 Percentage share of recycled polyester in 2021 excluding Reebok.
where necessary. Due to the timing and resources required to create the adidas Annual Report 2021, we
have only reflected taxonomy-relevant publications issued before January 31, 2022.
'OPEX KPI': The taxonomy definition of 'OPEX' including expenditure for research and development,
short-term leases, maintenance and repair costs as well as other expenditure 20 results in a total value
of € 692 million (denominator of the 'OPEX KPI') at adidas. In comparison to the disclosed
130
Through our annual Modern Slavery Statements, annual progress updates, and other public disclosures,
we have shared the actions we have taken to address forced labor in our global supply chain, documenting
risks and remedies. 2021 also saw us partnering with the Responsible Sourcing Network for their 'Yarn
Ethically and Sustainably Sourced' ('YESS') initiative helping to enable spinners and textile mills to
implement effective due diligence to prevent cotton produced with forced labor. This initiative has been
piloted in India and Pakistan.
For the past five years adidas has partnered with the International Organization for Migration (IOM)
through its 'Corporate Responsibility in Eliminating Slavery and Trafficking' ('CREST') initiative to
implement responsible recruitment practices in the supply chain. Having identified Indonesia, the
Philippines, Thailand, and Vietnam as the key sending countries for foreign migrant workers, in 2021 we
provided targeted trainings for private recruitment agencies from these countries to raise their awareness
on international standards on responsible recruitment and available certifications. The training was
conducted in partnership with IOM, as part of our drive to increase overall awareness of ethical
recruitment, improve recruitment fee transparency, and build capability and understanding of the
*International Recruitment Integrity System' ('IRIS'), the global standard for ethical recruitment. We
commissioned the IOM in 2021.
As a sponsor, we have intensified our engagement with FIFA in 2021 over the hosting of the upcoming 2022
FIFA World Cup in Qatar, paying particular attention to stakeholder concerns over human rights and
offering our support for the establishment of a Migrant Workers Information Centre. Separately, we have
undertaken due diligence of our planned on-ground activation in Qatar and have mapped our supply chain
linked to World Cup 2022 production. In the lead-up to the World Cup we have also consulted with FIFA
over effective grievance mechanisms.
We continue to support improvements in the ongoing and independent accreditation of our supply chain-
facing social compliance program by the Fair Labor Association (FLA). We have also maintained our
commitment to the 'Sporting Chance Principles' and our seat on the Advisory Council for the Centre for
Sport and Human Rights.
Since its inception in 1997, our human and labor rights program has been built on the back of intense
stakeholder outreach and engagement, seeking to understand and define the most salient issues to
address as a company. We have fully embraced the need to undertake effective Human Rights and
Environmental Due Diligence ('HREDD') across the entire value chain and have defined those areas and
assessment processes that need to be evaluated and strengthened in preparation for the implementation
of the 'German Act on Corporate Due Diligence Obligations in Supply Chains,' which takes effect in 2023.
HUMAN RIGHTS
Another aspect that we consider to be material in this context is our responsibility regarding tax. Through
taxes, governments have the monetary ability to pursue their objectives and take on the responsibility of
further developing their countries.
Through our economic activities we create value and contribute positively to society. However, being a
company of our scale and global presence, we also have a social impact on communities. adidas
recognizes its responsibility to respect human rights and the importance of managing the appropriate due
diligence to fulfill this obligation as a business. We do this by striving to operate responsibly along the
entire value chain, by safeguarding the rights of our own employees and those of the workers who
manufacture our products through our Workplace Standards, and by applying our influence to effect
change wherever human rights issues are linked to our business activities.
SOCIAL IMPACTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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For the year 2021, adidas did not identify any taxonomy-eligible turnover. However, adidas performed an
analysis to identify the proportion of taxonomy-eligible (i.e., what has the potential to be classified as
'sustainable') operating expenses ('OPEX') and capital expenditure ('CAPEX') that can be linked to the first
two environmental objectives with reference to the total values according to the EU taxonomy definitions.
The taxonomy provides different definitions of the terms 'OPEX' and 'CAPEX' than what we are disclosing
in this report.
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20 By 'other expenditure,' we mean expenditure for facility management services, i.e., expenditure relating to the day-to-day servicing of property, plant, and
equipment.
Within our strategy 'Own the Game,' sustainability builds a strategic focus area and we are committed to
pushing the boundaries going forward, which is reflected in the ambitious targets and numerous initiatives
outlined in this report.
'CAPEX KPI': In comparison to the disclosed CAPEX value of € 667 million in this report, the taxonomy
definition of 'CAPEX' results in a total value of € 1.188 billion (denominator of the 'CAPEX KPI') at
adidas. The denominator contains, in accordance with the definition of the EU Taxonomy and as
disclosed in this report, additions to buildings, technical equipment and machinery, other equipment,
furniture and fixtures, right-of-use assets, and other intangible assets, before depreciation,
amortization and re-measurements. For the calculation of the numerator of the 'CAPEX KPI' we
analyzed the additions and allocated them to activities listed in Annex 1 and 2 of the regulation, where
eligible. In this process we conducted several control measures such as plausibility checks as well as
reconciliations to avoid double-counting of additions. The numerator of the 'CAPEX KPI' amounts to
€ 604 million and mainly contains eligible expenditure in relation to leasing, the construction and the
renovation of buildings, as well as the company car fleet, all related to the first environmental objective
'climate change mitigation' (Annex 1). Consequently, the 'CAPEX KPI' results in 51% of taxonomy-
eligible and 49% of non-eligible activities.
€ 21.234 billion of net sales and € 8.892 billion of 'OPEX' in this report, we consider the EU Taxonomy
*OPEX' value as insignificant with regard to our business model. Consequently, and in line with the
regulation, we are not publishing the numerator of the 'OPEX KPI.' The information would not add
significant value to the reader of this report, as, for example, our expenditure for research and
development would not be considered taxonomy-eligible at this point. At the current stage, the
numerator would only include activities such as the renovation of buildings and professional services
related to the energy performance of buildings, etc. As a result of these considerations, we report an
'OPEX KPI' numerator value of € 0.
TO OUR SHAREHOLDERS
Number of scholarships granted to students at adidas' HBCU partner schools as
part of adidas 'United Against Racism' ambition
4 At year-end.
Number of funded ventures for 'Black Ambition,' a program that supports Black
and LatinX entrepreneurs in launching start-up businesses
OWN OPERATIONS
Own operations refer to administrative offices, distribution centers, and production sites, and together
with our own retail stores in 2021 equaled a coverage of 3,654,401m² of gross leased area (GLA). Similarly
to our supply chain program, we focus on working toward decarbonization, enhancing the efficiency of water
use, and aiming for higher waste diversion rates.
2025 Goal for Own Operations
Climate Neutrality (CO₂e)
125
1
3
Over the last several years, we have substantially contributed to the AFIRM 'Restricted Substances List,'
which constitutes a harmonized restricted substances list across the industry. While the uptake of the list
as an industry best practice matured further, a pilot for an assessment tool was launched in cooperation
with international third-party laboratories in 2021, to evaluate the testing performance and accreditation
level of the laboratories we work with. This approach will ultimately also be made available to other
customers of the laboratories, such as companies from the textile and sporting goods industry and their
suppliers. We also continued our participation in several major public stakeholder consultation processes
initiated by the European Commission (e.g., European Chemicals Agency) and US state legislative
initiatives to inform governmental entities on implications and opportunities of drafted legislation.¬
4
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SUSTAINABILITY BOND: IMPACTS
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Eligible category: sustainable materials
Impact of investment or expenditure into using more sustainable materials
Percentage of recycled polyester used for adidas apparel and footwear ranges¹
Percentage of more sustainable cotton sourced
TO OUR SHAREHOLDERS
Number of pairs of shoes produced containing 'Parley Ocean Plastic'
One of these policies is the Restricted Substances Policy ('A-01' Policy) that we pioneered in 1998. It covers
the strictest applicable local requirements and includes best-practice standards as recommended by
consumer organizations. The policy is updated and published internally and externally at least once a year
based on findings in our ongoing dialogue with scientific organizations, and it is mandatory for all business
partners. To ensure successful application of the policy across the business, we have integrated a 'Product
Safety and Compliance' workspace into the Global Legal Sharepoint on our intranet which serves as a
platform for all employees involved in product creation by providing them with the necessary information
and guidance to develop, produce, and distribute products according to international regulations and best-
practice standards. Both our own quality laboratories and external institutes are used to constantly
monitor material samples for compliance with our requirements. Materials that do not meet our
standards and specifications are rejected. As a result of our ongoing efforts, we did not record any product
recalls in 2021.
Product safety is an imperative. As a company we have to manage the risk of selling defective products
that may result in injury to consumers or impair our image. To mitigate this risk, we have company-wide
product safety policies in place that ensure we consistently apply physical and chemical product safety and
conformity standards.
PACKAGING
We are committed to reducing our plastic footprint globally. Where the use of plastics is still unavoidable,
for example in transport packaging, adidas is working to find sustainable alternatives. For example, together
with the global innovation platform 'Fashion for Good,' the company explored the development of a recycling
infrastructure for used polybags as well as innovative recycling processes for polybags, testing the technical
feasibility of polybag circularity.
In addition, the company succeeded in changing practically all of the polybags used to protect finished
products during transport from our manufacturing facilities from virgin material to 100% recycled LDPE
(low-density polyethylene) polybags by the end of 2021. Most of the few remaining virgin polybags cannot
be replaced currently as no alternative is available in the production country and import restrictions are in
place.
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ANNUAL REPORT 2021
The creation of respective adidas standards and policies is a collaborative, cross-functional approach
involving experts from the Corporate Legal and Global Operations departments to ensure all aspects of a
specific product are covered. This includes subsequent updates and training activities. Application and
monitoring are ensured through our Global Operations function.
3
TO OUR SHAREHOLDERS
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
PRODUCT SAFETY AND INTEGRITY
adidas
4
Number of grants for Black-owned small businesses as part of 'BeyGOOD,' an
initiative aimed at bringing equity to those disproportionately impacted by social
and racial injustice
Eligible category: sustainable processes
Impact of investment or expenditure into improving our operations by establishing
more sustainable processes
91
71
100
100
2
> 17m
> 15m
Absolute annual CO2e Scope 1 and Scope 2 net emissions (in tons) in own
operations²
138,411
_3
Number of buildings of own operations holding certification for environmental
management (ISO 14001)/health and safety management (ISO 45001]/energy
management (ISO 50001)
64/63/327
42/39/53
Eligible category: community engagement
Impact of investment or expenditure (on a global and local level) from actively
supporting and positively impacting communities
2020
2021
ANNUAL REPORT 2021
139
As we continue to increase our focus on added-value advisory services and empowerment projects, which
go beyond our regular audit routine, the number of audits conducted by our own in-house team has
decreased to 233 in 2021 (2020: 251), with 741 assessments performed by third-party monitors (2020:
569).24
On top of these, in 2021, 78 self-governance audits and collaboration audits (2020: 88) were conducted.
Under the C-KPI program, when a manufacturing facility reaches a compliance maturity level of '4C' or
above, we empower the supplier to conduct their own self-governance audits and develop appropriate
remediation plans, which we periodically review. Collaboration audits are conducted in partnership with
other brands, or as part of joint remediation exercises. The number of audits in factories manufacturing
goods for licensees increased from 278 in 2020 to 395 in 2021. This reflects the expanded supply base of
some of our licensee partners, as well as the sharing of SLCP assessments with us.
A total of 770 social compliance audits (initial assessments, performance audits, and SLCPs) were
conducted in 2021 (2020: 624), 67 of which were conducted remotely. Of the 405 on-site Performance
Audits conducted, 78% were carried out on an unannounced basis whereby the manufacturing facility is
not informed in advance of the exact date of assessment. Our team continued to prioritize not only
assessing our manufacturing partners' labor, health and safety, but also their environmental compliance.
We established a new Environmental Assurance team in 2021 along with a dedicated set of environmental
Zero Tolerance and Threshold Issues pertaining to a manufacturing facility's energy, water, and waste
impact and environmental management systems (e.g., chemical, environmental, and wastewater
management). Existing manufacturing partners are also being assessed against these environmental
standards. In 2021, 204 facilities in 19 countries were assessed and evaluated to these environmental
standards, which represented 181 of our key Tier 1 and Tier 2 manufacturing partners, and selected Tier 3
suppliers.
4 Includes audits done in licensee factories.
3 Includes environmental assessments and wastewater test assessments according to the 'ZDHC Wastewater Guidelines."
2 Audits conducted in approved factories that have passed the initial assessment (including on-site and desktop assessments as of 2021].
1 Every new manufacturing facility has to pass an initial assessment to prove compliance with the 'adidas Workplace Standards' before an order is placed. The
data shown includes both initial assessments and initial assessment follow-ups, and from 2021, includes on-site and desktop assessments.
921
1,176
451
548
343
460
127
168
Total4
35
70
24 Including social and environmental assessments, excluding ZDHC wastewater assessments.
34%
Enforcement'
Initial assessment¹
Region
NUMBER OF AUDITS BY REGION AND TYPE
With covid-19 continuing to place restrictions in some parts of the world on our ability to conduct our own
on-site assessments in 2021, our monitoring approach had to remain agile to accommodate lockdowns
and travel restrictions. Where possible, we continued to follow our regular on-site assessments, while
also continuing the use of remote desktop assessments first piloted in 2020.
the tool in different supplier settings in 2022. As part of our ongoing evaluation, we will continue to provide
this feedback to the SLCP and collaborate with like-minded industry partners in the pursuit of effective
and impactful industry solutions.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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5
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3
2
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We audit our manufacturing partners regularly against our Workplace Standards. In 2021, in addition to
our own audits, we have expanded our use of assessments under the 'Social & Labor Convergence
Program' ('SLCP'). As a signatory to the SLCP, we share its vision of industry collaboration and support its
efforts to establish a robust methodology for the efficient collection, verification, and sharing of
manufacturing facility compliance data. By using the SLCP's Converged Assessment Framework,
manufacturing partners are able to share their verified assessments with buyers, thereby helping to
reduce duplicative audit activity and facilitate collaboration among stakeholders. In 2021, we have
accepted 142 SLCP assessments in lieu of our own Performance Audits. The SLCP, as an industry
assessment tool, will continue to evolve as it is adopted more widely across the sector, and its
methodology is strengthened. We are pleased to contribute to this evergreening and will continue to test
MONITORING
Since 2018 we have partnered with the International Organization for Migration ('IOM') to promote fair
recruitment practices for foreign migrant labor employed by our Tier 2 materials manufacturing partners.
In 2021, this engagement with 'IOM' resulted in a series of virtual trainings that were held with labor
recruitment agencies in Indonesia, Thailand, Vietnam, and the Philippines - the main sending countries
supplying most migrant workers to Taiwan. Taiwan has been a key focus country for our program. The
online training sessions provided an overview of international standards and regulations related to
recruitment fees and conveyed to the attendees adidas' zero tolerance policy with regards to human
trafficking and forced labor. In addition, the trainings provided a framework for the recruitment agencies,
to ensure that they are undertaking a framework implementing the required due diligence, to comply with
both adidas' and international standards.
We continued to work with our licensee partners in 2021 to ensure that they were implementing adidas
Workplace Standards into their manufacturing partners' operations in a consistent manner. As in past
years, we co-hosted, along with five other brands, a joint 'Licensee Summit' in 2021, providing a forum for
discussion on supply chain sustainability challenges and best practice sharing. In addition, we also
enabled our licensees to access the Fair Labor Association's ('FLA') e-learning material, offering trainings
devoted to Human Rights, Forced Labor, Responsible Manufacturing, and Worker Engagement, among
other topic areas. Our team also continued to work within the FLA's Responsible Licensing Principles
Working Group that is charged with developing standards that the FLA will use to evaluate its members'
licensing and monitoring activities.
Wherever possible, we were also able to exchange multiple, shorter virtual interactions, with longer, and
more comprehensive, on-site engagements. In addition to our continuous tracking of covid-19 impacts on
our manufacturing partners' operations, we used these engagements to monitor remediation activities,
KPI improvement plans, grievance investigations, and worker satisfaction surveys.
In 2021, while our ability to physically visit our manufacturing partners continued to be constrained in
some locations by the pandemic, in other areas during the year our ability to do so was restored. We used
these opportunities to maximize the impact of our facility engagements and training sessions. Through a
combination of on-site and remote, or virtual interactions throughout the year, we completed 373
individual facility engagements in 2021 (2020: 644), and 149 training sessions for manufacturing partners,
licensees, workers, and adidas employees (2020: 61). Training sessions covered a broad range of topics,
from our Workplace Standards, guidelines, and supporting policies, through to targeted training on
specific labor, health and safety, and environmental topics. The number of trainings delivered also
reflected our focused efforts this year to educate our manufacturing partners on Worker Empowerment
projects and the launch of our new 'S-KPI tool.' Where virtual training sessions could be held, we
continued to utilize this format to attract larger audiences, reaching a total of 5,321 people, up significantly
from the 2020 figure of 1,497.
MANUFACTURING FACILITY ENGAGEMENTS AND TRAINING SESSIONS
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TO OUR SHAREHOLDERS
Performance audit²
Environmental
assessment³
Total
2021
20
40
2
8
EMEA
35
63
18
15
12
33
5
15
Americas
4
851
420
511
311
387
120
145
Asia
2020
2021
2020
2021
2020
2021
2020
1,043
adidas
3
ANNUAL REPORT 2021
TO OUR SHAREHOLDERS
4
3
2
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136
Responses received through the 'Workers Voice' platform are tracked by adidas, using KPIs and
dashboard reviews, case satisfaction ratings, and on-site worker interviews. This allows us to evaluate the
efficacy of the grievance channels, see major cases in real time, and undertake timely interventions,
A robust grievance mechanism is the fulcrum on which workers can raise their concerns and secure
remedies. Access to a digital complaint mechanism has proven invaluable during covid-19. Close to
52,000 human and labor rights complaints (2020: around 46,000) were filed with the facility management
teams in 2021, with 99% of these complaints being closed by the end of 2021. The top complaints were
related to concerns over general facilities, benefits, health and safety issues associated with covid-19, and
communication.
Since 2017, we have reduced our reliance on local worker hotlines as a complaint mechanism, by
building an application-based 'Workers Voice' platform: a bespoke, manufacturing facility-based digital
grievance channel for workers. We have progressively improved and expanded the use of this grievance
mechanism and in 2021 more than 600,000 workers employed in 123 manufacturing facilities across
18 countries had access to this system, reflecting a 99% coverage of strategic manufacturing partners.
WORKER ENGAGEMENT AND EMPOWERMENT
6 Includes warning letters issued by licensees excluding warnings to facilities for the non-disclosure of subcontractors, which are issued either directly through
business entities, or by the adidas Legal department where there is a breach of contract obligations under a manufacturing agreement. A third and final
warning results in a recommended termination.
5 Total number of audits includes audits done in licensee factories. Performance audits conducted in approved factories that have passed the initial assessment
(from 2021 onward, this includes on-site and desktop assessments). Environmental assessments include ZDHC wastewater test assessments according to the
'ZDHC Wastewater Guidelines.'
4 Strategic manufacturing partners are responsible for around 90% of our global production volume.
3 Factories that were directly rejected after the first visit, i.e., with no chance of being visited a second time, and factories that were rejected after being visited a
second time.
2 Factories that were directly rejected after the first visit, i.e., with no chance of being visited a second time, and factories that were rejected after initial
assessments but which were given a chance for a second visit.
1 Every new manufacturing facility has to pass an initial assessment to prove compliance with the 'adidas Workplace Standards' before an order is placed. The
data includes both initial assessments and initial assessment follow-ups, and from 2021, includes on-site and desktop assessments.
0
0
0
1
3
2
19
11
Number of business relationship terminations for compliance reasons
Number of warning letters (third and final warning)
Number of warning letters (second warning]
Number of warning letters (first warning]
GROUP MANAGEMENT REPORT -
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2021 also saw an expansion of our mobile-phone-based 'Digital Training' project, which was successfully
rolled out in 43 manufacturing facilities across Cambodia, China, Indonesia, and Vietnam in 2020. The
digital tool assesses workers' awareness of their labor rights and remedies, e.g., harassment and abuse,
fire safety and use of grievance channels. Of the more than 62,000 workers who took part in 2021 (2020:
11,000), they averaged a score of 92 out of 100 in the post-test questions.
Alongside facility-led training, we have also offered tailored training under our 'Women Leadership
Program,' first launched in 2016. However, due to the constraints imposed by covid-19, this training was
initiated only in three countries (China, Indonesia and the Philippines) in 2021.
Significant increases in the workers' positive response rates were identified in all six of the survey's
questions across all surveyed workers. This increase in the workers' general satisfaction rates is also a
factor in the increase in the average C-KPI score for our manufacturing partners' facilities in 2021. This
shows that when workers' voices are being heard and acted upon by the facility's management, it can have
an impact in improving the overall working conditions within a manufacturing facility. Manufacturing
partners are required to develop and track workplace improvement plans, based on the feedback received
from the 'Worker Pulse.'
1 The percentage figures indicate the average response on a five-point Likert type scale where 100% respresents 'strong agreement' and 0% 'strong
disagreement.
75%
81%
I know what to do if I experience any abuse or harassment.
78%
84%
My workplace is free from abuse and harassment cases.
78%
2
84%
77%
82%
If I raise a complaint or suggestion, I think it will be treated seriously by
management.
78%
84%
If I have a complaint or suggestion, I am willing to speak up.
79%
85%
If my friends or relatives are looking for a new job, I would recommend this
factory.
2020
2021
WORKER PULSE SURVEY QUESTIONS: AVERAGE RESPONSES'
Complementing the various grievance channels, we expanded the 'Worker Pulse' project that was
launched in 2020, which is a digitalized short survey to capture workers' perception and awareness of their
labor rights on focused areas such as communication, harassment, and abuse, as well as grievance
systems. It builds on what we learned from a previous survey process we initiated in 2016. In 2021, we
undertook these digital surveys in 123 manufacturing facilities (2020: 63) across 16 countries (2020: 9),
with more than 66,000 workers participating (2020: 22,000). The survey was conveyed to the workers
through a mobile-phone-based application.
where necessary. It also helps us understand the main challenges and labor rights issues in a
manufacturing facility and track how the facility's management and their HR teams resolve cases and
communicate their findings. Our evaluation contributes to the facility's overall social compliance score ('C-
KPI'/'S-KPI'). adidas provides ongoing capacity building to enhance the facility teams' capability to improve
the effectiveness of the grievance mechanism. It is notable that the case satisfaction rate, which allows
workers to input their level of satisfaction with the resolution of complaints, has risen steadily from 39% in
2019 to 58% in 2020 to 71% in 2021. The increase in satisfaction is partly related to a significant
improvement in the response time that it took the factory management to address workers' grievances,
which decreased from 49 hours in 2020 to less than 16 hours in 2021 due to improvements in
communication and transparency in the workplace. The management teams in the manufacturing facilities
have continuously engaged with the facility's workers through e-newsletters and broadcast messages,
which improved the workers' engagement and the overall company culture.
I feel comfortable talking to my direct supervisor.
1
13
2
According to the results of our assessments, Sourcing and SEA teams jointly decide the course of action,
ranging from trainings to enforcement actions, such as sending warning letters or hiring external
consultants to help improve workplace systems or practices.
commitment to independent manufacturing facility inspections and external verification of our programs.
Since then, our program has been accredited three times by the FLA.
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5
4
3
At the end of 2021, adidas worked with 509 independent supplier facilities 23 (2020: 520) that manufacture
products for our company in 46 countries (2020: 49). These numbers reflect the stability of our supply
chain and our strategy to form long-term partnerships with our manufacturing partners. 67% of our
manufacturing partners' facilities (2020: 66%) are located in the Asia-Pacific region. The number of
licensees we worked with increased slightly compared to 2020, with 60 licensees (2020: 56) that
manufactured products in 418 factories (2020: 375) across 39 countries (2020: 37). ¬
2
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Any cases of non-compliance identified during audits are given a clear time frame for remediation.
Potential new manufacturing facilities are assessed in a similar way and orders can only be placed if
approval by the Social and Environmental Affairs ('SEA') team has been granted. We operate several
grievance channels allowing workers or third parties to submit complaints about violations of the
Workplace Standards and human rights generally. All third-party complaints received through our
grievance channels are reviewed and investigated, and the outcome is reported on our corporate website.
Manufacturing facilities' conditions are also inspected by independent auditors through our participation in
the Fair Labor Association ('FLA'), which we joined as a founding member in 1999, demonstrating our
We regularly assess our manufacturing partners on their ability to provide fair, healthy, and
environmentally sound workplace conditions by conducting announced and unannounced audits through
our own team and accredited external auditors.
MANUFACTURING FACILITY PERFORMANCE
Going forward, we will prioritize these five levers to influence wage improvements across our supply
chain. To support that strategy, we are prioritizing increased tracking of wages and benefits-related
findings and their accompanying remediation. As of June 2021, 96% of wages and benefits related
threshold issues identified since the beginning of 2018 had been verified as having been remedied in full.
Given the complex nature of many wages and benefits-related findings, it can take many months to
address open issues in full. We do not characterize issues as 'closed' until the remedy has been verified as
having been implemented completely and in a sustainable manner to avoid reoccurrence. As a result,
these issues may take a longer period of time to be reflected as 'closed' in our compliance data
management systems. In addition, we collected wage data from 50% of our key manufacturing partners in
Southeast Asia (Cambodia, Indonesia, and Vietnam), which enable us to review/assess wage progression
against credible and publicly available wage benchmarks. The three primary benchmarks considered are
the World Bank's published poverty line, government-mandated minimum wages and living wages as
defined by the Global Living Wage Coalition.
In 2021, we reviewed and updated our Fair Compensation Strategy' identifying five key levers that
influence wages: legal obligations; responsible sourcing and purchasing practices; worker productivity;
government involvement, and industrial relations.
FAIR COMPENSATION
ANNUAL REPORT 2021
ONBOARDING
In 2021, our primary focus has been on maintaining partnerships with our existing manufacturing
partners rather than onboarding new ones. At the same time, several existing licensees have expanded
their supply chains, to add to those of four newly onboarded licensees. Consequently, 2021 saw initial
assessments, the first approval stage for a new entry into our supply chain, or, in the case of existing sites,
where there is the construction of new facilities, conducted in 142 factories (2020: 112). Of these,
48 factories (2020: 31) were either rejected directly after the initial assessment identified zero-tolerance
issues or were 'rejected with a second visit' due to identification of one or more threshold issues, which
means they were rejected but given the chance to remediate the non-compliance issues within a specific
timeframe. The vast majority (86%) of all initial assessments were undertaken in Asia (2020: 94%), with
China accounting for 42% (2020: 50%).
Overall, at the end of 2021, the first-time rejection rate of 34% of all new factories visited was slightly
higher than in the previous year (2020: 28%). Providing focused support to those factories that we have
onboarded, has aided us in maintaining a 'final rejection rate of under 2% in 2021. The remediation of
manufacturing facility issues prior to their onboarding is beneficial for workers as it raises the bar in
terms of better and timelier pay, improved benefits, reduced hours, and the legal protection of formal
employment contracts, and it results in significant improvements in basic health and safety within the
workplace. Manufacturing partners that have threshold issues are normally given three months to
remediate those issues before being re-audited for final acceptance.
Total number of final rejections
First-time rejection rate
Total number of first-time rejections²
2020
2021
reasons
Onboarding: Worldwide rejections after initial assessment¹ for compliance
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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SUPPLY CHAIN PERFORMANCE DATA
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23 Independent supplier facilities refer to individual Tier 1 facilities (factories) of our manufacturing partners that adidas has a manufacturing agreement with,
and their Tier 1 subcontractor facilities, excluding own factories and licensee facilities. Facilities that work with our licensees are reported separately. Some of
these facilities may produce both for adidas directly and for licensees.
In 2021, we developed a guidance document for our manufacturing partners, 'Gender Strategy for
Business Partners,' which will officially be launched in 2022, to help them develop and implement their
own gender strategy within their operations. The guidance document not only references various laws and
regulations related to gender equality and non-discrimination, it also highlights six focus areas for action:
'Respectful Workplace,' 'Compensation and Benefits,' 'Gender Based Violence and Harassment,' 'Voice
and Representation,' 'Leadership and Skills Development' and 'Health, Safety and Well-being.' To
complement our guidance, we selected six manufacturing partners, two from each region, to pilot the
International Center for Research on Women's 'Self-Diagnostic Tool' that we plan to rollout across all
suppliers in 2022 and 2023. This self-assessment tool helps suppliers identify the gender-based gaps in
their operating practices and procedures, and creates the building blocks for the development of their own
gender strategy, with supporting improvement plans. Once submitted, we will track each improvement
plan to see that gaps are being effectively closed and policies and procedures updated to address the six
priority areas for action.
We aim to bring a gender lens to our key manufacturing partners' operations ensuring that all workers
enjoy the same opportunities, rights, and obligations.
GENDER EQUALITY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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Our commitment to ensuring fair labor practices and safe working conditions in our manufacturing
facilities throughout our global supply chain is fundamental to our human rights approach. Our active
efforts are guided by the adidas Workplace Standards, our supply chain code of conduct that is aligned
with the Fair Labor Association's 'Workplace Code of Conduct' and the 'Principles of Fair Labor and
Responsible Sourcing.' The standards form a contractual obligation under the manufacturing agreements
we sign with our manufacturing partners to ensure workers are employed in fair, safe, and
OUR APPROACH TO WORKING CONDITIONS IN OUR SUPPLY CHAIN
Ensuring business continuity and a functioning supply chain kept jobs, albeit sometimes with reduced
working hours due to government-mandated lockdowns or temporary suspensions. We continued to be
committed to ensuring legal compliance in terms of pay and benefits for all workers affected by
operational changes due to covid-19 and tracked the working conditions in every manufacturing facility
closely. Where we have seen downsizing, we ensured that laid-off workers received their legal severance
and other entitlements in full. In 2020, we endorsed the International Labor Organization's ('ILO') 'Call to
Action' to address the impact of the coronavirus pandemic on the garment industry, and throughout 2021
we worked closely with the International Organisation of Employers and the ILO Better Work program on
the ILO-driven 'Call to Action' plans, with a special focus on social protection mechanisms.
In 2021, covid-19 continued to impact all segments of society, including our manufacturing partners and
especially workers in key sourcing countries in Asia: Cambodia, Indonesia, and Vietnam, all of whose
governments, at various points in time, imposed government-mandated lockdowns to prevent the spread
of covid-19. The longest lockdown occurred in Vietnam, where many stores and businesses were closed
for three months by government order. In response to these challenges, we worked closely with our
manufacturing partners to implement covid-19 safety measures and supported them in their vaccination
drives, which resulted in high levels of protection for the workers. In Vietnam, we assisted with the supply
of covid-19 testing kits and worked with the Vietnamese government, providing input to their guidelines
and protocols for the safe reopening of the supplier factories, once the lockdown was lifted.
From the very outset, adidas has sought to mitigate the impact of the coronavirus pandemic on the
workers in its global supply chain, providing guidance on infectious disease control, occupational safety,
and improvement of workers' welfare. We continued to uphold our standard manufacturing terms,
including worker rights protection, and assisted key manufacturing partners in securing bank financing to
help them weather the covid-19 crisis.
MANAGING THE IMPACT OF COVID-19
WORKING CONDITIONS IN OUR SUPPLY CHAIN
We ensure that the tax profile of our activities is aligned with the substance of the operating structures
of our business. Accordingly, transactions have commercial and economic substance and we do not put in
place arrangements that are contrived or artificial. Our 'Transfer Pricing Policy' requires that intragroup
transactions be carried out on an arm's-length basis. As a result, our profits are derived and taxed in the
jurisdictions where value is created.
TAX PLANNING
We seek a cooperative relationship with tax authorities. We respond to information requests, whether
formal or informal, and, on a case-by-case basis, decide whether to take the initiative in communicating
business developments of particular significance to the local tax authorities. During 2021 we were not
involved in the public policy regarding tax law or tax law changes in any of the jurisdictions in which we
operate.
INTERACTIONS WITH TAX AUTHORITIES
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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5
ANNUAL REPORT 2021
22
4
Final rejection rate³
5
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21 The fair wage benchmarks include industry wages, minimum wages, and living wages. These benchmarks are set and tracked through a 'Fair Labor
Association Fair Compensation Tool,' which has broad industry adoption and is being rolled out progressively to strategic Tier 1 supplier partners.
22 The measurement of wage parity for production line workers and their immediate supervisors (i.e., line leaders) forms part of a broader gender strategy
rollout to applicable Tier 1 strategic partners who complete self-assessments to identify and then close gender gaps in operating practices and procedures.
In addition to regularly monitoring our supply chain to ensure compliance with the adidas Workplace
Standards, we invested time in 2021 to review our own purchasing practices. This was done to ensure that
such practices were not negatively impacting our manufacturing partners' ability to comply with our
standards, in accordance with adidas' 'Responsible Sourcing Policy.' Specifically, in 2021 we published
adidas 'Ten Buyer Commitments' and integrated them into our 'Responsible Sourcing Policy.' We trained
more than a hundred senior leaders within our Global Operations department on this policy and our 'Buyer
Commitments. As a subscriber to the Better Buying Institute, we reviewed our 2021 'Better Buying
Report' in detail and started internal discussions to further improve our program based on the report's
feedback. Finally, we began working with the Better Buying Institute to develop an e-learning training on
responsible purchasing practices, which will be deployed to a broader section of adidas' workforce in
2022.7
RESPONSIBLE SOURCING PRACTICES
Fairness: This concept focuses on responsible sourcing practices, gender equality, and pay equity, that
support fair compensation for workers. By 2025, we aim for progressive improvement in
compensation, measured by fair wage benchmarks across our strategic Tier 1 suppliers. 21 We also
strive to achieve gender wage parity for workers and their supervisors in our strategic Tier 1
suppliers.22
Transparency: As part of our broader risk management processes, we will increase the scope and
application of 'Human Rights and Environmental Due Diligence' ('HREDD') efforts. By 2025, we aim to
have a system in place to identify and manage high risk human rights issues in 100% of our value chain.
In conducting due diligence we seek to identify, prevent or mitigate potential adverse human rights or
environmental impacts, with priority given to addressing the most severe impacts. In 2021, we have
taken steps towards this ambition by working in partnership with our sourcing organization to enhance
our mapping of Tier 1 manufacturing partners' sub-contractors. In 2022, we will build on these actions
by assigning accountability to our key Tier 1 manufacturing partners for implementing their own due
diligence efforts and will track their implementation via our S-KPI tool. This will include requiring them
to commission social compliance audits in their sub-contractor facilities.
-
Our social compliance program continues to evolve, and is built around three core concepts:
healthyworkplaces which are environmentally sound. Our standards follow ILO and United Nations
conventions relating to human rights and employment practices, as well as the model code of conduct of
the World Federation of the Sporting Goods Industry ('WFSGI'). We also seek to extend our reach by
cascading responsibilities to our partners, to capture and address potential and actual risks related to
possible labor rights violations upstream and downstream of our supply chain. Specific reference to the
code provisions of the ILO core labor conventions is provided in the adidas Guidelines on Employment
Standards. The Sourcing and Social and Environmental Affairs ('SEA') senior management reviews and
approves all policies and implementation processes of the labor rights program.
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Performance: In 2021, we began a transition from our compliance benchmark ('C-KPI'), which is
focused on management systems and supplier self-governance, to a new social impact KPI ('S-KPI').
The S-KPI measures a set of social indicators, such as accident rates, worker satisfaction, and worker
empowerment. By 2025, we aim for having 70% of Tier 1 strategic suppliers achieve at minimum '4S,'
and 100% of Tier 1 strategic suppliers achieve '3S' or better.
50
2C
3C
8
5
3
1
4C
79
75
2019
-56
22
12
12
In 2022, we intend to strengthen our due-diligence practices and coverage by introducing new
requirements to ensure that all key Tier 1 manufacturing partners take accountability in conducting
annual social compliance audits at their sub-contractor facilities using adidas' authorized external
monitors.
Of our key licensees, 100% achieved a Licensee Compliance Rating ('LCR') of at least 4 (on a rating scale of
1-5 with 5 being the best), and of these, 29% received a rating of 5. This rating mechanism mirrors that of
our C-KPI applied to manufacturing partners and reflects that these licensees have successfully
demonstrated that they have embedded strong governance systems, supply chain management, and
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.28
2020
2021
1C
4
31
3
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STATEMENTS
Audit coverage: A total of 54% (2020: 49%) of all direct and licensee facilities were audited in 2021.
'High-risk' locations in Asia, which is the most significant sourcing region for adidas, were the subject
of extensive monitoring in 2021, with an audit coverage of 70% (2020: 64%). As a general principle,
manufacturing facilities located in high-risk countries are 100% covered in our auditing scope, which
means they receive audits annually (unless they are rated as 'self-governing,' in which case they are
subject to audits every two years), while low-risk countries with strong government enforcement and
inspectorate systems, such as Germany, are considered out of scope for our audit coverage.
Audit results: In 2021, 97% of our key manufacturing facilities achieved a rating of '4C' or better (on a
rating scale of 1-5 with 5 being the best). These ratings show that our key manufacturing partners have
continued to strengthen their compliance performance, despite the headwinds created by covid-19.
Some 22% of our key manufacturing partners' facilities have progressed even further, achieving a '5C'
rating, which shows that they have mature social compliance governance systems and practices in
place. At the end of 2021, we retired our C-KPI rating system for assessing social compliance in our
key manufacturing partners. In its final year of use, and despite the pandemic, the C-KPI scores in
2021 were higher than in 2020. We believe our work on Worker Empowerment projects, and close
engagements with our manufacturing partners in preparing them for the new impact-oriented S-KPI
tool to be launched in 2022, has helped improve the C-KPI results in this final
SOCIAL COMPLIANCE PERFORMANCE RATING OF STRATEGIC SUPPLIER FACTORIES BY C-KPI RATING IN %
year.
-
90
80
70
60
40
30
20
10
0
2
3
5C
TO OUR SHAREHOLDERS
921
1,176
Total number of audits (initial assessment, performance audits, environmental
assessments)5
Monitoring
61
149
Number of training sessions (fundamental, performance, advanced)
Trainings
58%
71%
4
manufacturing partners4
98%
99%
Implementation of 'Workers Voice' grievance platform at strategic
Worker satisfaction
2%
1%
2
2
28%
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Satisfaction rate from workers who raised a grievance through 'Workers Voice'
4
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
We continued to receive external recognition for our approach to managing Human Rights. We maintained
our leadership position on the 2021 'KnowTheChain' forced labor benchmark as the highest-scoring
European company in the benchmark, and in the first ever 2021 Gender Benchmark developed by the
World Benchmarking Alliance, we ranked in the top three international apparel companies.
OUR APPROACH TO TAX
We do not operate through artificial structures or structure our business in ways that are intended to
result in tax avoidance. Where we have a presence in so-called low-tax jurisdictions, this is related to our
business activities in those jurisdictions, and is not created for the purpose of minimizing our tax burden.
While tax is among the many considerations in making business decisions, it is not the main driver in our
decision-making process.
TAX MANAGEMENT AND GOVERNANCE
Given the range of activities and locations we operate in, adidas is subject to a wide range of taxes
across the world, including corporate income tax; VAT/GST; employee-related taxes, such as payroll and
fringe benefit tax; withholding taxes; property taxes; stamp duties and other taxes. The purpose of our tax
function is to support and enable business objectives while ensuring compliance and preventing or
minimizing tax risks.
The approach to tax is defined by the Vice President Corporate Tax and is reflected in the tax strategy,
objectives, policies, and internal controls. Economic and social impacts are considered in developing and
executing our tax strategy. The Corporate Tax team reviews our tax strategy on an annual basis, with
significant changes being approved by our Chief Financial Officer (CFO). The CFO is ultimately accountable
for compliance with our tax strategy.
We are committed to being compliant with all tax regulations in all jurisdictions in which we operate.
We consider the interests of our stakeholders in the business decisions we make in order to ensure the
lasting success of our company.
Our Executive Board is updated on tax matters periodically, including a risk review process every six
months that also forms part of our tax governance framework. Our CFO and/or the Executive Board,
advised by the Corporate Tax team, is ultimately responsible for decisions on topics such as entering into
significant or one-off transactions that may give rise to an increase in tax risk (e.g., mergers and
acquisitions).
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Pursuant to our tax policies, the local Directors and Management of each legal entity are responsible for
ensuring compliance with tax regulations. The local teams are supported by the company's Corporate Tax
team and tax advisors. The Corporate Tax team exercises global governance and is accountable for our
approach to tax. Its main responsibility is to provide global tax advisory, to identify and manage
opportunities and risks, and ensure tax compliance worldwide. Through partnering with business
functions, the Corporate Tax team aims to understand the needs and perspectives of various stakeholders
internally and externally and to support business objectives while ensuring continued compliance with tax
regulations. Inquiries from and communication with external stakeholders regarding our tax affairs are
managed in accordance with our Global Communication Guidelines.
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Our Fair Play Code of Conduct' sets out the options available to employees who detect unlawful or
unethical behavior, including anonymous notification or whistleblowing procedures. The adidas AG audit
includes the audit of disclosures in respect to tax.
TO OUR SHAREHOLDERS
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FINANCIAL REVIEW
5
5% First aid
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Non-compliances in the area of health and safety: Fire, electrical, and machine safety are critical
areas for existing manufacturing facilities and together accounted for 30% of the non-compliances
identified in 2021. The way chemicals were stored and used, including the handling of hazardous
chemicals, accounted for 7% of non-compliance findings reported. A further 8% of the findings related
to management systems, policies, and procedures, and specifically a lack of compliance with our
Workplace Standards and expectation for effective health and safety systems, including the
recruitment and retention of qualified safety staff.
SHORTCOMINGS IN THE AREA OF HEALTH AND SAFETY IDENTIFIED DURING AUDITS IN 2021
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26% Other¹
4% Occupational
hazards risk assessment
4
17% Fire safety
7% Hazardous chemicals
8% Machine safety
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The Fair Labor Association ('FLA') was able to resume monitoring coverage in 2021 by utilizing a variety
of monitoring models (e.g., in-person, virtual, or a hybrid approach of both in-person/virtual), despite the
ongoing challenges posed by covid-19. This resulted in adidas receiving four 'Sustainable Compliance
Initiative' ('SCI') Assessments from the FLA in 2021. In addition to manufacturing facility monitoring, the
FLA focused its efforts on enhancing virtual monitoring methodology; issuing specific country/topical
guidance, supply chain mapping, grievance mechanisms; supporting company affiliates with their Fair
Compensation Strategy; launching a new e-learning program for business affiliates' manufacturing
partners; revising its third-party complaint mechanism; developing responsible termination guidelines;
and continuing its work to measure and mitigate impacts of covid-19 on the industry's supply chain.
INDEPENDENT FLA AUDITS
10% Architectural considerations
We follow up on all cases of non-compliance and require our manufacturing partners to remediate
open issues within a specified timeframe. As an illustration of our efforts to support this remedy, in the
period 2018 to June 2021, 95% of the threshold issues identified during our monitoring assessments have
been verified as being remedied in full. A small percentage of issues identified over this period remain
open, the majority of which were found during assessments conducted in 2020 and in the first half of 2021.
While in many cases the actual issues will have been resolved, our approach is to only 'close' these in our
systems when we have verified evidence of completion and established that corrective actions taken are
sustainable and sufficient to avoid reoccurrence.
8% Management systems
for health and safety
REMEDIATION
1 'Other' includes, for example, material storage, housekeeping, or waste management.
5% Electricity and electrical hazards
6% Sanitation and hygiene
5% Personal protective equipment
in production
2
3
1
Our manufacturing partners' facilities are evaluated against a number of critical compliance issues.
While threshold issues are considered serious but correctable non-compliances that can be addressed in
a specified timeframe through remedial action, zero-tolerance issues - such as forced labor, child labor
practices, or critical life-threatening health, safety, and environment conditions - immediately trigger a
warning and potential disqualification of a supplier. Over the course of each year, we continuously track
the non-compliance findings identified through manufacturing partners' performance audits, collaboration
audits, self-governance assessments, and, since 2020, SLCP assessments. We follow up on all cases of
non-compliance and require our manufacturing partners to remediate open issues within a specified
timeframe. The identified issues in 2021 remained largely the same as those reported in 2020.
NON-COMPLIANCES IDENTIFIED IN ACTIVE FACTORIES
purchasing practices compliance requirements into their business practices. Licensees are also assessed
on the existence of policies and systems to address stakeholder engagement, as well as levels of public
reporting and communication.
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Non-compliances in the area of labor: Besides identifying non-compliances with the Workplace
Standards, our team focuses on the use and effectiveness of the facilities' HR management systems,
including any gaps in policies and procedures, related to specific risk areas, such as forced labor, child
labor, freedom of association, or discrimination. As a result, the percentages shown indicate the
systemic shortcomings of active facilities, rather than the confirmed presence of a specific case of
non-compliance.
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SHORTCOMINGS IN THE AREA OF LABOR IDENTIFIED DURING AUDITS IN 2021
3% Social and medical insurance
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2 'No standardized filing' indicates a factory does not keep relevant information/documents and records which demonstrate compliance with laws and
regulations.
1 'Other' includes, for example, overtime/holiday rate and other benefits/allowances.
7% Annual leave/public holidays
11% Company policy/
staff handbook
24% Other¹
13% No standardized
filing system²
13% Management systems
12% Management systems
for working hours
8% Communication systems
3% Recruitment
4% Overtime
3% Post-hiring
for fair wages
ANNUAL REPORT 2021
▶ SEE SUSTAINABILITY
3
Learning
▶ SEE OUR PEOPLE
Experience and engagement
➤ SEE OUR PEOPLE
‣ SEE INTERNAL MANAGEMENT SYSTEM
▶ SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISK AND OPPORTUNITIES,
AND OUTLOOK
Water consumption (supply chain)
‣ SEE SUSTAINABILITY
Decarbonization (supply chain)
Waste diversion (supply chain)
▶ SEE SUSTAINABILITY
Diversity, Equity, and Inclusion
▶ SEE OUR PEOPLE
‣ SEE INTERNAL MANAGEMENT SYSTEM
▶ SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISK AND OPPORTUNITIES,
AND OUTLOOK
▶ SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISK AND OPPORTUNITIES,
AND OUTLOOK
-
Product safety and integrity
▶ SEE SUSTAINABILITY
CONSUMER MATTERS
Membership
‣ SEE GLOBAL SALES
‣ SEE INTERNAL MANAGEMENT SYSTEM
‣ SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISK AND OPPORTUNITIES,
AND OUTLOOK
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PRODUCT RESPONSIBILITY
➤ SEE INTERNAL MANAGEMENT SYSTEM
▸ SEE SUSTAINABILITY
More sustainable materials and circular
services
4
5
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ENFORCEMENT
Warning letters are an essential part of our enforcement efforts and are triggered when we find
ongoing serious non-compliance issues that need to be addressed by our manufacturing partners'
facilities. We work closely with our manufacturing partners to help them improve their performance.
However, where we face situations of severe or repeated non-compliance, we do terminate business
relationships with facilities.
Warning letters: In 2021, our close engagement with our manufacturing partners' facilities has helped
reduce the number of active warning letters to 13 (2020: 22) across six countries. Compared to the
previous year, the overall number of active first-warning letters decreased significantly, from 19 in
2020 to 11 in 2021; the total number of second warnings also decreased to 2 in 2021 (2020: 3).
Manufacturing facilities that receive second-warning letters are only one step away from being notified
of possible termination of the manufacturing agreement and are subject to focused monitoring by our
team. No third-warning letters (which result in manufacturing facility terminations) were issued to our
manufacturing partners in 2021(2020: 0).
Terminations: In 2021, there was one instance of a termination of a supplier agreement for social
compliance reasons (2020: 0).
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3
4
TO OUR SHAREHOLDERS
ENVIRONMENTAL APPROACH
▶ SEE OUR PEOPLE
EMPLOYEE MATTERS
Rewards
▶ SEE GLOBAL OPERATIONS
▶ SEE GLOBAL SALES
DESCRIPTION OF BUSINESS MODEL
2
adidas applied the Global Reporting Initiative (GRI) guidelines as an external reporting framework. The
content of the non-financial statement combined with further information in this report and on our
corporate website is prepared with reference to the GRI Standards. The GRI content index can be found
online. REPORT.ADIDAS-GROUP.COM
In accordance with §§ 315b, 315c HGB in combination with §§ 289b to 289e HGB, adidas publishes a
combined non-financial statement for adidas AG and the Group in this combined Management Report. The
content of the non-financial statement can be found throughout the entire combined Management Report,
with relevant parts being indicated by this symbol: . These parts are not covered by the Audit of the
Consolidated Financial Statements and of the Group Management Report, as they were subject to a
separate limited assurance engagement of KPMG AG Wirtschaftsprüfungsgesellschaft. Links and
references are not part of the non-financial statement and have not been assessed. SEE LIMITED ASSURANCE REPORT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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NON-FINANCIAL STATEMENT
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We are committed to a continuous improvement in the company's bottom line. Management closely
monitors the development of net income from continuing operations and executes against this KPI. Our
strong focus on driving sustainable expansion to the company's bottom line is also reflected in the fact
that, as the most significant part of the Long-Term Incentive Plan 2021/2025, the variable compensation
for our Management is directly linked to the growth of the company's net income from continuing
operations. SEE COMPENSATION REPORT
FOCUS ON NET INCOME IN THE INTEREST OF OUR SHAREHOLDERS
Improving the effectiveness of capital expenditure is another major lever to drive our cash flow generation.
We control capital expenditure with a top-down, bottom-up approach. In a first step, Management defines
focus areas within the framework of our strategy and an overall investment budget based on investment
requests from various functions within the organization. Then, in a second step, our operating segments
align their initiatives within the scope of assigned priorities and available budget. We evaluate potential
return on planned investments utilizing the net present value method. Risk is accounted for by adding a
risk premium to the cost of capital, and thus reducing our estimated future earnings streams where
appropriate. By means of scenario planning, the sensitivity of investment returns is tested against changes
in initial assumptions. For large investment projects, timelines and deviations versus budget are
monitored on a monthly basis throughout the course of the project. In addition to optimizing return on
investments, we evaluate larger projects upon completion and document learnings for future capital
expenditure decisions.
CAPITAL EXPENDITURE TARGETED TO MAXIMIZE FUTURE RETURNS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
We strive to proactively manage our inventory levels to meet market demand and ensure fast
replenishment. Inventory aging is controlled carefully to reduce inventory obsolescence and to minimize
clearance activities. As a result, 'Inventory Days Lasting' (IDL) is monitored and assessed regularly as it
measures the average number of days goods remain in inventory before being sold, highlighting the
efficiency of capital locked up in products. To optimize capital tied up in accounts receivable, we strive to
improve collection efforts in order to reduce the 'Days of Sales Outstanding' (DSO) and minimize the aging
of accounts receivable. Likewise, we strive to optimize payment terms with our suppliers to manage our
accounts payable in the best possible way.
Actively managing our liquidity, cash flow and operating working capital remains a key focus for us and
continues to be monitored closely by Management. Generally, due to a comparatively low level of fixed
assets required in our business, the efficiency of the balance sheet depends to a large degree on our
operating working capital management. Operating working capital comprises accounts receivable plus
inventories minus accounts payable. SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS
CASH FLOW AND OPERATING WORKING CAPITAL MANAGEMENT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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In this context, the KPI we use is average operating working capital as a percentage of net sales.
Monitoring the development of this metric facilitates the measurement of our progress in improving the
efficiency of our business cycle.
STRATEGIC KEY PERFORMANCE INDICATORS
In addition to the major financial KPIs to assess the performance and operational success of our company,
as outlined above, we have identified a set of strategic KPIs that help us track our progress in areas that
are critical for our long-term success. The strategic KPIs also play a major role in measuring the success
of our strategy 'Own the Game' for the period until 2025. These strategic KPIs are assessed on a regular
basis and managed by the respective business functions. Strategic KPIs we are monitoring include, among
others, women's business and DTC share of net sales, e-commerce net sales, the development of our
member base, our sustainable article offering, employee engagement, and the share of female leadership.
NET SALES
TO OUR SHAREHOLDERS
150
Taking into account the year-to-date performance as well as opportunities and risks, the company's
expected full-year financial performance is assessed on a monthly basis. Finally, as a further early
indicator for future performance, the results of any relevant recent market and consumer research are
assessed as available.
We have developed an extensive performance measurement system, which utilizes a variety of tools to
measure the company's performance. Key performance indicators and other important financial metrics
are regularly monitored and compared against initial targets as well as rolling forecasts on a monthly
basis. When negative deviations exist between actual and target numbers, we perform a detailed analysis
to identify and address the cause. If necessary, action plans are implemented to optimize the development
of our operating performance. To assess current sales and profitability development, Management
continuously analyzes the performance of our operating segments. We also benchmark our financial
results with those of our major competitors on a regular basis.
STRUCTURED PERFORMANCE MEASUREMENT SYSTEM
updates about our sustainability performance in this Annual Report as well as on our corporate website.”
▸ SEE MANAGEMENT ASSESSMENT OF PERFORMANCE, RISKS AND OPPORTUNITIES, AND OUTLOOK SEE SUSTAINABILITY SEE STRATEGY SEE COMPENSATION REPORT
➤ ADIDAS-GROUP.COM/S/SUSTAINABILITY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
ANNUAL REPORT 2021
1
adidas
With our strategy 'Own the Game,' we have identified several areas that are of particular strategic
relevance in addition to the already existing focus on net sales:
We aim at driving overproportionate growth in our women's business to increase its overall share.
Through our focus on DTC, we defined the share of our DTC business in relation to total net sales as
our metric to measure the success of our strategy.
With e-commerce being an integral part of our growth plans, we monitor and assess the absolute net
sales amount for this channel on a regular basis. ▸ SEE STRATEGY
MEMBERSHIP
We want to grow long-term relationships with our consumers who are at the center of our strategy
'Own the Game.' Our membership program offers personalized experiences and rewards our most valued
consumers' engagement and purchasing activity. Therefore, our goal is to increase the member base over
the years, and its growth serves as the metric to measure our success.
Operating expense control: Management puts high emphasis on tightly controlling operating expenses
to leverage sales growth through to the bottom line. This requires a particular focus on ensuring
flexibility in the company's cost base. This flexibility helped us manage the covid-19 pandemic in 2020
and 2021, when we adopted a disciplined approach to both marketing and operating overhead
expenses. More broadly, marketing expenditure is one of our largest operating expenses, and at the
same time, one of the most important mechanisms for driving brand desirability and top-line growth.
Therefore, we are committed to improving the efficiency of our marketing investments. This includes
concentrating our communication efforts on key global brand initiatives and focusing our promotion
spend on well-selected partnerships with top events, leagues, clubs, federations, athletes, and artists.
We also aim to increase operational efficiency by tightly managing operating overhead expenses. In
this respect, we regularly review our operational structure by harmonizing business processes,
standardizing systems, eliminating redundancies, and leveraging the scale of our organization.
EMPLOYEE ENGAGEMENT AND EXPERIENCE
We are convinced that listening to employees plays a crucial role in our pursuit of creating a best-in-
class employee experience and continuing to attract and retain top talent. We can only tell if we are
successful by asking our people, hence we empower them to share their feedback. We launched the
'Employee Listening Survey' in 2021 - our new approach to measure the level of employee engagement
and experience that adidas provides as an employer. SEE OUR PEOPLE
FEMALE LEADERSHIP
Through our focus on Diversity, Equity, and Inclusion, we are committed to providing an equal starting
line for all our people, ensuring that everyone has the same career opportunities. One of our commitments
is to increase the share of women in management positions (Director level and above) globally to more
than 40% by 2025. SEE OUR PEOPLE SEE STRATEGY
SUSTAINABILITY PERFORMANCE
We have a strong commitment to enhance the social and environmental performance of our company.
By doing so, we firmly believe we will not only improve the company's overall reputation but also increase
its economic value. We therefore made sustainability one of the focus areas in our strategy 'Own the
Game.' To measure our progress, we have developed and implemented the strategic KPI 'Sustainable
Article Offering.' In addition, we have already been following a comprehensive roadmap with clear targets
for years, and regularly track our progress toward these targets with regard to the environmental and
social impact. We are measuring the environmental footprint of our own sites globally as well as
monitoring and rating our supplier factories with regard to social and environmental compliance with our
Workplace Standards. We have a long-standing commitment to sustainability disclosure, providing regular
149
▸ SEE STRATEGY
Improving the quality of distribution, with a particular focus on our direct-to-consumer business
Optimizing our product and channel mix
Planning pricing and clearance activities according to market realities
BUSINESS PERFORMANCE BY SEGMENT
FINANCIAL STATEMENTS AND MANAGEMENT REPORT OF ADIDAS AG
TREASURY
STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS
INCOME STATEMENT
BUSINESS PERFORMANCE
INTERNAL MANAGEMENT SYSTEM
MANAGEMENT REPORT
FINANCIAL REVIEW
GROUP
3
ANNUAL REPORT 2021
adidas
▶ SEE SUSTAINABILITY
EU Taxonomy
SUSTAINABLE FINANCE
‣ SEE SUSTAINABILITY
Our approach to tax
Fair labor conditions
▶ SEE SUSTAINABILITY
Fair labor conditions (supply chain)
‣ SEE SUSTAINABILITY
-
Supplier relationships
OUTLOOK
▶ SEE GLOBAL OPERATIONS
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
ANTI-BRIBERY AND CORRUPTION
Ethical business practices
‣ SEE RISK AND OPPORTUNITY REPORT
TAX
145
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
RISK AND OPPORTUNITY REPORT
146
-
Sales and gross margin development: Management focuses on identifying and exploiting growth
opportunities that not only provide for future top-line improvements but also have potential to increase
our gross margin. Major levers for enhancing our sales and gross margin include:
Operating margin (defined as operating profit as a percentage of net sales) is one of the major KPIs to
drive and improve our company's operational performance. It highlights the quality of our top-line and
operational efficiency. The primary drivers to enhance operating margin are as follows:
OPERATING MARGIN AS MAJOR KPI FOR OPERATIONAL PROGRESS
In order to drive and steer value creation, the company's Management focuses on a set of major financial
key performance indicators (KPIs). Sales and operating profit growth, paired with a focus on management
of operating working capital, are the main contributors to operating cash flow improvements. At the same
time, value-enhancing capital expenditure benefits future operating profit and cash flow development. In
addition, the development of the company's net income from continuing operations is of high importance
as it directly drives returns in the interest of our shareholders. Our strong focus on value creation is
reflected in the fact that our Management's short- and long-term variable compensation is closely linked
to the company's growth in sales, profitability, and net income from continuing operations. SEE COMPENSATION
REPORT
INTERNAL MANAGEMENT SYSTEM DESIGNED TO DRIVE SHAREHOLDER VALUE
We are committed to significant value creation - for our company and all its stakeholders. We strive to
create value by converting sales and profit growth into strong operating cash flow, while at the same
time managing our asset base proactively. Our company's planning and controlling system is therefore
designed to provide a variety of tools to assess our current performance and to align future strategic
and investment decisions to best utilize commercial and organizational opportunities. As a result of our
new strategy 'Own the Game,' our business is becoming significantly more cash generative than ever
before. Consequently, we enhanced our internal management system. SEE STRATEGY
INTERNAL MANAGEMENT SYSTEM
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
17
147
151
151
153
160
MANAGEMENT ASSESSMENT OF PERFORMANCE, RISKS AND OPPORTUNITIES, AND OUTLOOK
166
181
187
190
209
adidas
1
171
4
Financial income decreased 32% to € 19 million in 2021 (2020: € 29 million), while financial expenses were
down 22% to € 153 million compared to € 196 million in 2020. As a result, the company recorded a net
financial result of negative € 133 million, compared to negative € 167 million in 2020. ▸ SEE NOTE 32
€ 1.004 billion as well as the dividend payment of € 585 million. Currency effects had a positive impact on
cash and cash equivalents in an amount of € 57 million. Inventories decreased 9% to € 4.009 billion at the
end of December 2021 from € 4.397 billion in 2020, reflecting the reclassification of the Reebok inventory
to assets held for sale due to the expected divestiture of the Reebok business. The strong sell-through of
the company's products, successful inventory management as well as the impact from industry-wide
supply chain challenges also contributed to the decline. On a currency-neutral basis, inventories
decreased 12%. SEE NOTE 07
(3%)
(2%)
21,234
18,435
15%
16%
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
NET SALES BY SEGMENT' IN % OF NET SALES
7% Latin America
10% Asia-Pacific
22% Greater China
37% EMEA
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
149
SALES GROWTH IN ALL PRODUCT CATEGORIES
Currency-neutral footwear sales were up 13% in 2021 as a result of a double-digit sales increase in
Performance as well as a high-single-digit improvement in Lifestyle. Apparel revenues were up 20% on a
currency-neutral basis reflecting double-digit sales increases in both Performance and Lifestyle.
Currency-neutral accessories and gear sales were up 22%.
NET SALES BY PRODUCT CATEGORY € IN MILLIONS'
2021
2020
Change
Change
(currency-
neutral)
Footwear
11,336
10,129
12%
13%
Apparel
8,710
24% North America
7,315
145
40%
North America
Greater China
Asia-Pacific
Latin America
Other Businesses
Total
2021
2020
Change
Change
(currency-
neutral)
7,760
6,308
23%
47%
24%
4,519
13%
17%
4,597
4,342
6%
3%
2,180
2,083
5%
8%
1,446
1,035
5,105
19%
20%
Accessories and Gear
2021
2020
2019
2018
2017
50.7
50.0
52.0
51.8
50.4
1 Gross margin = (gross profit / net sales) × 100.
2 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
ROYALTY AND COMMISSION INCOME INCREASES WHILE OTHER OPERATING INCOME DECREASES
GROSS MARGIN 12 IN %
In 2021, royalty and commission income increased 41% to € 86 million (2020: € 61 million) reflecting the
comparably low licensing income in 2020 due to the coronavirus pandemic. Other operating income was
down 35% to € 28 million from € 42 million in 2020.
155
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1
ANNUAL REPORT 2021
2
3
4
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GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
sale expenses were up 7% to € 2.547 billion (2020: € 2.373 billion) as the company increased brand
investments to support the introduction of new products and to drive consumer experience across both
digital and physical platforms. As a percentage of sales, marketing and point-of-sale expenses decreased
0.9 percentage points to 12.0% (2020: 12.9%). Distribution and selling expenses increased 4% to
OTHER OPERATING EXPENSES AS A PERCENTAGE OF SALES DOWN 4.7 PERCENTAGE POINTS
Other operating expenses, including depreciation and amortization, mainly consist of marketing and point-
of-sale, distribution and selling as well as general and administration expenses. In 2021, other operating
expenses were up 4% to € 8.892 billion (2020: € 8.580 billion). As a percentage of sales, other operating
expenses decreased 4.7 percentage points to 41.9% from 46.5% in 2020. In 2021, marketing and point-of-
In 2021, gross profit increased 17% to € 10.765 billion from € 9.222 billion in 2020, representing a gross
margin increase of 0.7 percentage points to 50.7% (2020: 50.0%). While negative currency developments,
higher supply chain costs and a less favorable channel and market mix weighed on the development in
2021, higher full-price sales and lower inventory allowances as well as the non-recurrence of last year's
purchase order cancellation costs were able to overcompensate the negative effects.
GROSS MARGIN UP 0.7 PERCENTAGE POINTS
Cost of sales is defined as the amount we pay to third parties for expenses associated with producing and
delivering our products. In addition, own-production expenses are also included in the cost of sales.
However, these expenses represent only a very small portion of total cost of sales. In 2021, cost of sales
was € 10.469 billion, representing an increase of 14% compared to the prior year level of € 9.213 billion.
This development mainly reflects the increase in revenue.
1,187
991
20%
22%
Total
21,234
18,435
15%
16%
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
154
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1
ANNUAL REPORT 2021
2
3
4
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GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
NET SALES BY PRODUCT CATEGORY 'IN % OF NET SALES
6% Accessories and Gear
41% Apparel
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
O
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
53% Footwear
COST OF SALES INCREASES IN LINE WITH NET SALES
EMEA
NET SALES BY SEGMENT € IN MILLIONS'
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
Global
8
7
6
5.5
5
4
3
2.6
2
1
0
[1]
REGIONAL GDP DEVELOPMENT 12 IN %
[2]
(4)
(3.4)
[5]
[6]
[7]
[8]
Euro area
160
USA
5.8
5.2
-(6.4)
2.7
(3)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
BUSINESS PERFORMANCE
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
In 2021, adidas recorded strong operational and financial improvements. Revenues increased 16% on a
currency-neutral basis, reflecting broad-based growth across all market segments and categories. The
gross margin increased 0.7 percentage points to 50.7%. Other operating expenses as a percentage of
sales were down 4.7 percentage points to 41.9%. The company's operating margin increased
5.3 percentage points to 9.4%, reflecting both the gross margin increase and the decrease in other
operating expenses as a percentage of sales. Net income from continuing operations increased 223% to
€ 1.492 billion. This translates into basic EPS from continuing operations of € 7.47, also representing an
increase of 223% versus the prior year period.
ECONOMIC AND SECTOR DEVELOPMENT
GLOBAL ECONOMY RECOVERS IN 202125
The global economy recovered in 2021, with global gross domestic product (GDP) rebounding 5.5%.
Increasing vaccination rates allowed international trade to pick up, while policymakers transitioned from
strict lockdowns to less disruptive measures such as face mask obligations and capacity limits, leading to
an increase in output, consumption, and trade. Advanced economies grew by 5.0% in 2021, mainly driven
by the discontinuation of lockdown measures, which partially had to be revoked in the wake of new
coronavirus variants emerging in the second half of the year. Developing economies in aggregate were up
6.3% in 2021 as production expanded. Overall, rising demand faced supply bottlenecks, which led to rising
prices in advanced and developing countries alike. Globally, risks of new emerging coronavirus variants
leading to a further delay in the pandemic recovery remain.
SPORTING GOODS INDUSTRY REBOUNDS IN 2021
The global sporting goods industry expanded in 2021 while still facing steep challenges, such as increased
freight costs and coronavirus-induced factory closures. Due to supply shocks in Southeast Asia, the
industry could not always meet the increasing demand. Nevertheless, global demand was driven by the
return of sports and large-scale sport events, such as the UEFA EURO 2020 or the Tokyo 2020 Olympics.
Furthermore, existing global trends, such as the increased penetration of sportswear ('athleisure') as well
as rising awareness for health and wellness, accelerated further. Moreover, sustainability remained an
important theme for consumers. While physical retail recovered from the lockdown-related declines in the
prior year, purchasing behavior continued to shift toward online channels. Ultimately, digital platforms,
such as social fitness or membership programs, are evolving with growing interest of consumers. For the
sporting goods industry, too, risks of a delayed pandemic recovery continue to exist.
25 Source: World Bank Global Economic Prospects.
151
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
1.6
€ 4.782 billion in 2021 from € 4.601 billion in the prior year, mainly reflecting fewer coronavirus-related
store closures compared to 2020. As a percentage of sales, distribution and selling expenses decreased
2.4 percentage points to 22.5% from 25.0% in 2020. General and administration expenses were up 7% to
€ 1.481 billion (2020: € 1.379 billion), mainly due to higher personnel costs. As a percentage of sales,
general and administration expenses decreased 0.5 percentage points to 7.0% (2020: 7.5%). In total,
operating overhead expenses increased 2% to € 6.345 billion (2020: € 6.207 billion) including more than
€ 220 million stranded costs related to the expected divestiture of the Reebok business. As a percentage
of sales, operating overhead expenses decreased 3.8 percentage points to 29.9% from 33.7% in 2020.
5.6
(3.4)
Net sales
+16% C.N.
€ 21.234 bn
REVENUE DEVELOPMENT DRIVEN BY ALL CATEGORIES
From a category perspective, currency-neutral revenues in Performance grew in the strong double-digits,
driven by double-digit improvements in all key categories. In addition, Lifestyle also grew at a double-digit
rate.
NET SALES € IN MILLIONS
2021
2020
2019
21,234
18,435
23,640
In 2021, revenues increased 16% on a currency-neutral basis. In euro terms, revenues were up 15% to
€ 21.234 billion from € 18.435 billion in 2020. From a market perspective, currency-neutral sales
increased in all segments with EMEA, North America, and Latin America posting strong double-digit
improvements. Currency-neutral sales in Asia-Pacific and Greater China were up by high-single- and low-
single-digit rates, respectively. SEE BUSINESS PERFORMANCE BY SEGMENT
2018
2017
21,218
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
153
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
21,915
2021 MARKS SUCCESSFUL FIRST YEAR OF THE NEW STRATEGIC CYCLE
Due to the expected divestiture of the Reebok business, all related income and expenses are reported as
discontinued operations at the end of December 2021. All P&L-related figures for the 2020 financial year
in this report refer to the company's continuing operations unless otherwise stated.
FOCUS ON CONTINUING OPERATIONS
2021
2020
2019
1 Real change in percent versus prior year; 2020 and 2019 figures restated compared to prior year.
2 Source: World Bank as of January 11, 2022.
3 Includes Emerging Europe and Central Asia.
4 Includes East Asia and Pacific.
152
Asia4
Latin America
7.1
6.7
5.8
2.3
1.2
0.8
(6.4)
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
INCOME STATEMENT
(2.0)
▸ SEE NOTE 30
Eastern Europe³
2018
9.8
10.8
11.3
4.0
9.4
2 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
3 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
1 Operating margin = (operating profit/ net sales) x 100.
2017
OTHER OPERATING EXPENSES 12 IN % OF NET SALES
2021
2020
2019
2018
2017
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
MARKETING AND POINT-OF-SALE EXPENSES 12 IN % OF NET SALES
41.9
46.5
41.6
41.9
41.3
2021
2020
2019
12.0
12.9
12.9
NET FINANCIAL RESULT DECREASES
2018
TAX RATE DECREASES 0.8 PERCENTAGE POINTS TO 19.4%
NET INCOME FROM CONTINUING OPERATIONS UP 223% TO € 1.492 BILLION
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
1,430
1,709
1,918
461
1,492
158
3 2017 excluding negative one-time tax impact of € 76 million.
2 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2017
2018
2019
2020
2021
NET INCOME FROM CONTINUING OPERATIONS 1,2,3 € IN MILLIONS
€ 1.492 bn
+223%
Net income from continuing operations
Net income from continuing operations increased 223% to € 1.492 billion versus € 461 million in the prior
year. Basic earnings per share (EPS) from continuing operations increased 223% to € 7.47 from € 2.31 in
2020. Diluted EPS from continuing operations was also up 223% to € 7.47 in 2021 (2020: € 2.31).
The company's tax rate decreased 0.8 percentage points to 19.4% in 2021 (2020: 20.2%). SEE NOTE 34
2017
13.7
12.8
2017
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
157
3,066
1,967
3,845
2,882
2,511
1,986
746
2,660
2,368
2,070
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
OPERATING MARGIN 1,2,3 IN %
2021
2020
2019
2018
2019
2020
2021
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
156
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2
3
4
5
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OUR COMPANY
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
EBITDA INCREASES 56%
EBITDA 1,2,3 € IN MILLIONS
2021
2020
2019
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2017
1 EBITDA = income before taxes (IBT) + net interest expenses + depreciation and amortization + impairment losses - reversal of impairment losses.
2 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
3 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
OPERATING MARGIN INCREASES TO 9.4%
Operating profit increased 166% to € 1.986 billion in 2021 versus € 746 million in 2020. The operating
margin increased 5.3 percentage points to 9.4% compared to the prior year level of 4.0%. This
development was due to the gross margin increase and the decrease in other operating expenses as a
percentage of sales.
Operating margin
9.4%
+5.3 PP
OPERATING PROFIT 12€ IN MILLIONS
Earnings before interest, taxes, depreciation and amortization, as well as impairment losses/reversal of
impairment losses on property, plant, and equipment; right-of-use; and intangible assets (EBITDA)
increased 56% to € 3.066 billion in 2021 versus € 1.967 billion in 2020. Total depreciation and amortization
as well as impairment losses/reversal of impairment losses for tangible and intangible assets decreased
11% to € 1.115 billion in 2021 (2020: € 1.257 billion).
2018
FINANCIAL REVIEW
5
At December 31, 2021, all assets and liabilities of the Reebok business are presented as assets and
liabilities classified as held for sale due to a signed agreement to sell that business. The closing of the
transaction is expected during the first quarter of 2022. At the end of 2021, assets of € 2.033 billion and
liabilities of € 594 million were allocated to the Reebok business. However, a restatement of the 2020
balance sheet items is not permitted under IFRS.
EXPECTED DIVESTITURE OF THE REEBOK BUSINESS IMPACTS BALANCE SHEET ITEMS
STATEMENT OF CASH FLOWS
STATEMENT OF FINANCIAL POSITION AND
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
159
€ 10.90 versus € 2.21 in 2020. Diluted EPS from continuing and discontinued operations also increased
392% to € 10.90 (2020: € 2.21).
The company's net income attributable to shareholders, which in addition to net income from continuing
operations includes the gains from discontinued operations, increased 390% to € 2.116 billion (2020:
€ 432 million). As a result, basic EPS from continuing and discontinued operations increased 392% to
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS INCREASES 390% TO € 2.116 BILLION
€ 19 million). ▸ SEE NOTE 03
In 2021, adidas incurred gains from discontinued operations of € 666 million, net of tax, mainly related to a
write-up of the previously impaired Reebok trademark in an amount of € 549 million and deferred tax
expenses thereon in the amount of € 143 million within discontinued operations (2020: loss of
GAINS FROM DISCONTINUED OPERATIONS AMOUNT TO € 666 MILLION
BASIC EARNINGS PER SHARE 1,2,3 IN €
7.05
8.46
ASSETS
At the end of December 2021, total assets were up 5% to € 22.137 billion versus € 21.053 billion in the
prior year, mainly due to the write-up of the Reebok trademark and as right-of-use assets from leasing
agreements increased.
STRUCTURE OF STATEMENT OF FINANCIAL POSITION IN % OF TOTAL ASSETS 2
Assets (€ in millions)
Total current assets increased 15% to € 13.944 billion at the end of December 2021 compared to
€ 12.154 billion in 2020. Cash and cash equivalents were down 4% to € 3.828 billion at the end of
December 2021 from € 3.994 billion in the prior year. The net cash generated from operating activities was
more than offset by the net cash used for investing and financing activities, which included the repayment
of the € 600 million eurobond, the repurchase of adidas AG shares for a total consideration of
3 Fixed assets = property, plant, and equipment + right-of-use assets + goodwill + trademarks + other intangible assets + long-term financial assets.
4 As a percentage of fixed assets.
16.8%
24.5%
34.0%
38.4%
34.0%
30.2%
20.9%
18.1%
9.3%
9.8%
9.70
19.0%
21,053
22,137
2020
2021
2 2021 figures reflect the reclassification of the Reebok business to assets held for sale.
1 For absolute figures see adidas AG Consolidated Statement of Financial Position.
Other assets
Right-of-use assets (IFRS 16)4
Fixed assets³
Inventories
Accounts receivable
Cash and cash equivalents
17.3%
2.31
The total number of shares outstanding decreased by 3,471,205 shares to 191,594,855 at the end of 2021.
This development was a result of shares repurchased as part of the company's share buyback program.
Consequently, the average number of shares used in the calculation of basic earnings per share (EPS) was
194,172,984 (2020: 195,155,924).
3 2017 excluding negative one-time tax impact of € 76 million.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
7.47
2021
2020
5
2018
2017
1 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
2019
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2,294
GROUP MANAGEMENT REPORT -
OUR COMPANY
2,390
2,703
2,300
1,975
Total non-current liabilities remained stable at € 5.334 billion at the end of December 2021 compared to
€ 5.535 billion in the prior year. Long-term borrowings stayed nearly flat at € 2.466 billion at the end of
December 2021 compared with € 2.482 billion in the prior year. Non-current lease liabilities increased 5%
to € 2.263 billion at the end of December 2021 from € 2.159 billion in the prior year as currency effects
were partially offset by a reclassification related to the expected divestiture of the Reebok business. Other
non-current financial liabilities were down 55% to € 51 million at the end of December 2021 from
€ 115 million in the prior year related to embedded derivative financial instruments. Deferred tax liabilities
decreased 49% to € 122 million at the end of December 2021 from € 241 million in the prior year, mainly
due to a reclassification related to the expected divestiture of the Reebok business. Other non-current
provisions decreased 35% to € 149 million at the end of December 2021 from € 229 million in the prior
year, mainly as a result of reduced provisions for personnel. SEE NOTE 22
Shareholders' equity increased 17% to € 7.519 billion at the end of December 2021 versus € 6.454 billion
in 2020, mainly driven by the net income generated during the year, an increase in hedging reserves of
162
adidas
5
1
31.8%
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Accounts payable
Short-term borrowings
Liabilities and equity (€ in millions)
STRUCTURE OF STATEMENT OF FINANCIAL POSITION 'IN % OF TOTAL LIABILITIES AND EQUITY 2
lease liabilities remained fairly stable at € 573 million at the end of December 2021 versus € 563 million in
2020. Other current financial liabilities were down 19% to € 363 million from € 446 million in 2020, mainly
as a result of a decrease in the fair value of financial instruments. Other current provisions were down 9%
to € 1.458 billion at the end of December 2021 versus € 1.609 billion in 2020, mainly due to a reduction of
the provision for returns and a reclassification to liabilities held for sale related to the expected divestiture
of the Reebok business. Current accrued liabilities were up 24% to € 2.684 billion at the end of December
2021 from € 2.172 billion in 2020, partly due to higher accruals for personnel costs related to the
company's annual bonus for its senior management. Other current liabilities were up 9% to € 434 million
at the end of December 2021 from € 398 million in 2020. Liabilities classified as held for sale increased to
€ 594 million at the end of December 2021 (2020: € 0 million) related to the expected divestiture of the
Reebok business. SEE NOTE 20 SEE NOTE 21
ANNUAL REPORT 2021
2
35.4%
29.8%
Long-term borrowings
Other liabilities
Current and non-current lease liabilities (IFRS 16)³
Total equity
1 For absolute figures see adidas AG Consolidated Statement of Financial Position.
2 2021 figures reflect the reclassification of the Reebok business to liabilities held for sale.
3 As a percentage of other liabilities.
ACCOUNTS PAYABLE € IN MILLIONS'
2021
2020
2019
2018
30.9%
2017
2021
2020
22,137
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
21,053
0.1%
3.3%
10.4%
11.4%
11.1%
11.8%
43.0%
1 2021 figures reflect the reclassification of the Reebok business to liabilities held for sale.
41.8%
The weighted average interest rate on the company's gross borrowings decreased to 0.7% in 2021 (2020:
1.0%). This development was mainly due to the repayment of the € 600 million bond with a coupon of
1.25% and a lower financing need. Fixed-rate financing represented 100% of total gross borrowings at the
end of 2021 (2020: 98%). There were no variable-rate borrowings at the end of the year 2021 (2020: 2%).
5
1 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
2 First-time application of adjusted net borrowings as of 2020. Only figure for 2019 restated.
3 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
4 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
OFF-BALANCE-SHEET ITEMS
The company's most significant off-balance-sheet items are commitments for promotion and advertising
as well as other contracts. These contracts are related to short-term leases as well as leases for offices
and warehouses, which are not yet considered according to IFRS 16. Minimum future payments for other
contracts were € 396 million at December 31, 2021, compared to € 323 million at the end of December
2020, representing an increase of 23%. At the end of December 2021, financial commitments for
promotion and advertising decreased 4% to € 5.712 billion in 2021 (2020: € 5.948 billion). ▸ SEE NOTE 37
‣ SEE NOTE 38
165
adidas
1
ANNUAL REPORT 2021
153.0
Total
- 2020
2021
Q4 2018
1 Allocation of proceeds was subject to an independent review by Sustainalytics.
(0.2)
Unallocated proceeds
(0.3)
1.6
in investing
activities
(424)
1 Figures reflect continuing and discontinued operations.
ADJUSTED NET BORROWINGS/EBITDA 1,2,3,4 € IN MILLIONS
2021
2020
2019
2018
2017
Net cash used
in financing
activities
Effect of
exchange rates
Cash and cash
equivalents at
the end of
2021
57
3,828
(2,991)
1.0
16
1.1
Net cash used
Cumulated eligible sustainable project expenditure
Sustainable processes
166
In accordance with our Treasury Policy, all worldwide credit lines are directly or indirectly managed by the
centralized Treasury department. Portions of those lines are allocated to our subsidiaries and sometimes
backed by adidas AG guarantees. As a result of this centralized liquidity management, the company is well
positioned to allocate resources efficiently throughout the organization. The company's debt is generally
unsecured and may include standard covenants. We maintain good relations with numerous partner
banks, thereby avoiding a high dependency on any single financial institution. Banking partners of the
company and our subsidiaries are required to have at least a BBB- long-term investment grade rating by
Standard & Poor's or an equivalent rating by another leading rating agency. We authorize our companies
to work with banks with a lower rating only in very exceptional cases. To ensure optimal allocation of the
company's liquid financial resources, subsidiaries transfer excess cash to our headquarters in all
instances where it is legally and economically feasible. In this regard, the standardization and
consolidation of our global cash management and payment processes, including automated domestic and
cross-border cash pools is a key priority for our centrally managed Treasury department. Effective
management of our currency exposure and interest rate risks are additional goals and responsibilities of
the department. ▸ SEE NOTE 02
CENTRALIZED TREASURY FUNCTION
On a subsidiary level, where applicable and economically reasonable, local managing directors and
finance directors are responsible for managing treasury matters in their respective subsidiaries.
Controlling functions on a corporate level ensure that the transactions of the individual business units
are in compliance with our Treasury Policy.
The Treasury department is responsible for specific centralized treasury transactions and for the
global implementation of our Treasury Policy.
The Treasury Committee consists of members of the Executive Board and other senior executives who
decide on the Treasury Policy and provide strategic guidance for managing treasury-related topics.
Major changes to our Treasury Policy are subject to the prior approval of the Treasury Committee.
Our Treasury Policy governs all treasury-related issues, including banking policy and approval of bank
relationships, financing arrangements and liquidity/asset management, currency, interest and commodity
risk management, and the management of intercompany cash flows. Responsibilities are arranged in a
three-tiered approach:
TREASURY POLICY AND RESPONSIBILITIES
In order to be able to meet the company's payment commitments at all times, the major goal of our
financial policy is to ensure adidas' solvency, to limit financing risks and to balance financing costs with
financial flexibility. The operating activities of our segments and the resulting cash inflows represent the
company's main source of liquidity. Liquidity is planned on a rolling monthly basis under a multi-year
financial and liquidity plan.
CORPORATE FINANCING POLICY
TREASURY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
adidas
Community engagement
1
2
Sustainable materials
Eligible sustainable projects per category
SUSTAINABILITY BOND: AMOUNT OF NET PROCEEDS ALLOCATED¹€ IN MILLIONS
On September 29, 2020, adidas successfully placed its first sustainability bond as the company continued
to execute on its ambitious long-term sustainability roadmap while at the same time further optimizing its
capital structure and financing costs. At the time of the issuance, the € 500 million bond had a term of
eight years and a coupon of 0.00%. It has been listed on the Luxembourg Stock Exchange and has
denominations of € 100,000. adidas plans to use the proceeds of the sustainability bond to finance and
refinance, in whole or in part, eligible sustainable projects, as defined in the sustainability bond
framework. As of December 31, 2021, the total amount allocated to eligible sustainable projects was
€ 225.5 million.
On September 1, 2020, adidas successfully placed two bonds amounting to € 1 billion in total. The four-
year bond of € 500 million matures in September 2024 and has a coupon of 0.00%, while the 15-year bond
of € 500 million matures in September 2035 and has a coupon of 0.625%. The bonds have been listed on
the Luxemburg Stock Exchange and have denominations of € 100,000 each.
BONDS AND CREDIT RATINGS
In 2020, adidas took several steps to considerably strengthen its financial profile. On November 10, 2020,
adidas entered into a new € 1.5 billion syndicated credit facility with twelve of its partner banks. This credit
facility agreement was subsequently amended on October 8, 2021. The amended and restated credit
facility of € 1.5 billion with eleven partner banks will run until November 2026 and includes an extension
option of one year exercisable in 2022.
SYNDICATED CREDIT FACILITY
In the case of our committed credit facilities, we have entered into various legal covenants. These legal
covenants may include limits on the disposal of fixed assets, the amount of debt secured by liens, cross-
default provisions and change of control. However, our financial arrangements do not contain any financial
covenants. If we fail to meet any covenant and were unable to obtain a waiver, borrowings would become
due and payable immediately. As at December 31, 2021, we were in full compliance with all our covenants.
We are fully confident we will continue to be compliant with these covenants going forward. We believe
that cash generated from operating activities, together with access to internal and external sources of
funds, will be sufficient to meet our future operating and capital needs.
STANDARD COVENANTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
ANNUAL REPORT 2021
3,994
3,192
Net cash generated
from operating
activities
34.0
30.7
32.9
40.8
43.0
20.0
25.3
18.1
19.0
20.4
INVESTMENT ANALYSIS
Capital expenditure is defined as the total cash expenditure for the purchase of tangible and intangible
assets (excluding acquisitions and right-of-use assets according to IFRS 16). Capital expenditure
increased 51% to € 667 million (2020: € 442 million). Capital expenditure for property, plant, and
equipment was up 34% to € 494 million compared to € 368 million in the prior year. The company invested
€ 173 million in intangible assets (2020: € 64 million). Depreciation and amortization, excluding
impairment losses and reversal of impairment losses of tangible and intangible assets, decreased 9% to
€ 516 million in 2021 (2020: € 561 million).
Controlled space initiatives, which comprise investments in new or remodeled own-retail and franchise
stores as well as in shop-in-shop presentations of our products in our customers' stores, accounted for
44% of total capital expenditure (2020: 42%). Expenditure for IT and logistics represented 27% and 19%,
respectively (2020: 14% and 8%, respectively). In addition, expenditure for administration accounted for
163
adidas
1
ANNUAL REPORT 2021
2 2021 figure reflects the reclassification of the Reebok business to assets or liabilities held for sale. Calculation logic used for internal reporting as well.
3 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations. Calculation logic
used for internal reporting as well.
2
1 Average operating working capital = sum of operating working capital at quarter-end/4. Operating working capital = accounts receivable + inventories -
accounts payable.
2018
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
€ 226 million and a currency effect of € 308 million. This development was partly offset by the repurchase
of adidas AG shares for a total consideration of € 1.004 billion and the dividend of € 585 million paid to
shareholders for the 2020 financial year. SEE NOTE 25
EQUITY RATIO 12,3 IN %
2021
2020
2019
2018
2017
1 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
2 Based on shareholders' equity.
3 Figures reflect continuing and discontinued operations.
OPERATING WORKING CAPITAL
Operating working capital decreased 2% to € 3.890 billion at the end of December 2021 compared to
€ 3.960 billion in 2020. On a currency-neutral basis, operating working capital was down 6%. Average
operating working capital as a percentage of sales decreased 5.3 percentage points to 20.0% (2020:
25.3%), reflecting the strong top-line growth, the company's successful inventory management, and the
impact from industry-wide supply chain challenges.
AVERAGE OPERATING WORKING CAPITAL 12 IN % OF NET SALES 3
2021
2020
2019
2017
3
4
TO OUR SHAREHOLDERS
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
of the eurobond, the repurchase of adidas AG shares as well as the dividend payment. Exchange rate
effects positively impacted the company's cash position by € 57 million (2020: negative impact of
€ 75 million).
As a result of all these developments, cash and cash equivalents decreased by € 165 million to
€ 3.828 billion at the end of December 2021 compared to € 3.994 billion at the end of December 2020.
Adjusted net borrowings at December 31, 2021, amounted to € 2.963 billion, compared to € 3.148 billion in
2020. The company's ratio of adjusted net borrowings over EBITDA amounted to 1.0 at the end of
December 2021 (2020: 1.6). ► SEE TREASURY
CHANGE IN CASH AND CASH EQUIVALENTS € IN MILLIONS'
Cash and cash
equivalents
at the end of
2020
164
In 2021, net cash used in investing activities increased to € 424 million (2020: € 115 million) and net cash
used in continuing investing activities increased to € 415 million (2020: € 105 million). This development
was due to increased investing activities in 2021 compared to a lower investment base in 2020. This
change was mainly related to expenditures for property, plant, and equipment, purchase of trademarks,
and other intangible assets. Net cash used from financing activities amounted to € 2.991 billion (2020:
€ 479 million net cash generated) and net cash used from continuing financing activities amounted to
€ 2.952 billion (2020: € 514 million net cash generated). This development was mainly due the repayment
Due to the increase in operating profit, net cash generated from operating activities increased to
€ 3.192 billion in 2021 (2020: € 1.486 billion). Net cash generated from continuing operating activities
increased to € 2.873 billion (2020: € 1.366 billion).
LIQUIDITY ANALYSIS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
10% (2020: 4%). From a segmental perspective, the majority of the capital expenditure was recorded
centrally at headquarter level, which accounted for 49% (2020: 49%). From a regional perspective, capital
expenditure in EMEA accounted for 19% (2020: 12%) of the total capital expenditure, on par with Greater
China at 19% (2020: 21%), followed by APAC with 5% (2020: 9%), North America with 4% (2020: 8%), and
Latin America with 3% (2020: 2%).
CAPITAL EXPENDITURE BY TYPE IN % OF TOTAL CAPEX
10% Administration
19% Logistics
TO OUR SHAREHOLDERS
27% IT
3% Latin America
4% North America
5% Asia-Pacific
19% Greater China
19% EMEA
44% Controlled Space
0% Other Businesses
49% HQ/Consolidation
CAPITAL EXPENDITURE BY SEGMENTS IN % OF TOTAL CAPEX
INTEREST RATE DEVELOPMENT IN %
2
TO OUR SHAREHOLDERS
167
These transactions followed after adidas had received strong first-time investment-grade ratings by both
Standard & Poor's and Moody's in August 2020. Standard & Poor's gave adidas an 'A+' rating, and Moody's
granted the company an 'A2' rating. The outlook for both ratings is 'stable.' The company's strong credit
metrics, robust liquidity profile, and conservative financial policies are recognized by both agencies. The
ratings make adidas one of the highest-rated companies both in Germany and in the global sporting goods
industry.
274.5
225.5
45.4
180.0
24.6
8.4
16.2
14.2
3.3
10.9
186.7
33.8
2021
0.7
50
2020
2019
2018
2017
1 Weighted average interest rate of gross borrowings.
EFFECTIVE FOREIGN EXCHANGE MANAGEMENT IS A KEY PRIORITY
adidas
1.0
1
2
€0.4bn
€0.5bn
€0.5bn
€0.6bn
5.0
in %
Coupons
Investment-
grade-rated bond
Sustainability
bond
Eurobond -
second tranche
convertible bond grade-rated bond
Equity-neutral
Eurobond -
first tranche
MATURITY PROFILE OF BORROWINGS INCLUDING COUPONS '
€ 500 million was issued on September 5, 2018, with a coupon of 0.05% and is due on September 12, 2023.
On July 8, 2021, adidas exercised the early redemption option and fully repaid a € 600 million bond with a
coupon of 1.25% originally maturing in October 2021. SEE OUR SHARE SEE NOTE 16
On top of the above-mentioned placements, the company has further outstanding bonds, issued in 2014,
and one outstanding equity-neutral convertible bond, which was issued in 2018. The bond of € 400 million
matures on October 8, 2026, and has a coupon of 2.25%. The equity-neutral convertible bond of
OUTSTANDING BONDS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
5
4
3
ANNUAL REPORT 2021
2.25
1.5
2.7
3,692
3,445
4,085
4,397
4,009
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
1 2021 figures reflect the reclassification of the Reebok business to assets held for sale.
2017
2018
2019
2020
2021
INVENTORIES € IN MILLIONS'
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
Accounts receivable increased 11% to € 2.175 billion at the end of December 2021 (2020: € 1.952 billion),
reflecting the company's strong top-line growth. On a currency-neutral basis, receivables were up 6%.
Other current financial assets increased to € 745 million (2020: € 702 million), mainly due to an increase
in the fair value of financial instruments and short-term deposits, partly offset by a decrease in custom
claims. Other current assets were up 6% to € 1.062 billion at the end of December 2021 (2020:
2.1
€ 999 million). Assets classified as held for sale increased to € 2.033 billion (2020: € 0 billion) reflecting
the reclassification related to the expected divestiture of the Reebok business and the write-up of the
Reebok trademark. SEE NOTE 05 SEE NOTE 06 SEE NOTE 08
2021
As a globally operating company, adidas is exposed to currency risks. Therefore, effective currency
management is a key focus of our Treasury department, with the aim of reducing the impact of currency
fluctuations on non-euro-denominated net future cash flows. In this regard, hedging US dollars is a
central part of our hedging program. This is a direct result of our Asian-dominated sourcing, which is
largely denominated in US dollars. In 2021, our Treasury department managed a net deficit of around
US $ 7.3 billion related to business activities (2020: US $ 6.1 billion). Thereof, around US $ 6.0 billion was
against the euro (2020: US $ 4.8 billion). As governed by our Treasury Policy, we have established a
hedging program on a rolling basis up to 24 months in advance, under which the vast majority of the
anticipated seasonal hedging volume is secured approximately six months prior to the start of a season. In
rare instances, hedges are contracted beyond the 24-month horizon. We had largely covered our
anticipated hedging needs for 2022 as of the end of 2021. At the same time, we have already started
hedging our exposure for 2023. The use or combination of different hedging instruments, such as foreign
exchange contracts, currency options, and swaps, protects us against unfavorable currency movements.
‣ SEE GLOBAL OPERATIONS SEE RISK AND OPPORTUNITY REPORT SEE NOTE 28
170
3
4
3
2
ANNUAL REPORT 2021
1
adidas
161
Total current liabilities were up 2% to € 8.965 billion at the end of December 2021 from € 8.827 billion in
2020. Short-term borrowings decreased to € 29 million at the end of December 2021 (2020: € 686 million),
mainly reflecting the repayment of the € 600 million eurobond. Accounts payable declined by 4% to
€ 2.294 billion at the end of December 2021 versus € 2.390 billion in 2020, mainly reflecting the
normalization of payment terms and a reclassification to liabilities held for sale related to the expected
divestiture of the Reebok business. On a currency-neutral basis, accounts payable decreased 6%. Current
LIABILITIES AND EQUITY
Total non-current assets decreased 8% to € 8.193 billion at the end of December 2021 from € 8.899 billion
in 2020, mainly related to a decrease in fixed assets and other non-current financial assets. Fixed assets
decreased 6% to € 6.696 billion at the end of December 2021 versus € 7.149 billion in 2020, as trademarks
decreased 98% to € 16 million at the end of December 2021 (2020: € 750 million). This was solely due to
the reclassification of the Reebok trademark as asset held for sale related to the expected divestiture of
the Reebok business. Right-of-use assets increased 6% to € 2.569 billion (2020: € 2.430 billion) due to
lease modifications and positive currency effects. Other non-current financial assets decreased 61% to
€ 160 million from € 414 million at the end of 2020, mainly due to cash proceeds from former discontinued
operations. Deferred tax assets were up 2% to € 1.263 billion from € 1.233 billion in 2020, mainly due to
the recognition of deferred tax assets on previousy unrecognized tax losses and movements in taxable and
deductible temporary differences. ▸ SEE NOTE 34
2,315
2,418
2,625
1,952
2,175
1 2021 figures reflect the reclassification of the Reebok business to assets held for sale.
2017
2018
2019
2020
ACCOUNTS RECEIVABLE € IN MILLIONS'
€0.5bn
Investment-
4.0
3,168
2,495
1,416
998
538
436
528
1,032
686
29
2020
2021
€0.5bn
2021
Total
> 5 years
3 to 5 years
1 to 3 years
< 1 year
REMAINING TIME TO MATURITY OF GROSS BORROWINGS € IN MILLIONS
In 2022, assuming unchanged maturities, debt instruments of € 29 million will mature. This compares to
€ 686 million that matured during the course of 2021.
DEBT MATURITY PROFILE
826
ADJUSTED NET BORROWINGS OF € 2.963 BILLION
Adjusted net borrowings on December 31, 2021, amounted to € 2.963 billion, compared with € 3.148 billion
in 2020.
ADJUSTED NET BORROWINGS/NET CASH 12 € IN MILLIONS
2021
INTEREST RATE DECREASES
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
1,334
adidas
2 First-time application of adjusted net borrowings as of 2020. Only 2019 figure was restated.
1 Adjusted net borrowings = short-term borrowings + long-term borrowings and future cash used in lease and pension liabilities - cash and cash equivalents
and short-term financial assets.
2017
2018
484
959
(4,173)
(3,148)
2,963
2019
2020
169
3,168
2020
491
adidas
168
The company's gross borrowings, the vast majority of which are denominated in euro, are composed of
bank borrowings as well as the outstanding bonds and the equity-neutral convertible bond. Gross
borrowings decreased 21% to € 2.495 billion at the end of 2021 from € 3.168 billion in the prior year. The
total amount of bonds outstanding at the end of 2021 was € 2.384 billion (2020: € 2.978 billion). Bank
borrowings amounted to € 111 million at the end of 2021 compared to € 189 million in the prior year.
GROSS BORROWINGS DECREASED
€ 4.058 billion was unutilized (2020: € 4.085 billion). Committed and uncommitted credit lines represent
approximately 38% and 62% of total credit lines, respectively (2020: 38% and 62%, respectively). In
addition, we have an unused multi-currency commercial paper program in the amount of € 2.0 billion
available (2020: € 2.0 billion). We monitor the ongoing need for available credit lines based on the current
level of debt and future financing requirements.
In addition to the syndicated credit facility and improved access to bond markets following the strong
investment-grade ratings of Standard & Poor's and Moody's, the company's financial flexibility is ensured
by the availability of further credit facilities. At the end of 2021, committed and uncommitted credit lines,
including the syndicated loan facility, amounted to € 4.169 billion (2020: € 4.274 billion), of which
ADDITIONAL CREDIT LINES
1 Coupons are fixed.
2035
2028
2026
2,495
2023
2021
0
0.00
0.05
0.00
0.625
1.0
1.25
2.0
3.0
1
ANNUAL REPORT 2021
2024
5
494
2,488
1,890
189
111
3,994
2020
2021
Net cash
Gross total borrowings
Equity-neutral convertible bond
3,828
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Bank borrowings
Cash and short-term financial assets
FINANCING STRUCTURE € IN MILLIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
Eurobonds
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
issued between May 12, 2021, and the sale of the shares based on an authorized capital with the
exclusion of shareholders' subscription rights pursuant to § 203 section 1 in conjunction with § 186
section 3 sentence 4 AktG shall be attributed to the limit of 10%. Likewise, the prorated amount of the
nominal capital that is attributable to shares, which may be issued due to bonds with warrants and/or
convertible bonds, which are linked to subscription or conversion rights or obligations or the
company's right to delivery of shares, provided these bonds are issued on the basis of authorizations
pursuant to §§ 221 section 4, 186 section 3 sentence 4 AktG between May 12, 2021, and the sale of the
shares, shall also be attributed to the limit of 10%.
The shares may be offered and assigned as consideration for the direct or indirect acquisition of
companies, parts of companies, or participations in companies or other business assets, especially
real estate and rights to real estate or receivables (also from the company) or within the scope of
company mergers.
The rights of shareholders to subscribe treasury shares shall be excluded to the extent that such shares
are used pursuant to the aforementioned authorization. The Supervisory Board may determine that
transactions based on this authorization may only be carried out subject to the approval of the Supervisory
Board or one of its committees.
They may be used for purposes of meeting the subscription or conversion rights or obligations or the
company's right to delivery of shares arising from bonds with warrants and/or convertible bonds
issued by the company or its subordinated Group companies.
In connection with employee stock purchase plans, the shares may be used in favor of (current and
former) employees of the company and its affiliated companies as well as in favor of (current and
former) members of management bodies of the company's affiliated companies, whereas the amount
of shares must not exceed 5% of the nominal capital neither at the point in time when this
authorization becomes effective nor at the point in time when the shares are used. Shares assigned to
members of the Executive Board as compensation in the form of a share bonus based on this
authorization shall be attributed to this limit.
They may be canceled without such cancelation requiring an additional resolution of the Annual
General Meeting.
Furthermore, the shares may be assigned to members of the Executive Board as compensation in the
form of a share bonus subject to the provision that resale by the Executive Board members shall only be
permitted following a lock-up period of at least four years. Responsibility in this case lies with the
Supervisory Board. The amount of shares that may be used for such purposes must not exceed 5% of the
nominal capital, neither at the point in time when this authorization becomes effective nor at the point in
time when the shares are used or promised. Shares used based on this authorization shall be attributed to
this limit.
GROUP MANAGEMENT REPORT -
OUR COMPANY
They may be offered and sold as consideration for the acquisition of industrial property rights or
intangible property rights or for the acquisition of licenses relating to such rights, also through
subordinated Group companies.
TO OUR SHAREHOLDERS
The authorizations of the Executive Board to repurchase adidas AG shares arise from §§ 71 et seq. AktG
and, as at the balance sheet date, from the authorization granted by the Annual General Meeting on
May 12, 2021.
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They may be sold on the stock exchange or through a public offer to all shareholders in relation to their
shareholding quota; in case of an offer to all shareholders, subscription rights for residual amounts
are excluded. The shares may also be sold differently, provided the shares are sold in exchange for a
cash payment and at a price that, at the time of the sale, is not significantly below the stock market
price of the company's shares with the same features; the prorated amount of the nominal capital
which is attributable to the aggregate number of shares sold under this authorization may not exceed
10% of the nominal capital. The prorated amount of the nominal capital attributable to new shares
The purposes for which treasury shares repurchased based on this authorization may be used are set out
in the resolution on Item 12 of the Agenda for the Annual General Meeting held on May 12, 2021. The
shares may,
in particular, be used as follows:
The repurchase can be carried out via the stock exchange, through a public invitation to submit sale offers,
through a public repurchase offer, or through granting tender rights to shareholders. The authorization
furthermore sets out the lowest and highest nominal value that may be granted in each case.
Until May 11, 2026, the Executive Board is authorized to repurchase adidas AG shares in an amount
totaling up to 10% of the nominal capital at the date of the resolution (or, as the case may be, a lower
amount of nominal capital at the date of utilization of the authorization) for any lawful purpose and within
the legal framework. The authorization may be used by the company but also by its subordinated Group
companies or by third parties on account of the company or its subordinated Group companies or third
parties assigned by the company or one of its subordinated Group companies.
AUTHORIZATION OF THE EXECUTIVE BOARD TO REPURCHASE SHARES
Within the scope of the authorization resolved upon by the Annual General Meeting on May 12, 2021, the
Executive Board is furthermore authorized to conduct the share buyback also by using equity derivatives,
which are arranged with a credit institution or financial services institution in close conformity with market
conditions or by using a multilateral trading facility within the meaning of § 2 section 6 Stock Exchange Act
(Börsengesetz). adidas AG is authorized to acquire options that entitle the company to purchase shares of
4
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REPORT OF ADIDAS AG
1
The Executive Board has so far not utilized the authorization to issue bonds with warrants and/or
convertible bonds granted by the Annual General Meeting on May 9, 2018.
adidas
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FINANCIAL REVIEW
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adidas
No compensation agreements were entered into with members of the Executive Board or employees
relating to the event of a takeover bid.
CHANGE OF CONTROL/COMPENSATION AGREEMENTS
In the 2021 financial year, the Executive Board utilized the authorization to repurchase adidas AG shares
through the Share Buyback Program 2021/1 and the Share Buyback Program 2021/II. Under the Share
Buyback Program 2021/1, adidas AG purchased 1,851,522 treasury shares. Under the Share Buyback
Program 2021/II, further 1,619,683 treasury shares were purchased. In the year under review, adidas AG
thus purchased 3,471,205 treasury shares in total. ▸ SEE NOTE 25
For the use, the exclusion of subscription rights and the cancelation of shares purchased using equity
derivatives or a multilateral trading facility, the general provisions adopted by the Annual General Meeting
(set out above) apply accordingly.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
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ANNUAL REPORT 2021
Substantial agreements that provide for regulations in the case of a change of control are the material
financing agreements of adidas AG. In the case of a change of control, these agreements, as is customary
in the market, entitle the creditor/bondholder to termination and early calling-in.
necessary for granting subscription rights to which holders or creditors of previously issued bonds are
entitled. Finally, the Executive Board is authorized, subject to Supervisory Board approval, to also exclude
shareholders' subscription rights if the issue price of the bonds is not significantly below the hypothetical
market value of these bonds and the number of shares to be issued does not exceed 10% of the nominal
capital. Treasury shares that are or will be sold with the exclusion of subscription rights in accordance
with § 71 section 1 no. 8 in conjunction with § 186 section 3 sentence 4 AktG between the starting date of
the term of this authorization and the issuance of the respective bonds shall be attributed to the
aforementioned limit of 10%. Shares that are or will be issued, subject to the exclusion of subscription
rights pursuant to § 186 section 3 sentence 4 AktG or pursuant to § 203 section 1 in conjunction with § 186
section 3 sentence 4 AktG between the starting date of the term of this authorization and the issuance of
the respective bonds in the context of a cash capital increase shall also be attributed to the
aforementioned limit of 10%. Finally, shares for which there are option or conversion rights or obligations
or a right to delivery of shares of the company in favor of the company due to bonds with warrants or
convertible bonds issued by the company or its subordinated Group companies, subject to the exclusion of
subscription rights in accordance with § 221 section 4 sentence 2 in conjunction with § 186 section 3
sentence 4 AktG during the term of this authorization based on other authorizations shall be attributed to
the aforementioned limit of 10%. Notwithstanding the Supervisory Board's right to determine further
approval requirements, the Executive Board requires the Supervisory Board's approval for the issuance of
bonds with warrants and/or convertible bonds based on this authorization of the Annual General Meeting
on May 9, 2018, with the exclusion of shareholders' subscription rights.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
OTHER OPERATING EXPENSES DECREASE 4%
In 2021, other operating income of adidas AG decreased 34% to € 649 million (2020: € 986 million). This
development was primarily due to less positive currency effects.
OTHER OPERATING INCOME DOWN 34%
Sales of adidas AG comprise external revenues generated by adidas Germany with products of the adidas
and Reebok brands as well as revenues from foreign subsidiaries. Revenues of adidas AG also include
royalty and commission income, mainly from affiliated companies, revenues from central distribution, and
other revenues. In 2021, adidas AG net sales increased 12% to € 4.475 billion compared to € 3.991 billion
in the prior year.
NET SALES INCREASE 12%
3,991
4,475
611
643
119
120
35
39
1,216
In 2021, other operating expenses for adidas AG decreased 4% to € 2.462 billion (2020: € 2.564 billion).
This was largely attributable to less currency losses, but partly offset due to the increased expenses for IT
and maintenance costs.
1,436
2,237
2020
2021
Total
Other revenues
Central distribution
Foreign subsidiaries
adidas Germany
Royalty and commission income
ADIDAS AG NET SALES € IN MILLIONS
1,166
1,334
Retained earnings
[163]
2,010
Utilization for the repurchase of adidas AG shares
172
1
4,839
4,801
683
691
154
236
Financial assets
Property, plant and equipment
Intangible assets
Assets
Dec. 31, 2021 Dec. 31, 2020
BALANCE SHEET IN ACCORDANCE WITH HGB (CONDENSED) € IN MILLIONS
BALANCE SHEET
Net income, after taxes of € 98 million (2020: € 77 million), amounted to € 1.850 billion in 2021 and was
thus 174% above the prior year level (2020: € 674 million).
adidas
NET INCOME CONSIDERABLY ABOVE PRIOR YEAR LEVEL
INCREASE OF THE FINANCIAL RESULT
In 2021, adidas AG generated an operating profit of € 32 million. This was significantly below the prior year
level of € 166 million and mainly due to less positive currency effects.
OPERATING RESULT BELOW PRIOR YEAR LEVEL
Depreciation and amortization for adidas AG decreased 8% to € 117 million in 2021 (2020: € 127 million).
DEPRECIATION AND AMORTIZATION DOWN 8%
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
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ANNUAL REPORT 2021
The financial result of adidas AG increased 228% to € 1.916 billion in 2021 (2020: € 585 million). The
increase was attributable to higher income from dividends and higher profit transfers from affiliated
companies under profit and loss transfer agreements.
[8]
Allocation to capital reserves
(336)
3,991
4,475
Total output
Change in inventory
Net sales
2020
2021
STATEMENT OF INCOME IN ACCORDANCE WITH HGB (CONDENSED) € IN MILLIONS
INCOME STATEMENT
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
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Unlike the consolidated financial statements, which are in conformity with the International Financial
Reporting Standards (IFRS), as adopted by the European Union as of December 31, 2021, the following
financial statements of adidas AG have been prepared in accordance with the rules set out in the German
Commercial Code (Handelsgesetzbuch - HGB).
PREPARATION OF ACCOUNTS
The asset and capital structure of adidas AG is significantly impacted by its holding and financing function
for the company. For example, 43% of total assets as of December 31, 2021, related to financial assets
(2020: 40%), which primarily consist of shares in affiliated companies. Intercompany accounts, through
which transactions between affiliated companies are settled, represent another 17% of total assets (2020:
21%) and 32% of total equity and liabilities as of December 31, 2021 (2020: 36%).
The opportunities and risks as well as the future development of adidas AG largely reflect those of the
company as a whole. SEE OUTLOOK SEE RISK AND OPPORTUNITY REPORT
In addition to its own trading activities, the results of adidas AG are significantly influenced by its holding
function for the company as a whole. This is reflected primarily in currency effects, transfer of costs for
services provided, interest result, and income from investments in related companies.
The majority of the operating business of adidas AG consists of the sale of merchandise to wholesale
partners and own-retail activities.
OPERATING ACTIVITIES AND CAPITAL STRUCTURE OF ADIDAS AG
for the German market, as well as corporate headquarter functions such as Marketing, IT, Treasury,
Taxes, Legal, and Finance. adidas AG also administers the company's shareholdings.
adidas AG is the parent company of the adidas Group. It includes operating business functions, primarily
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
4,475
3,992
Other operating income
(925)
Allocation to other revenue reserves
828
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Retained earnings brought forward
674
1,850
Net income
(77)
(98)
585
1,916
166
32
(2,564)
(2,462)
(127)
Cost of materials
Personnel expenses
Depreciation and amortization
Other operating expenses
Operating profit
Financial result
Fixed assets
Taxes
986
(1,744)
(1,466)
[769]
(655)
(117)
649
FINANCIAL STATEMENTS AND MANAGEMENT
5,728
Inventories
If the Executive Board does not have the required number of members, the competent court must, in urgent
cases, make the necessary appointment upon application (§ 85 section 1 AktG).
As adidas AG is subject to the regulations of the German Co-Determination Act (Mitbestimmungsgesetz -
MitbestG), the appointment of Executive Board members and also their dismissal require a majority of at
least two-thirds of the Supervisory Board members (§ 31 MitbestG). If such a majority is not established in
the first vote by the Supervisory Board, the Mediation Committee has to present a proposal, which, however,
does not exclude other proposals. The appointment or dismissal is then made in a second vote with a simple
majority of the votes cast by the Supervisory Board members. Should the required majority not be
established in this case either, a third vote, again requiring a simple majority, must be held in which the
Chairman of the Supervisory Board has two votes.
The Supervisory Board may revoke the appointment of an individual as member of the Executive Board or
CEO if there is good cause, such as gross negligence of duties or a vote of no confidence by the Annual
General Meeting.
Pursuant to § 6 of the Articles of Association and § 84 AktG, the Supervisory Board is responsible for
determining the exact number of members of the Executive Board, for their appointment and dismissal as
well as for the appointment of the Chief Executive Officer (CEO). The adidas AG Executive Board, which, as
a basic principle, comprises at least two members, currently consists of the CEO and five further
members. Executive Board members may be appointed for a maximum period of five years. Such
appointments may be renewed and the terms of office may be extended, provided that no term exceeds
five years. SEE EXECUTIVE BOARD
EXECUTIVE BOARD APPOINTMENT AND DISMISSAL
Like all other shareholders, employees who hold adidas AG shares exercise their control rights directly in
accordance with statutory provisions and the Articles of Association. The shares that employees acquire in
the context of the Stock Purchase Plan are held in trust centrally by a service provider on behalf of the
participating employees. As long as the shares are held in trust, the trustee shall take reasonable
measures to enable participating employees to directly or indirectly exercise their voting rights in respect
of the shares held in trust.
VOTING RIGHT CONTROL IF EMPLOYEES HAVE A SHARE IN THE CAPITAL
There are no shares bearing special rights. In particular, there are no shares with rights conferring
powers of control.
SHARES WITH SPECIAL RIGHTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
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OUR COMPANY
TO OUR SHAREHOLDERS
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AMENDMENTS TO THE ARTICLES OF ASSOCIATION
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We have not been notified of, and are not aware of, any direct or indirect shareholdings in the share capital
of adidas AG reaching or exceeding 10% of the voting rights.
SHAREHOLDINGS IN SHARE CAPITAL EXCEEDING 10% OF VOTING RIGHTS
The shares that were issued in the context of the Stock Purchase Plan to employees of adidas AG and
employees of subsidiaries participating in the Stock Purchase Plan are not subject to any lock-up periods,
unless such a waiting period is stipulated in locally applicable regulations. Employees who hold the shares
that they purchased themselves (investment shares) for at least one year will subsequently receive one
share for every six investment shares without having to pay for these shares (matching share) if they are
still adidas employees at that point in time. If employees transfer, pledge, or hypothecate investment
shares in any way during the one-year vesting period, the right to receive matching shares ceases.
In addition, restrictions of voting rights may exist pursuant to, inter alia, § 136 AktG or for treasury shares
pursuant to § 71b AktG as well as due to capital market regulations, in particular pursuant to §§ 33 et seq.
German Securities Trading Act (Wertpapierhandelsgesetz - WpHG).
We are not aware of any contractual agreements with adidas AG or other agreements restricting voting
rights or the transfer of shares. Based on the Code of Conduct and internal guidelines of adidas AG and
based on Article 19 section 11 of the Regulation (EU) No 596/2014 (Market Abuse Regulation), however,
particular trade prohibitions do exist for members of the Supervisory Board and the Executive Board with
regard to the purchase and sale of adidas AG shares, in connection with the (time of) publication of
quarterly results, half-year, and year-end financial reports.
RESTRICTIONS ON VOTING RIGHTS OR TRANSFER OF SHARES
In the USA, adidas AG has issued American Depositary Receipts (ADRs). ADRs are deposit certificates of
non-US shares that are traded instead of the original shares on US stock exchanges. Two ADRs equal one
adidas AG share. SEE OUR SHARE
The nominal capital of adidas AG amounts to € 192,100,000 (as at December 31, 2021) and is divided into
the same number of registered no-par-value shares with a notional pro rata amount in the nominal capital
of € 1 each. In the 2021 financial year, the nominal capital and the number of shares were reduced due to
the cancelation of 8,316,186 treasury shares and the capital reduction with effect from November 30, 2021.
The shares are fully paid in. Any claim on the part of the shareholders to the issuance of individual share
certificates is generally excluded pursuant to § 4 section 7 of the Articles of Association unless such
issuance is required in accordance with the regulations applicable at a stock exchange where the shares
are admitted. Pursuant to § 67 section 2 German Stock Corporation Act (Aktiengesetz - AktG), in relation
to adidas AG, only a person who is registered as such in the share register shall be deemed a shareholder.
Each share grants one vote at the Annual General Meeting and determines the shareholders' share in the
company's profit. All shares carry the same rights and obligations. The shareholders' individual rights and
obligations follow from the provisions of the German Stock Corporation Act, in particular from §§ 12, 53a
et seq., 118 et seq., and 186 AktG. As at December 31, 2021, adidas AG held in total 505,145 treasury
shares, which do not confer any rights to the company in accordance with § 71b AktG. ▸ SEE NOTE 25
COMPOSITION OF SUBSCRIBED CAPITAL
3
DISCLOSURES PURSUANT TO § 315A SECTION 1 AND § 289A SECTION 1 OF THE
GERMAN COMMERCIAL CODE AND EXPLANATORY REPORT
Pursuant to §§ 119 section 1 number 6, 179 section 1 sentence 1 AktG, the Articles of Association of adidas
AG can, in principle, only be amended by a resolution passed by the Annual General Meeting. Pursuant to
§ 21 section 3 of the Articles of Association in conjunction with § 179 section 2 sentence 2 AktG, the Annual
General Meeting of adidas AG principally resolves upon amendments to the Articles of Association with a
simple majority of the votes cast and with a simple majority of the nominal capital represented when
passing the resolution. If mandatory legal provisions stipulate a larger majority of voting rights or capital,
this is applicable. When it comes to amendments solely relating to the wording, the Supervisory Board
is authorized to make these modifications in accordance with § 179 section 1 sentence 2 AktG in
conjunction with § 10 section 1 sentence 2 of the Articles of Association.
adidas
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
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OUR COMPANY
TO OUR SHAREHOLDERS
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The nominal capital of the company is conditionally increased by up to € 12,500,000 (Contingent Capital
2018). The Contingent Capital serves the purpose of granting holders or creditors of bonds that are issued
based on the resolution of the Annual General Meeting on May 9, 2018, subscription or conversion rights
relating to no more than a total of 12,500,000 shares in compliance with the corresponding conditions of
the bonds. Based on the authorization granted by the Annual General Meeting on May 9, 2018, the
Executive Board is authorized to issue bonds with warrants and/or convertible bonds in an aggregate
nominal value of up to € 2,500,000,000 with or without a limited term against contributions in cash once or
several times until May 8, 2023, and to guarantee bonds issued by subordinated Group companies. The
Executive Board is also authorized, subject to Supervisory Board approval, to exclude shareholders'
subscription rights for residual amounts and to exclude shareholders' subscription rights insofar as this is
CONTINGENT CAPITAL
Until August 6, 2026, the Executive Board is also authorized to increase the nominal capital, subject to
Supervisory Board approval, by issuing new shares against contributions in kind and/or cash once or
several times by no more than € 20,000,000 altogether (Authorized Capital 2021/II). The Executive
Board is authorized, subject to Supervisory Board approval, to exclude residual amounts from
shareholders' subscription rights and to wholly or partly exclude shareholders' subscription rights
when issuing shares against contributions in kind. Additionally, the Executive Board may, subject to
Supervisory Board approval, exclude shareholders' subscription rights if the new shares against
contributions in kind are issued at a price not significantly below the stock market price of the
company's shares already quoted on the stock exchange at the point in time when the issue price is
ultimately determined, which should be as close as possible to the placement of the shares; this
exclusion of subscription rights can also be associated with the listing of the company's shares on a
foreign stock exchange. The authorization to exclude subscription rights under this authorization,
however, may only be used to the extent that the pro-rata amount of the new shares in the nominal
capital together with the pro-rata amount in the nominal capital of other shares that have been issued
while excluding subscription rights by the company since May 12, 2021, subject to the exclusion of
subscription rights on the basis of an authorized capital or following a repurchase or for which
subscription or conversion rights or subscription or conversion obligations have been granted, through
the issuance of convertible bonds and/or bonds with warrants, does not exceed 10% of the nominal
capital existing on the date of the entry of this authorization with the commercial register or - if this
amount is lower - as of the respective date on which the resolution on the utilization of the
authorization is adopted. The previous sentence does not apply to the exclusion of subscription rights
for residual amounts. The Authorized Capital 2021/II must not be used to issue shares within the scope
of compensation or participation programs for Executive Board members or employees or for
members of the management bodies or employees of affiliated companies. SEE NOTE 25
Until August 6, 2026, the Executive Board is authorized to increase the nominal capital, subject to
Supervisory Board approval, by issuing new shares against contributions in cash once or several times
by no more than € 50,000,000 altogether (Authorized Capital 2021/I). The Executive Board may, subject
to Supervisory Board approval, exclude residual amounts from shareholders' subscription rights.
176
―
The authorization of the Executive Board to issue shares is regulated by § 4 of the Articles of Association
and by statutory provisions:
AUTHORIZATION OF THE EXECUTIVE BOARD TO ISSUE SHARES
The authorizations of the Executive Board are regulated by §§ 76 et seq. AktG in conjunction with §§ 7
and 8 of the Articles of Association. The Executive Board is responsible, in particular, for managing the
company and represents the company judicially and extra-judicially.
AUTHORIZATIONS OF THE EXECUTIVE BOARD
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
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ANNUAL REPORT 2021
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AUTHORIZED CAPITAL
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
11,959
11,061
7,740
6,463
686
797
3,533
3,801
Total equity and liabilities
Liabilities and other items
Provisions
Shareholders' equity
Equity and liabilities
Total assets
TOTAL ASSETS BELOW PRIOR YEAR
11,959
96
116
Prepaid expenses
6,187
5,217
Current assets
3,449
3,024
Cash and cash equivalents, securities
2,698
2,155
Receivables and other assets
40
38
11,061
At the end of December 2021, total assets decreased 8% to € 11.061 billion compared to € 11.959 billion in
the prior year. This development was mainly a result of decreases in receivables and securities.
SHAREHOLDERS' EQUITY UP 8%
Shareholders' equity rose 8% to € 3.801 billion at the end of 2021 (2020: € 3.533 billion). The equity ratio
increased to 34.4% (2020: 29.5%).
TO OUR SHAREHOLDERS
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adidas AG is able to meet its financial commitments at all times.
In 2021, operating activities of adidas AG resulted in a cash inflow of € 811 million (2020: outflow of
€ 703 million). The change versus the prior year was a result of the significant increase in net income,
partly offset by lower payables. Net cash inflow from investment activities was € 1.785 billion (2020:
€ 160 million). This was primarily attributable to higher dividend income. Financing activities resulted in a
net cash outflow of € 2.252 billion (2020: net cash inflow of € 1.162 billion). The net cash outflow from
financing activities mainly relates to the repurchases of adidas AG shares, the repayment of a bond and
the paid dividends. As a result of these developments, cash and cash equivalents of adidas AG increased to
€ 1.600 billion at the end of December 2021 compared to € 1.256 billion at the end of the prior year.
‣ SEE TREASURY
adidas AG has a syndicated credit facility of € 1.5 billion and additional bilateral credit lines of € 1.0 billion.
In addition, the company has a multi-currency commercial paper program in an amount of € 2.0 billion.
CASH INFLOW FROM INVESTING ACTIVITIES REFLECTS CHANGE IN CASH AND CASH EQUIVALENTS
€ 7.740 billion). This results mostly from the repayment of a bond in 2021.
At the end of December 2021, liabilities and other items decreased 16% to € 6.463 billion (2020:
LIABILITIES AND OTHER ITEMS DOWN 16%
173
adidas
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ANNUAL REPORT 2021
2
3
5,676
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
PROVISIONS INCREASE 16%
Provisions were up 16% to € 797 million at the end of 2021 (2020: € 686 million). The increase primarily
resulted from higher provisions for personnel.
5
580
the company upon the exercise of the options (call options) and/or to sell options, which require the
company to purchase shares of the company upon the exercise of the options by the option holders (put
options) or to use a combination of call and put options or other equity derivatives if the option conditions
ensure that the shares delivered for these equity derivatives were purchased in compliance with the
principle of equal treatment. All share purchases using the aforementioned equity derivatives are limited
to a maximum value of 5% of the nominal capital existing at the date on which the resolution was adopted
by the Annual General Meeting (or, as the case may be, a lower amount of nominal capital at the date of
exercising the authorization). The term of the options may not exceed 18 months and must furthermore be
chosen in such a way that the shares are purchased upon the exercise of the options no later than May 11,
2026. The authorization to purchase treasury shares while using equity derivatives or via multilateral
trading facilities also contains specifications on the highest and lowest amount of consideration paid per
share.
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
3
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GROUP MANAGEMENT REPORT -
OUR COMPANY
adidas
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
ASIA-PACIFIC
Sales in Asia-Pacific improved 8% on a currency-neutral basis. In euro terms, sales in Asia-Pacific were
up 5% to € 2.180 billion from € 2.083 billion in 2020. On a currency-neutral basis, this development was
driven by mid-single-digit increases in Performance due to moderate improvements in Training and
Running as well as by low-single-digit growth in Lifestyle.
Net sales in Asia-Pacific
+8%C.
% C.N.
€ 2.180 bn
ASIA-PACIFIC AT A GLANCE € IN MILLIONS'
Net sales
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Gross margin
Gross margin in Greater China decreased 0.5 percentage points to 51.8% from 52.3% in 2020, mainly due
to negative currency developments and higher sourcing costs, which could only be partly offset by a more
favorable category mix. Operating expenses were up 5% to € 1.188 billion (2020: € 1.134 billion), reflecting
an increase in both marketing expenditure and operating overhead costs. Operating expenses as a
percentage of sales decreased 0.3 percentage points to 25.8% versus 26.1% in the prior year. As the gross
margin decline was not fully offset by lower operating expenses as a percentage of sales, operating
margin decreased 0.2 percentage points to 26.0% from 26.2% in 2020. Operating profit in Greater China
increased 5% to € 1.194 billion versus € 1.137 billion in 2020.
(0.2pp)
Segmental operating margin
Change
(currency-
2021
2020
Change
4,597
4,342
6%
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
neutral)
51.8%
52.3%
(0.5pp)
1,194
1,137
5%
26.0%
26.2%
3%
Segmental operating profit
Change
(currency-
2,180
3
4
5
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
LATIN AMERICA
Revenues in Latin America increased 47% on a currency-neutral basis. In euro terms, sales in Latin
America improved 40% to € 1.446 billion from € 1.035 billion in 2020. On a currency-neutral basis, this
improvement was driven by exceptional sales growth in both Performance and Lifestyle. All key categories
- Training, Running, Football, and Outdoor - grew at strong double-digit rates.
2
Net sales in Latin America
€ 1.446 bn
LATIN AMERICA AT A GLANCE € IN MILLIONS'
Net sales
Gross margin
Segmental operating profit
Segmental operating margin
2021
1,446
.47% C.N.
2021
ANNUAL REPORT 2021
1
2020
2,083
Change
5%
neutral)
8%
51.3%
52.0%
(0.7pp)
TO OUR SHAREHOLDERS
457
20.9%
19%
Segmental operating profit
Segmental operating margin
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2.6pp
Gross margin in Asia-Pacific decreased 0.7 percentage points to 51.3% (2020: 52.0%), due to negative
currency developments, higher sourcing costs, and a less favorable channel mix. Operating expenses were
down 6% to € 677 million versus € 717 million in 2020, reflecting a decline in both marketing expenditure
and to a higher extent - operating overhead costs. Operating expenses as a percentage of sales were
down 3.4 percentage points to 31.1% (2020: 34.4%). As the gross margin decline was more than offset by
lower operating expenses as a percentage of sales, operating margin was up 2.6 percentage points to
20.9% versus 18.3% in 2020. Operating profit in Asia-Pacific increased 19% to € 457 million from
€ 382 million in 2020.
185
adidas
382
18.3%
2020
1,035
Gross margin
GREATER CHINA AT A GLANCE € IN MILLIONS'
5.5pp
Gross margin in EMEA increased 0.8 percentage points to 50.8% from 50.0% in 2020 reflecting a more
favorable pricing mix due to less promotional activity. Negative currency developments and higher
sourcing costs had a negative impact on the gross margin development. Operating expenses were up 6%
to € 2.294 billion versus € 2.159 billion in 2020, mainly driven by a double-digit increase in marketing
expenditure. Operating expenses as a percentage of sales were down 4.7 percentage points to 29.6%
(2020: 34.2%). As a result of the higher gross margin and lower operating expenses as a percentage of
sales, operating margin was up 5.5 percentage points to 21.4% (2020: 15.9%). Operating profit in EMEA
improved 65% to € 1.658 billion versus € 1.003 billion in the prior year.
182
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
15.9%
3
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
NORTH AMERICA
Revenues in North America increased 17% on a currency-neutral basis and 13% in euro terms to
€ 5.105 billion from € 4.519 billion in 2020. The currency-neutral improvement was driven by strong
double-digit growth in Performance, reflecting double-digit increases in Training and Running as well as
exceptional growth in Football and Outdoor. In addition, Lifestyle grew at a double-digit rate, as well.
Net sales in North America
17% C.N.
4
c.
21.4%
1,003
€ 7.760 bn
EMEA AT A GLANCE € IN MILLIONS'
Net sales
Gross margin
Segmental operating profit
Segmental operating margin
2021
2020
65%
Change
7,760
6,308
23%
24%
50.8%
50.0%
0.8pp
1,658
Change
(currency-
neutral)
Net sales
€ 5.105 bn
Net sales
183
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
3
4
Gross margin in North America increased 3.4 percentage points to 46.2% (2020: 42.8%). While a more
favorable pricing mix due to less promotional activity supported the improvement, higher sourcing costs
as well as a less favorable channel mix had an adverse impact on gross margin. Operating expenses were
down 2% to € 1.433 billion versus € 1.460 billion in 2020, reflecting a decrease in operating overhead costs
as marketing expenditure increased. Operating expenses as a percentage of sales decreased 4.2
percentage points to 28.1% (2020: 32.3%). As a result of the higher gross margin and lower operating
expenses as a percentage of sales, operating margin increased 7.6 percentage points to 18.8% from 11.2%
in 2020. Operating profit in North America increased 90% to € 960 million from € 506 million in 2020.
GROUP MANAGEMENT REPORT -
OUR COMPANY
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GREATER CHINA
Sales in Greater China increased 3% on a currency-neutral basis. In euro terms, sales in Greater China
improved 6% to € 4.597 billion from € 4.342 billion in 2020. The currency-neutral increase was driven by
mid-single-digit growth in Lifestyle. In addition, low-single-digit improvements in Training and Outdoor
also contributed to the increase.
Net sales in Greater China
+3% C.
C.N.
€ 4.597 bn
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
NORTH AMERICA AT A GLANCE € IN MILLIONS'
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
11.2%
Gross margin
Segmental operating profit
Segmental operating margin
Change
(currency-
2021
2020
Change
neutral)
7.6pp
5,105
13%
17%
46.2%
42.8%
3.4pp
960
18.8%
506
90%
4,519
Change
184
40%
In 2022, gross margin is expected to continue to recover and reach a level of between 51.5% and 52.0%. A
positive channel mix effect, price increases as well as the positive impact from favorable currency
developments will drive the gross margin improvement and are expected to outweigh significantly higher
supply chain costs.
OPERATING MARGIN TO INCREASE TO A LEVEL OF BETWEEN 10.5% AND 11.0%
In 2022, the operating margin is projected to increase significantly to a level of between 10.5% and 11.0%.
In addition to the expected higher gross margin, lower operating expenses as a percentage of sales – also
due to the non-recurrence of some of the Reebok-related stranded costs - will contribute to the
profitability improvement. Driven by the strong top-line growth in combination with the margin
improvements net income from continuing operations is projected to increase to a level of between
€ 1.8 billion and € 1.9 billion in 2022.
AVERAGE OPERATING WORKING CAPITAL AS A PERCENTAGE OF SALES TO DECREASE
During the coronavirus pandemic, average operating working capital as a percentage of sales increased
significantly as a result of prolonged temporary store closures and lower product sell-through. While we
were able to normalize inventory levels and significantly improve our working capital position in 2021
already, we will continue this development in 2022 and bring average operating working capital as a
percentage of sales back to a level below 20%.
CAPITAL EXPENDITURE TO INCREASE TO UP TO € 900 MILLION
In order to execute our growth strategy, we will continue to invest into our business. Consequently, capital
expenditure is expected to increase to a level of up to € 900 million in 2022. Investments into our own
retail stores as well as into digital, including e-commerce, will make up the biggest part of capital
expenditure.
MANAGEMENT PROPOSES DIVIDEND PAYMENT OF €3.30 PER SHARE
As a result of the strong operational and financial performance in 2021, the company's financial position
as well as Management's confidence in our long-term growth aspirations, the adidas AG Executive and
Supervisory Boards will recommend paying a dividend of € 3.30 per dividend-entitled share to
shareholders at the Annual General Meeting on May 12, 2022. This represents an increase of 10%
compared to the prior year dividend (2021: € 3.00) and would result in a total payout of € 632 million (2021:
€ 585 million). ▸ SEE OUR SHARE
189
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROSS MARGIN EXPECTED TO EXPAND TO A LEVEL BETWEEN 51.5% AND 52.0%
GROUP MANAGEMENT REPORT -
OUR COMPANY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
to increase to a level of
up to € 900 million
to decrease to a level
below 20%
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 Currency-neutral.
3 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
CURRENCY-NEUTRAL SALES TO INCREASE BETWEEN 12% AND 14% IN 2022
After the recovery from the coronavirus pandemic in 2021, we expect strong top-line growth to continue in
2022. Despite covid-19-related challenges in parts of the world, uncertainties regarding the global
economic outlook and risks from geopolitical tensions, the company's sales development will continue to
be favorably impacted by long-term industry growth drivers such as increasing sports participation, the
growing penetration of sports-inspired apparel and footwear ('athleisure') and digitalization. Beyond these
structural industry tailwinds, the execution of our strategy 'Own the Game' as well as our strong product
pipeline are expected to drive double-digit sales growth. Specifically, we expect sales to increase at a rate
between 12% and 14% on a currency-neutral basis. This development will be supported by currency
tailwinds.
CURRENCY-NEUTRAL REVENUES TO INCREASE IN ALL MARKET SEGMENTS
In 2022, we expect currency-neutral revenues to increase in all market segments. While currency-neutral
sales in North America and Latin America are projected to grow at a mid- to high-teens rate, currency-
neutral revenues are expected to grow at a rate in the mid-teens in EMEA and Asia-Pacific. Greater China
is expected to record growth in the mid-single-digits.
188
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
5
667
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
181
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
3
4
5
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
EMEA
In 2021, sales in EMEA increased 24% on a currency-neutral basis and 23% in euro terms to € 7.760 billion
from € 6.308 billion in 2020. The currency-neutral increase was driven by exceptional growth in
Performance and strong double-digit growth in Lifestyle. The former reflects excellent growth in Training
and Running as well as exceptional increases in Football and Outdoor.
Net sales in EMEA
+24% c.
C.N.
At the beginning of 2021, we launched our new strategy 'Own the Game' for the period until 2025. As part
of this strategy, we are focusing our growth efforts on the three strategic markets Greater China, EMEA,
and North America. To be able to execute this strategy successfully, adidas has changed its
organizational structure. Since January 1, 2021, adidas manages Greater China as a separate market.
The remaining Asia-Pacific (APAC) market now comprises Japan, South Korea, Southeast Asia, and the
Pacific region. The change reflects the increasing importance of Greater China as a growth market for
the company. In addition, adidas created the EMEA (Europe, Middle East, and Africa) market. To better
leverage economies of scale, the company has integrated the former markets Europe, Russia/CIS, and
Emerging Markets into the newly formed EMEA market. The markets North America and Latin America
remain unchanged.
5
BUSINESS PERFORMANCE BY SEGMENT
5
RISK AND OPPORTUNITY REPORT
In order to remain competitive and ensure sustainable success, adidas consciously takes risks and
continuously explores and develops opportunities. Our risk and opportunity management principles and
system provide the framework for our company to conduct business in a well-controlled environment.
RISK AND OPPORTUNITY MANAGEMENT PRINCIPLES
The key objective of the risk and opportunity management is to support business success and protect the
company as a going concern through an opportunity-focused but risk-aware decision-making framework.
Our Risk Management Policy outlines the principles, processes, tools, risk areas, key responsibilities,
reporting requirements, and communication timelines within our company. Risk and opportunity
management is a company-wide activity that utilizes key insights from the members of the Executive
Board as well as from global and local business units and functions. We define risk as the potential
occurrence of an external or internal event (or series of events) that may negatively impact our ability to
achieve the company's business objectives or financial goals. Opportunity is defined as the potential
occurrence of an external or internal event (or series of events) that can positively impact the company's
ability to achieve its business objectives or financial goals.
RISK AND OPPORTUNITY MANAGEMENT SYSTEM
The Executive Board has overall responsibility for establishing a risk and opportunity management system
that ensures comprehensive and consistent management of all material risks and opportunities. The Risk
Management department governs, operates, and develops the company's risk and opportunity
management system and is the owner of the centrally managed risk and opportunity management process
on behalf of the Executive Board. The Supervisory Board is responsible for monitoring the effectiveness of
the risk management system. These duties are undertaken by the Supervisory Board's Audit Committee.
Working independently of all other functions of the organization, the Internal Audit department provides
objective assurance to the Executive Board and the Audit Committee regarding the adequacy and
effectiveness of the company's risk and opportunity management system on a regular basis. In addition,
the Internal Audit department includes an assessment of the effectiveness of risk management processes
and compliance with the company's Risk Management Policy as part of its regular auditing activities with
selected adidas subsidiaries or functions each year.
Our risk and opportunity management system is based on frameworks for enterprise risk management
and internal controls developed and published by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Additionally, we have adapted our risk and opportunity management
system to more appropriately reflect the structure as well as the culture of the company. This system
focuses on the identification, evaluation, handling, systematic reporting, and monitoring of risks and
opportunities. In 2021, we evolved our risk and opportunity management system by introducing a
quantitative concept for risk capacity and risk appetite. Risk capacity is a liquidity-based measure and
represents the maximum level of risk adidas AG can take before being threatened with insolvency. Risk
appetite refers to the maximum level of risk the company is willing to take and is linked to the company's
liquidity targets.
190
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
Change
(currency-
neutral)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
20.0%
GROUP MANAGEMENT REPORT -
OUR COMPANY
(in % of sales)³
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
In 2022, we expect the robust recovery of the global economy and consumer spending to continue. While
uncertainty due to prolonged adverse effects of the coronavirus pandemic remains, we anticipate the
global sporting goods industry to continue expanding significantly in 2022. The macroeconomic recovery
as well as structural industry tailwinds in combination with the execution of our strategy 'Own the
Game' and our strong product pipeline are forecast to lead to currency-neutral net sales growth
between 12% and 14%. Gross margin is expected to increase to a level of between 51.5% and 52.0%.
Operating margin is anticipated to go up to a level of between 10.5% and 11.0%. As a result, net income
from continuing operations is forecast to increase to a level of between € 1.8 billion and € 1.9 billion. All
expectations stated in this outlook are for continuing operations and hence exclude the Reebok
business.
FORWARD-LOOKING STATEMENTS
This Management Report contains forward-looking statements that reflect Management's current view
with respect to the future development of our company. The outlook is based on estimates that we have
made on the basis of all the information available to us at the time of completion of this Annual Report. In
addition, such forward-looking statements are subject to uncertainties which are beyond the control of the
company. In case the underlying assumptions turn out to be incorrect or described risks or opportunities
materialize, actual results and developments may materially deviate (negatively or positively) from those
expressed by such statements. adidas does not assume any obligation to update any forward-looking
statements made in this Management Report beyond statutory disclosure obligations.
▶ SEE RISK AND OPPORTUNITY REPORT
DIVESTITURE OF REEBOK
As part of the development of its new strategy ´Own the Game,' adidas has decided to sell its Reebok
business to Authentic Brands Group for a total consideration of up to € 2.1 billion. Closing of the
transaction is expected to occur in the first quarter of 2022.
GLOBAL ECONOMIC GROWTH TO STABILIZE IN 202226
Global gross domestic product (GDP) is expected to grow 4.1% in 2022 despite continued impact from
covid-19, diminishing policy support and lingering supply disruptions. All regions will continue to face
downside risks from potential resurgences of covid-19, tightening financial conditions, geopolitical
conflicts and extreme weather as well as other natural disasters. Output, consumption, and trade,
however, are forecast to improve gradually amid more efficient pandemic management, supported by
elevated vaccination rates globally. In addition, differences in the pace of growth between advanced and
developing economies affect the global GDP projection. Advanced economies are forecast to see growth of
3.8% with pent-up demand fading and inflation remaining above target levels. Growth in developing
economies is projected at 4.6% as vaccination rates steadily increase while monetary policy
accommodation is being withdrawn.
SPORTING GOODS INDUSTRY EXPANSION TO CONTINUE IN 2022
In the absence of any delay in pandemic recovery or other macroeconomic shocks, the global sporting
goods industry is set to continue its recovery in 2022. Demand is forecast to stay robust amid elevated
vaccination rates and less restrictive pandemic management as lockdowns, social distancing measures
and store closures have become less likely. In addition, major sports events, such as the Beijing 2022
Olympic Winter Games and the FIFA World Cup Qatar 2022 will support industry growth, as spectators
26 Source: Worldbank Global Economic Prospects.
187
adidas
1
ANNUAL REPORT 2021
2
5
3
OUTLOOK
GROUP MANAGEMENT REPORT -
OUR COMPANY
Capital expenditure (€ in millions)³
47%
48.2%
265
18.3%
44.2%
3.9pp
33
3.2%
709%
15.1pp
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
Gross margin in Latin America increased 3.9 percentage points to 48.2% (2020: 44.2%). While a more
favorable pricing mix due to lower promotional activity had a positive impact on the gross margin
development, negative currency developments, a less favorable channel mix, and higher sourcing costs
had an adverse impact. Operating expenses were up 1% to € 434 million from € 429 million in 2020,
reflecting a double-digit increase in marketing expenditure while operating overhead costs declined.
Operating expenses as a percentage of sales decreased 11.5 percentage points to 30.0% (2020: 41.5%). As
a result of the higher gross margin and lower operating expenses as a percentage of sales, operating
margin improved 15.1 percentage points to 18.3% from 3.2% in 2020. Operating profit in Latin America
increased 709% to € 265 million versus € 33 million in 2020.
186
adidas
1
ANNUAL REPORT 2021
2
3
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
4
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
4,597
2,180
mid-teens growth²
mid- to high-teens growth²
mid-single-digit growth²
mid-teens growth²
1,446
50.7%
to increase to a level of
between 51.5% and 52.0%
9.4%
to increase to a level of
between 10.5% and 11.0%
Gross margin
Operating margin
to increase to a level of
Net income from continuing operations
1,492
between € 1.8 billion and
(€ in millions)
€ 1.9 billion
TO OUR SHAREHOLDERS
Average operating working capital
5,105
7,760
mid- to high-teens growth²
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
to increase at a rate
between 12% and 14%²
return to larger and smaller stages. Moreover, the sporting goods industry is projected to remain
fundamentally attractive in the long-term, as existing global trends such as 'athleisure,' increasing sport
participation rates and rising health and fitness awareness are further accelerating. In addition,
sustainability is expected to further gain in importance amid growing environmental awareness of
consumers. The pandemic supports the shift toward online and social media channels as a powerful
catalyst, while major industry players leverage this trend by increasing their direct-to-consumer (DTC)
efforts. However, the risks of a delayed pandemic recovery and rising geopolitical tensions also continue to
exist for the sporting goods industry.
2022 OUTLOOK '
Net sales (€ in millions)
EMEA
North America
Greater China
5
Asia-Pacific
21,234
2022 Outlook
2021
Latin America
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
HARM OHLMEYER
Chief Financial Officer
Amanda Rajkumar was born in Northampton, UK, in 1972
and is a British national. She holds a Bachelor of Science
degree from Goldsmiths College, London University, UK,
and began her professional career as a research
psychologist before joining the London-based
recruitment consultancy JM Management. From 1998
onward, she held various senior HR leadership and
managerial positions at JPMorgan Chase. She joined BNP
Paribas in 2009, where over eleven years, she was
responsible for Global Human Resources for different
business divisions based out of Europe and the US. Most
recently, she was Chief Human Resources Officer for the
Americas region, with responsibility for the Intermediary
Holding Company of BNP Paribas in the Americas
overseeing the retail and wholesale divisions. At the
beginning of 2021, Amanda Rajkumar was appointed to
the adidas Executive Board and is responsible for Global
Human Resources, People and Culture. In May 2021, she
was appointed as Labor Director.
adidas
Harm Ohlmeyer was born in Hoya, Germany, in 1968 and
is a German national. He holds a degree in Business
Studies from the University of Regensburg, Germany, as
well as an MBA from Murray State University, USA. Harm
Ohlmeyer started his career with adidas in 1998 and
gained extensive experience in the areas of Finance and
Sales, including responsibility as CFO TaylorMade-adidas
Golf in Carlsbad, USA, and Senior Vice President Finance
adidas Brand and Global Sales (adidas and Reebok). From
2011, he led the company's e-commerce business as
Senior Vice President Digital Brand Commerce. From
2014 to 2016, he held additional responsibility as Senior
Vice President Sales Strategy and Excellence. In 2017,
Harm Ohlmeyer was appointed to the Executive Board
and subsequently became Chief Financial Officer.
MANDATES:
16
Member of the Supervisory Board, SV Werder Bremen
GmbH & Co. KGaA, Bremen, Germany³
Y-3
AMANDA RAJKUMAR
Global Human Resources, People and Culture
1
-
2
FINANCIAL REVIEW
3
ANNUAL REPORT 2021
4
1
adidas
ANNUAL REPORT 2021
3 Since October 7, 2021.
Member of the Board of Directors, Pitzner Gruppen
Holding A/S, Copenhagen, Denmark
MANDATES:
Brian Grevy was born in Kolding, Denmark, in 1971 and is
a Danish citizen. After his studies at the Business School
in Vejle, Denmark, he held various leadership positions at
adidas and Reebok Nordics between 1998 and 2006. In
2006, he transferred to the adidas headquarters in
Herzogenaurach, Germany, to become Director Men's
Training and, as of 2010, Senior Vice President Training
and Regional Sports. From 2012 to 2014, Brian Grevy
acted as General Manager adidas Nordics in Stockholm,
Sweden. During the years 2014 to 2016, he led the adidas
Business Unit Training as General Manager in
Herzogenaurach, Germany. He then joined Gant in
Stockholm, Sweden, as Chief Marketing Officer, where he
became Chief Executive Officer in 2018. In 2020, Brian
Grevy was appointed to the adidas Executive Board and is
responsible for Global Brands.
Global Brands
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
-
2
born on April 14, 1965
4
Vice Chairman of Global Banking and Asia Pacific, JPMorgan Chase & Co., New York, USA
Member of the Supervisory Board since May 9, 2019
born on June 28, 1967
BRIAN GREVY
residing in Munich, Germany
residing in Hong Kong, China
GÜNTER WEIGL*
JING ULRICH
Chairman of the Supervisory Board, Evercore GmbH, Frankfurt/Main, Germany
Member of the Supervisory Board, Bertelsmann SE & Co. KGaA/Bertelsmann Management SE,
Gütersloh, Germany
Membership in other statutory supervisory boards in Germany:
Independent Management Consultant
Member of the Supervisory Board since May 9, 2019
born on August 18, 1959
Non-Executive Director, Levere Holding Corp., Grand Cayman, Cayman Islands⁹
3
residing in Oberreichenbach, Germany
Senior Vice President Global Sports Marketing and Brand Relations, adidas AG, Herzogenaurach, Germany
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
17
5
Member of the Supervisory Board since May 9, 2019
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Global Operations
Martin Shankland was born in Sydney, Australia, in 1971
and is an Australian national. He holds a Bachelor of
Commerce degree from the University of New South
Wales, Australia, and completed the Professional Year
Program at the Australian Institute of Chartered
Accountants. He joined adidas in 1997 as Finance Director
for adidas Russia/CIS and was Managing Director from
2000 to 2017. From 2017 to 2019, he led adidas Emerging
Markets as Managing Director. In 2019, Martin Shankland
was appointed to the Executive Board and is responsible
for Global Operations.
adidas
20
* Employee representative.
9 Since March 18, 2021.
MARTIN SHANKLAND
University of Miami, USA, he joined the adidas team as a
Strategic Planner in 1989. During his career with the
company, he has held many senior management
positions, including Business Unit Manager, Key Account
Manager Europe and Head of Region Europe, Middle East
and Africa. In 2009, he became Chief Sales Officer
Multichannel Markets. In 2013, Roland Auschel was
appointed to the Executive Board and is responsible for
Global Sales.
➤ ADIDAS-GROUP.COM/EXECUTIVE-BOARD
ROLAND AUSCHEL
Global Sales
adidas
13
More information on the adidas Executive Board
VES
TO CHAN
POWER
SPORT WE HAVE
THE
THROUGH
FUNCTION WITHIN THE COMPANY.
EACH BOARD MEMBER IS RESPONSIBLE FOR AT LEAST ONE MAJOR
OUR EXECUTIVE BOARD IS COMPOSED OF SIX MEMBERS.
EXECUTIVE BOARD
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
adidas
BODO UEBBER
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
1
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
On top of delivering strong results despite the challenges we faced, we also reached another important
milestone in 2021: We signed an agreement to sell the Reebok brand to Authentic Brands Group for a total
consideration of up to € 2.1 billion. Reebok has been a valued part of adidas, and we are grateful for the
contributions the brand and the team behind it have made to our company. With this change in ownership,
we believe the Reebok brand will be well positioned for long-term success.
3
2
ANNUAL REPORT 2021
1
TO OUR SHAREHOLDERS
AGREEMENT TO SELL REEBOK
ANNUAL REPORT 2021
2
3
adidas
1
ANNUAL REPORT 2021
2
3
4
Member of the Supervisory Board, Siemens AG, Berlin
and Munich, Germany²
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
15
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
GROUP MANAGEMENT REPORT -
OUR COMPANY
Roland Auschel was born in Bad Waldsee, Germany, in
1963 and is a German citizen. After obtaining a bachelor's
degree in European Business Studies from the Münster
University of Applied Sciences, Germany, and the
University of Hull, UK, as well as an MBA from the
Member of the Board of Directors, Nestlé S.A., Vevey,
Switzerland1
MANDATES:
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
1 Until April 7, 2022.
-
2 Since February 3, 2021.
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
KASPER RORSTED
Chief Executive Officer
Kasper Rorsted was born in Aarhus, Denmark, in 1962
and is a Danish national. He holds a degree in
International Business Studies from the Copenhagen
Business College, Denmark, from where he graduated in
1985, and completed a series of Executive Programs at
Harvard Business School, USA. During his career, Kasper
Rorsted gained valuable experience in the IT industry
through various management positions at Oracle,
Compaq and Hewlett Packard. These included Head of
Compaq Enterprise Business Group EMEA (1995-2001)
and Vice President and General Manager EMEA (2001-
2002) based in Germany and Switzerland at Compaq and
Senior Vice President and General Manager EMEA (2002-
2004) based in Switzerland at Hewlett-Packard, Digital
Equipment Corporation. In 2005, Kasper Rorsted joined
consumer goods manufacturer Henkel based in Germany
as the Executive Vice President of Human Resources
Management, Procurement, IT and Infrastructure
Services. In 2007, he became the Vice Chairman of the
Management Board before he was appointed Chief
Executive Officer (CEO) of Henkel in 2008. Since 2016,
Kasper Rorsted has been the CEO of adidas AG,
Herzogenaurach, Germany.
14
Deputy Chairman of the Works Council Herzogenaurach, adidas AG, Herzogenaurach, Germany
GROUP MANAGEMENT REPORT -
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born on July 3, 1959
Member of the Supervisory Board, Marnix French ParentCo SAS (Webhelp Group), Paris, France
Member of the Board of Directors, Financière De La Sambre, Loverval, Belgium
Member of the Board of Directors, Carpar SA, Loverval, Belgium?
4 Until September 17, 2021.
5 Until April 20, 2021.
6 Since June 30, 2021.
7 Since June 17, 2021.
* Employee representative.
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adidas
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TO OUR SHAREHOLDERS
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4
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Member of the Board of Directors, Château Cheval Blanc, Société Civile, Saint-Émilion, France
Member of the Board of Directors, GBL Development Ltd., London, United Kingdom
5
Member of the Board of Directors, Frère-Bourgeois SA, Loverval, Belgium 5
Member of the Board of Directors, Sienna Capital S.à r.l., Strassen, Luxembourg
UDO MÜLLER*
DEPUTY CHAIRMAN
residing in Herzogenaurach, Germany
born on April 14, 1960
Member of the Supervisory Board since October 6, 2016
Manager History Management, adidas AG, Herzogenaurach, Germany
IAN GALLIENNE
DEPUTY CHAIRMAN
residing in Gerpinnes, Belgium
born on January 23, 1971
Member of the Supervisory Board since June 15, 2016
Chief Executive Officer, Groupe Bruxelles Lambert, Brussels, Belgium
Membership in comparable domestic and foreign controlling bodies of commercial enterprises:
Member of the Board of Directors, Pernod Ricard SA, Paris, France
Member of the Board of Directors, SGS SA, Geneva, Switzerland
Mandates within the Groupe Bruxelles Lambert or in entities under common control with the Groupe
Bruxelles Lambert:
Member of the Board of Directors, Imerys SA, Paris, France
Member of the Board of Directors, Compagnie Nationale à Portefeuille SA, Loverval, Belgium
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PETRA AUERBACHER*
residing in Emskirchen, Germany
SUBSTANTIAL GROWTH IN SALES, PROFITABILITY, AND CASH FLOW UNTIL 2025
Based on our strategy, we have set ourselves ambitious targets that will be measured against our 2021
financial year as a baseline. We aim to increase sales by an average of between 8% and 10% per year on a
currency-neutral basis over the four-year period between 2021 and 2025. Gross margin is forecast to
expand to a level of between 53% and 55%, and the operating margin to a level of between 12% and 14% by
2025. Net income from continuing operations is also projected to increase substantially by an average of
between 16% and 18% per year over the four-year period between 2021 and 2025. Driven by the significant
top-line growth and strong bottom-line expansion, adidas will generate substantial cumulative free cash
flow. The majority of this - between € 8 billion and € 9 billion for the five-year period - will be distributed
to you, our shareholders, through regular dividend payouts in a range of between 30% and 50% of net
income from continuing operations, complemented with share buybacks.
POSITIVE OUTLOOK FOR 2022
I look into 2022 with optimism. We are well prepared to execute our strategic priorities diligently, our
product line-up looks great, and we will impactfully demonstrate our brand attitude of 'Impossible is
Nothing' throughout the entire year. Consequently, we expect currency-neutral net sales to grow at a rate
between 12% and 14% and our gross margin is projected to increase to a level of between 51.5% and
52.0%. Driven by the strong sales growth and the gross margin improvement, we expect an operating
margin of between 10.5% and 11.0%. We will grow the bottom line significantly faster than the top line. As
a result, net income from continuing operations is anticipated to increase to a level of between € 1.8 billion
and € 1.9 billion, making 2022 another successful year for adidas.
TOGETHER WE ARE ADIDAS
2021 threw a variety of challenges at us. I am proud that we mastered these challenges, launched a
compelling new strategy, and delivered strong financial results. My heartfelt thanks go out to all our
61,400 employees around the world. They are the ones that serve and delight our consumers every single
day by creating, selling, and delivering our products. They are the ones that show incredible commitment,
passion, and resilience in times of continued uncertainty. I am extremely proud to be part of this winning
team. Together, we are adidas - the best sports brand in the world.
Sincerely yours,
Kamper
Kasper Rorsted
CEO
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adidas
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born on December 27, 1969
'OWN THE GAME' STRATEGY PUTS THE CONSUMER FIRST
As for adidas, we will now completely focus our efforts on executing our 'Own the Game' strategy, which
we launched in March 2021. 'Own the Game' is a growth and investment strategy, which will lead adidas to
future success. Our strategy is deeply rooted in sport, puts the consumer at the heart of everything we do,
and is being brought to life by our people. Our strategic focus is on increasing the credibility of the adidas
brand, elevating the experience for consumers and pushing the boundaries in Sustainability. To
successfully deliver on this strategy, we will invest consistently into our people and our unique workplace.
This includes furthering our efforts to ensure there is a level playing field for all, as we continue our
Diversity, Equity, and Inclusion journey. Investments into product development, marketing, sponsoring,
and digitalization are also set to increase strongly over this strategy cycle.
INCREASE BRAND CREDIBILITY
'Own the Game' is designed to significantly increase sales and profitability, as well as gain market share
over the coming years. More than 95% of sales growth is expected to come from five strategic categories:
Football, Running, Training, Outdoor, and Lifestyle. We will increase brand credibility by sharpening the
edges of adidas on both ends of the spectrum - in sport and in lifestyle. With the introduction of adidas
Sportswear as a new consumer proposition, we are addressing the growing relevance of the 'athleisure'
trend toward sport-inspired leisurewear.
BUILD BEST-IN-CLASS EXPERIENCES
Our operating model is evolving to build direct relationships with consumers and offer them best-in-class
experiences in our stores and online. As a result, our company's direct-to-consumer business is projected
to account for around half of the company's total net sales by 2025 and generate more than 80% of the
targeted top-line growth. Our e-commerce revenues are forecast to double to between € 8 billion and
€ 9 billion.
From a market perspective, our primary focus will be on EMEA, North America, and Greater China.
Overall, these three strategic markets are expected to account for around 90% of sales growth by 2025.
Member of the Supervisory Board since May 9, 2019
LEAD IN SUSTAINABILITY
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adidas
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TO OUR SHAREHOLDERS
Last, but by no means least, we will expand our leadership position in sustainability. For over two decades,
sustainability has been an integral part of adidas' philosophy. A philosophy rooted in our company's
purpose Through sport, we have the power to change lives.' In the years to come, we will significantly
expand our commitment to sustainability and move to a comprehensive consumer-facing program with a
sustainable offering at scale: nine out of ten adidas articles will be made from sustainable materials by
2025.
Mandates held in foreign subsidiaries of Bertelsmann SE & Co. KGaA:
Member of the Supervisory Board, Majorel Group Luxembourg S.A., Luxembourg, Luxembourg4
Chief Executive Officer, RTL Group S.A., Luxembourg, Luxembourg
ANNUAL REPORT 2021
1
adidas
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* Employee representative.
8 Until December 31, 2021.
Member of the Supervisory Board, Wacker Chemie AG, Munich, Germany
Membership in other statutory supervisory boards in Germany:
State District Manager of the Industrial Union IG BCE, State District Bavaria, Munich, Germany
Member of the Supervisory Board since May 9, 2019
born on March 24, 1965
residing in Glashütten, Germany
BEATE ROHRIG*
Member of the Supervisory Board, Plastic Omnium Automotive Exteriors GmbH, Munich, Germany
Deputy Chairman of the Supervisory Board, CeramTec GmbH, Plochingen, Germany
Membership in other statutory supervisory boards in Germany:
District Manager of the Industrial Union IG Bergbau, Chemie, Energie (IG BCE), District of Nuremberg,
Nuremberg, Germany
2
3
4
5
residing in Oberreichenbach, Germany
MICHAEL STORL*
Director Finance - Strategy and Programs, adidas AG, Herzogenaurach, Germany
Member of the Supervisory Board since May 9, 2019
born on April 16, 1977
residing in Wilhelmsdorf, Germany
FRANK SCHEIDERER*
CEO of Avanti Acquisition Corp., New York, USA
Membership in comparable domestic and foreign controlling bodies of commercial enterprises
-
Member of the Supervisory Board since June 15, 2016
born on January 19, 1961
residing in London, United Kingdom
NASSEF SAWIRIS
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Executive Chairman and Member of the Board of Directors, OCI N.V., Amsterdam, The Netherlands
Membership in comparable domestic and foreign controlling bodies of commercial enterprises:
born on August 19, 1958
Member of the Supervisory Board since May 13, 2004
ROLAND NOSKO*
Member of the Supervisory Board since May 9, 2019
1
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3
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residing in Wolnzach, Germany
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THOMAS RABE
CHAIRMAN
residing in Berlin, Germany
born on August 6, 1965
Member of the Supervisory Board since May 9, 2019
Chairman and Chief Executive Officer, Bertelsmann Management SE, Gütersloh, Germany
SUPERVISORY BOARD
ROSWITHA HERMANN*8
Project Manager Creative Direction, adidas AG, Herzogenaurach, Germany
born on December 27, 1962
Self-employed entrepreneur
Member of the Supervisory Board since May 8, 2014
born on October 16, 1964
residing in Großenbrode, Germany
KATHRIN MENGES
Chief Executive Officer, SAP SE, Walldorf, Germany
residing in Erlangen, Germany
born on May 4, 1980
Member of the Supervisory Board since August 11, 2020
CHRISTIAN KLEIN
CEO Jackie Joyner-Kersee Foundation and Motivational Speaker, East St. Louis, Illinois, USA
Member of the Supervisory Board since May 12, 2021
born on March 3, 1962
residing in Ballwin, Missouri, USA
JACKIE JOYNER-KERSEE
Director Projects, adidas AG, Herzogenaurach, Germany
Member of the Supervisory Board since May 9, 2019
residing in Mühlhausen, Germany
ANNUAL REPORT 2021
adidas
1
2
GROUP MANAGEMENT REPORT -
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4
3
All financial systems used are protected against malpractice by means of appropriate authorization
concepts, approval concepts and access restrictions. Access authorizations are reviewed on a regular
basis and updated if required. The risk of data loss or outage of accounting-related IT systems is
minimized through central control and monitoring of virtually all IT systems, centralized management of
change processes and regular data backups.
The accounting for adidas companies is conducted either locally or by our Global Business Services.
Virtually all the IT Enterprise Resource Planning (ERP) systems used are based on a company-wide
standardized SAP system. Following approval by the Finance Director of the respective adidas company,
the local financial statements are transferred to a central consolidation system based on SAP SEM-BCS.
At the corporate level, the regularity and reliability of the financial statements prepared by adidas
companies are reviewed by the Accounting and Controlling departments. These reviews include automated
validations in the system as well as the creation of reports and analyses to ensure data integrity and
adherence to the reporting logic. In addition, differences between current-year and prior-year financial
data as well as budget figures are analyzed on a market level. If necessary, adidas seeks the opinion of
independent experts to review business transactions that occur infrequently and on a non-routine basis.
After ensuring data plausibility, the centrally coordinated and monitored consolidation process begins,
running automatically on SAP SEM-BCS. Controls within the individual consolidation steps, such as those
relating to the consolidation of debt or of income and expenses, are conducted both manually and system-
based, using automatically created consolidation logs. Any inadequacies are remedied manually by
systematically processing the individual errors as well as differences and are reported back to the adidas
companies. After finalization of all consolidation steps, all items in the consolidated income statement and
in the consolidated statement of financial position are analyzed with respect to trends and variances.
Unless already otherwise clarified, the adidas companies are asked to explain any identified material
deviations.
All adidas companies are required to comply with the consolidated financial reporting policies (Finance
Manual), which are available to all employees involved in the financial reporting process through the
company-wide intranet. We update the Finance Manual on a regular basis, dependent on regulatory
changes and internal developments. Changes to the Finance Manual are promptly communicated to all
adidas companies. Clear policies serve to limit employees' scope of discretion with regard to recognition
and valuation of assets and liabilities, thus reducing the risk of inconsistent accounting practices within
the company. We aim to ensure compliance with the Finance Manual through continuous adherence to the
four-eyes principle in accounting-related processes. In addition, the local manager responsible for the
accounting process within the respective company and the respective local Managing Director confirm
adherence to the Finance Manual and to IFRS in a signed representation letter to the Accounting
department semi-annually.
limitations of IcoFR, even with appropriate and functional systems absolute certainty about the
effectiveness of IcoFR cannot be guaranteed.
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4
3
2
ANNUAL REPORT 2021
1
adidas
adidas
1
2
Significant
Risks related to the coronavirus pandemic
Change
(2020 rating)
Potential
impact
Risk categories
CORPORATE RISKS OVERVIEW
This report includes an explanation of financial and non-financial risks that we deem to be most relevant
to the achievement of the company's objectives in 2022 and beyond. We still consider risks related to the
coronavirus pandemic material to the success of our company. In this report, we therefore present a
holistic assessment of the risks resulting from the pandemic. In addition, according to our risk
assessment methodology, macroeconomic, socio-political, regulatory and currency risks; risks related to
consumer demand and product offering; business partner risks; personnel risks; risks related to tax and
customs regulations; risks related to the Reebok divestiture; litigation risks; and IT and cyber security
risks are classified as material. The risks overview table illustrates the assessment of all risks described
below.
ILLUSTRATION OF RISKS
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Macroeconomic, sociopolitical, regulatory, and currency risks
197
The internal control and risk management system relating to the consolidated financial reporting process
of the company represents a process embedded within the company-wide corporate governance system. It
aims to provide reasonable assurance regarding the reliability of the company's external financial
reporting by ensuring company-wide compliance with statutory accounting regulations, in particular the
International Financial Reporting Standards (IFRS) and internal consolidated financial reporting policies
(Finance Manual). We regard the internal control and risk management system as a process based on the
principle of segregation of duties, encompassing various sub-processes in the areas of Accounting,
Controlling, Taxes, Treasury, Planning, Reporting and Legal, focusing on the identification, assessment,
mitigation, monitoring, and reporting of financial reporting risks. Clearly defined responsibilities are
assigned to each distinct sub-process. In a first step, the internal control and risk management system
serves to identify, assess, limit and control risks identified in the consolidated financial reporting process
that might result in the consolidated financial statements not being compliant with internal and external
regulations.
Other¹
Behavioral
Competition
Malfeasance, including conflicts of interest and corruption
Financial, including theft
POTENTIAL COMPLIANCE VIOLATIONS
FINANCIAL REVIEW
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3
2
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1 Includes payroll issues, intellectual property, and leaks of confidential information, inter alia.
Internal Control over Financial Reporting (ICOFR) serves to provide reasonable assurance regarding the
reliability of financial reporting and compliance with applicable laws and regulations. To monitor the
effectiveness of IcoFR, the Group Policies and Internal Controls department and the Internal Audit
department regularly review accounting-related processes. Additionally, as part of the year-end audit, the
external auditor assesses the effectiveness of selected internal controls, including IT controls. The Audit
Committee of the Supervisory Board also monitors the effectiveness of IcoFR. However, due to the
REPORTING OF POTENTIAL COMPLIANCE VIOLATIONS
Named contact to hotline
DESCRIPTION OF THE MAIN FEATURES OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM PROCESS
PURSUANT TO § 315 SECTION 4 GERMAN COMMERCIAL CODE (HANDELSGESETZBUCH-HGB)
The company's Chief Compliance Officer regularly reports to the Executive Board on the further
development of the compliance program and on major compliance cases. In addition, the Chief
Compliance Officer reports to the Audit Committee on a regular basis. In 2021, the Chief Compliance
Officer attended four meetings of the Audit Committee of the Supervisory Board to report on the further
development of the compliance program, major compliance cases, and other relevant compliance topics.
The Compliance department has revised its process for detecting compliance risks and included new
risks, as well as captured some risk areas (e.g., e-commerce) more clearly. In addition, the description of
the CMS has been sharpened.
23%
30%
47%
2021
119
294
0
21
51
2021
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5
Compliance Officer and other
Anonymous contact to hotline
Significant
Likelihood
30% - 50%
30% - 50%
Change
(2020 rating)
ANNUAL REPORT 2021
adidas
199
Major sports events could take place without people in attendance or even be canceled completely.
This would result in sales and profit shortfalls and, more importantly, negatively affect our ability to
showcase our brands and new product innovations.
Supply chain disruptions, such as the closure of factories of our manufacturing partners or the closure
of ports in critical sourcing countries, could cause production or delivery delays and negatively impact
our ability to fulfill consumer demand.
Closures of distribution centers would negatively impact the company's ability to fulfill orders by
consumers or retail partners and lead to sales and profit shortfalls, order cancellations, or excess
inventory.
Widespread lockdowns and containment measures across all our markets might result in traffic
declines in our own and our retail partners' stores or even require those stores to close. This could
have a noticeable negative impact on the company's financial performance as seen in 2020 and 2021.
The ongoing coronavirus pandemic could substantially impact the company's success in multiple ways, in
particular in the short term. Risks related to the coronavirus pandemic include but are not limited to:
RISKS RELATED TO THE CORONAVIRUS PANDEMIC
< 15%
Significant
↑ (< 15%)
↓(15% - 30%)
< 15%
Significant
Risks related to the competitive and retail environment
Compliance risks
1
30% - 50%
2
4
200
To mitigate the risk related to fluctuations in currency exchange rates, we utilize a centralized currency
risk management system and hedge currency needs for projected sourcing requirements on a rolling
basis up to 24 months in advance. In rare instances, hedges are contracted beyond the 24-months horizon.
‣ SEE TREASURY
To mitigate these macroeconomic, sociopolitical, and regulatory risks, adidas strives to balance sales
across key regions and also between developed and emerging markets. We continuously monitor the
macroeconomic, political, and regulatory landscape in all our key markets to anticipate potential problem
areas, so that we can quickly adjust our business activities accordingly upon any change in conditions.
Potential adjustments may be a reallocation of manufacturing of our products to alternative countries, a
reallocation of investments to alternative, more attractive markets, changes in product prices, closure of
our own-retail stores, more conservative product purchasing, tight working capital management, and an
increased focus on cost control.
Growth in the sporting goods industry is highly dependent on consumer spending and consumer
confidence. Economic downturns, inflation, financial market turbulence, currency exchange rate
fluctuations, and sociopolitical factors such as military conflicts, changes of government, civil unrest,
pandemics, nationalization, expropriation, or nationalism, in particular in regions where adidas is strongly
represented, could therefore negatively impact the company's business activities and top- and bottom-line
performance. Currency risks are a direct result of multi-currency cash flows within the company, in
particular the mismatch of the currencies required for sourcing our products versus the denominations of
our sales. Furthermore, translation impacts from the conversion of non-euro-denominated results into
the company's functional currency, the euro, might lead to a material negative impact on our company's
financial performance. In addition, substantial changes in the regulatory environment (e.g., trade
restrictions, economic and political sanctions, regulations concerning product compliance, environmental,
and climate protection regulations) could lead to potential sales shortfalls or cost increases. ▸ SEE NOTE 28
MACROECONOMIC, SOCIOPOLITICAL, REGULATORY, AND CURRENCY RISKS
To mitigate the effects of the ongoing coronavirus crisis, adidas is taking numerous measures. We are
further shifting our focus to our own and our partners' e-commerce and other digital channels with
targeted consumer marketing, exclusive product launches and prioritized supply chain management. With
flexible shifts in our product purchasing in close alignment with our manufacturing partners, a disciplined
sell-in, and the conscious use of our factory outlets, we reduce negative margin effects and avoid excess
inventory. By securing alternative freight capacities and adjusting planning processes for early shipments,
we mitigate the effect of container scarcity and port congestions. Strict cash flow and cost management
help us to ensure the financial stability of our company. Furthermore, adidas is safeguarding the health of
its employees and other stakeholders through strict measures. For example, we have increased our
workplace flexibility and given our employees the possibility to work remotely, depending on the
development of infection rates in the respective countries.
Volatile global financial markets might negatively affect the company's access to capital in the future.
Third-party business partners may partially or completely fail to meet their contractual financial
obligations, which could result in higher loss allowances and increased write-offs for accounts
receivable.
Lower-than-expected sales and profits in our own retail stores may result in higher impairment
charges or inventory allowances and negatively affect the company's bottom line.
Wholesale customers may cancel purchase orders or return product to adidas, which could result in
excess inventory and higher inventory allowances.
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5
3
(Significant)
Medium
Project risks
Significant
Risks related to media and stakeholder activities
Hazard risks
IT and cyber security risks
Litigation risks
Risks related to Reebok divestiture
Risks related to tax and customs regulations
Personnel risks
15% - 30%
Significant
Business partner risks
↑ (15% - 30%)
30% - 50%
Significant
Risks related to consumer demand and product offering
↑ (High)
15% - 30%
Significant
15% - 30%
30% - 50%
Medium
30% - 50%
Medium
↑ (< 15%)
15% - 30%
↑ (< 15%)
adidas
(no risk in 2020)
(30%-50%)
15% - 30%
15% - 30%
↑ (High)
↓ (Significant)
High
Significant
(no risk in 2020)
Significant
↑ << 15%)
196
198
Detection: adidas has whistleblowing procedures in place to ensure timely detection of potential
infringements of statutory regulations or internal guidelines. Employees can report compliance
concerns internally to their supervisor, the Chief Compliance Officer, Regional Compliance Managers
or Local Compliance Officers, the relevant HR Manager, or, where applicable, the Works Council.
Employees can also report externally via the independent, confidential Fair Play hotline and website,
which also allow for anonymous complaints. The Fair Play hotline and website are available at all times
worldwide, including the services of interpreters, if required. They are promoted digitally and with
posters to reach all our locations around the world. The company's continuous work to identify
potential compliance violations accelerated in 2021 through several initiatives related to the Global
'Diversity, Equity, and Inclusion' ('DEI') Program.
5
< 15%
15% - 30%
30% - 50%
50%-85%
> 85%
Likelihood
RISK EVALUATION CATEGORIES
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3
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ANNUAL REPORT 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
1
Material Risks
Financial € 1 million -
equivalent¹ € 10 million
Judicial investigations
leading to
imprisonment of
employees and/or
business interruption.
Harm to employees
or third parties that
leads to hospitali-
zation.
€ 35 million -
€ 60 million
Medium impact on
reputation, e.g.,
rejection by specific
consumer groups &
termination or
renegotiation of
partnerships & profit
warnings.
Medium
employees.
Judicial investigations
leading to no direct
sanctions but requiring
internal corrective
actions, including
dismissal of
Minor harm to
employees or third
parties that requires
medical treatment.
Low impact on
reputation, e.g., strong
increase of negative
consumer reactions
globally & impaired
bargaining power with
partners & weaker
results in important
non-financial external
ratings.
€10 million -
€ 35 million
Low
Internal corrective
actions required.
Minor harm to
employees or third
parties that doesn't
require medical
treatment.
Marginal impact on
reputation, e.g.,
growing negative
consumer reactions
locally & slightly
impaired bargaining
power with partners &
lower ranking in
employer ratings.
equivalent
Qualitative
Marginal
adidas
192
The potential impact is evaluated using five categories: marginal, low, medium, high, and significant.
These categories represent financial or equivalent non-financial measurements. The financial
measurements are based on the potential effect on the company's net income and cash flow. Non-
financial measurements used are the degree to which the company's reputation, brand image, and
employer value proposition are affected. Moreover, the degree of damage to people's health and safety
and the degree of legal and judicial consequences at a corporate and personal level can be considered.
Likelihood represents the possibility that a given risk or opportunity may materialize with the specific
impact. The likelihood of individual risks and opportunities is evaluated on a percentage scale divided
into five categories.
→ Reporting
Monitoring
Risk management policy and methodology
Risk Management
Overall responsibility and risk acceptance decision related to material risks
Executive Board
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5
Effectiveness assessment
Supervisory Board
RISK AND OPPORTUNITY MANAGEMENT SYSTEM
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⇒ Identification
Evaluation
Risk Owner
Handling
←
According to our methodology, risks and opportunities are evaluated by looking at two dimensions: the
potential impact and the likelihood that this impact materializes. Based on this evaluation, we classify
risks and opportunities into three categories: minor, moderate, and major.
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5
4
High
3
1
ANNUAL REPORT 2021
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191
Risk and opportunity evaluation: We assess identified risks and opportunities individually according to
a systematic evaluation methodology, which allows adequate prioritization as well as allocation of
resources. Risk and opportunity evaluation is part of the responsibility of the Risk Management
department supported by subject matter experts as well as internal and external data. The Risk
Management department also conducts assessments with the Executive Board members and senior
leaders to validate the evaluation of risks and opportunities.
Risk and opportunity identification: adidas continuously monitors the macroeconomic environment
and developments in the sporting goods industry as well as internal processes to identify risks and
opportunities as early as possible. On a semi-annual basis, the Risk Management department
conducts a survey with all members of the 'Core Leadership Group' ('CLG'), 'Extended Leadership
Group' ('ELG'), and 'Global High Potential Group' ('GHIPO') to ensure an effective bottom-up
identification of risks and opportunities. Risk Management has also defined 25 categories to help
identify risks and opportunities in a systematic way. In addition, adidas uses various instruments in the
risk and opportunity identification process, such as primary qualitative and quantitative research
including trend scouting and consumer surveys as well as feedback from our business partners. These
efforts are supported by global market research and competitor analysis. Through this process, we
seek to identify the markets, categories, consumer target groups, and product styles that show the
most potential for future growth at a local and global level. Equally, our analysis focuses on those
areas that are at risk of saturation or exposed to increased competition or changing consumer tastes.
Furthermore, as part of our identification process and following the 'Task Force on Climate-related
Financial Disclosures' ('TCFD') framework, we monitor physical risks related to climate change as well
as risks and opportunities resulting from the transition to a low-carbon economy. Our risk and
opportunity identification process is however not only limited to external risk factors or opportunities;
it also includes an internal perspective that considers company culture, processes, projects, human
resources, and compliance aspects.
Response: Appropriate and timely response to compliance violations is essential. The Chief
Compliance Officer leads all investigations in cooperation with an established team of Regional
Compliance Managers and a global network of Local Compliance Officers. We track, monitor, and
report potential incidents of non-compliance worldwide. In 2021, we recorded 485 potential compliance
violations (2020: 414). Most importantly, insights gained from the investigation of past violations are
used to continuously improve the CMS. Where necessary, we react promptly to confirmed compliance
violations, through appropriate and effective sanctions ranging from warnings to termination of
employment contracts. In addition, in 2021, the Compliance team strengthened its relationship with the
HR organization, a key partner in many compliance matters, especially those related to harassment
and discrimination.
2
€ 60 million -
Our risk and opportunity management process comprises the following steps:
Serious, life-changing
harm to employees or
third parties.
reduce and mitigate the risk of financial losses or damage caused by non-compliant conduct,
support the achievement of qualitative and sustainable growth through good corporate governance,
The company's CMS is based on the OECD Principles of Corporate Governance. It refers to the OECD
Guidelines for Multinational Enterprises and is designed to:
The adidas Chief Compliance Officer oversees the company's Compliance Management System (CMS). We
see compliance as all-encompassing, spanning all business functions throughout the entire value chain.
Our central Compliance team works closely with Regional Compliance Managers and Local Compliance
Officers to conduct a systematic assessment of key compliance risks on a yearly basis. In addition, the
central Compliance team regularly conducts compliance reviews within selected entities. Due to
widespread pandemic-related travel restrictions in 2021, the reviews have been postponed to 2022.
We consider compliance with the law as well as with external and internal regulations to be imperative.
The Executive Board sets the tone from the top. Every employee is required to act ethically and in
compliance with the law as well as with internal and other external regulations while executing the
company's business. We believe adidas Fair Play will prevent the majority of potential compliance issues.
For that reason, we have specific measures to detect and respond to any concerns. We realize, however,
that no compliance system can eliminate all violations.
COMPLIANCE MANAGEMENT SYSTEM (ADIDAS FAIR PLAY)
Material changes in previously reported risks and opportunities or newly identified material risks and
opportunities as well as any issues identified that, due to their material nature, require immediate
reporting, are also reported outside the regular half-yearly reporting stream on an ad hoc basis to the
Executive Board.
The Executive Board presents in collaboration with Risk Management the final risk and opportunity
assessment results to the Audit Committee of the Supervisory Board.
Based on the Executive Board's decision, Risk Management creates the final risk and opportunity
report that is also shared with the 'CLG.'
Risk Management provides a consolidated report to the Executive Board summarizing the results of
both bottom-up and top-down assessment as well as the risk and opportunity aggregation to highlight
a threat to the company's rating and going concern. The Executive Board reviews the report, jointly
agrees on a company assessment of risks and opportunities and decides if Risk Owners are required to
take further action.
Risk Management discusses the assessment of substantial risks and opportunities with the members
of the Executive Board and leaders directly reporting to them. The Executive Board members and their
direct reports validate the assessment of risks and opportunities in their respective area of
responsibility ('top-down assessment').
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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protect and further enhance the value and reputation of the company and its brand through compliant
conduct, and
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195
The Fair Play Code of Conduct and our CMS are organized around three pillars: prevent, detect, and
respond.
€ 100 million
High impact on
reputation, e.g..
regional consumer
boycotts & termination
of key partnership &
downgrade of credit
and analyst ratings &
temporary local
employee strikes.
Prevention: The Compliance team regularly reviews and updates the CMS as necessary. In addition to
the revised Fair Play Code of Conduct mentioned above, we also introduced an Anti-Harassment and
Anti-Discrimination Policy in September 2020, emphasizing adidas' renewed initiative to prevent and
fight harassment and discrimination in the workplace. Management also shares compliance-related
communication, and the Compliance department provides mandatory training to all employees globally
during onboarding and in regular, repeated cycles. The Compliance team and partners also provide
targeted in-person compliance training as appropriate with senior management and newly promoted
or hired senior executives across the globe in order to further enhance the compliance 'tone from the
top,' as well as the 'tone from the middle.' We closely monitor the completion rates for these training
measures and continuously update our web-based training. Also in 2021, the company launched
trainings on several topics, including information security; procurement, and 'Diversity, Equity, and
Inclusion' (DEI). We also focused on strengthening cooperation between the Compliance team and the
Internal Audit, the Group Policies and Internal Controls, and the Risk Management departments.
➤ ADIDAS-GROUP.COM/S/CODE-OF-CONDUCT
The adidas Fair Play Code of Conduct is accessible on our website, includes guidelines for employee
behavior in everyday work, and is applicable globally for all business areas. In 2020, we revised the Code of
Conduct to ensure it remains up to date and reflects our business environment.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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preserve diversity by fighting harassment and discrimination.
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When evaluating risks and opportunities, we also consider the speed of materialization (velocity). In
this respect, we differentiate in which financial year risks and opportunities could occur. We consider
both gross and net risk in our risk assessments. While the gross risk reflects the inherent risk before
any mitigating action, the net risk reflects the residual risk after all mitigating action. On the one hand,
this approach allows for a good understanding of the impact of mitigating action taken; on the other
hand, it provides the basis for scenario analysis. Our assessment of risks presented in this report only
reflects the net risk perspective. We measure the actual financial impact of the most relevant risks and
opportunities that materialized against the original assessment on a yearly basis ('back-testing'). In
1 Based on net income and cash flow.
Potential impact
Major
Moderate
Minor
Litigation (including
class action),
imprisonment of Board
member(s), monitorship
and/or cessation of
business operations
due to court order.
Fatalities of employees
or third parties.
Significant impact on
reputation, e.g..
persisting global
consumer boycott &
termination of multiple
key partnerships &
exclusion from key
stock indices &
long-lasting global
employee strikes.
> € 100 million
2
Significant
Judicial investigations
leading to
imprisonment of senior
leadership and/or
significant business
interruption including
due to ongoing
investigations.
ANNUAL REPORT 2021
2
Risk classification:
4
3
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Risk Management identifies risks and opportunities (with a potential effect on net income and cash
flow higher than € 1 million) by conducting a survey of 'CLG,' 'ELG,' and 'GHIPO' members as well as
utilizing available information concerning the internal and external environment of the company. Risk
Management evaluates, consolidates, and aggregates the identified risks and opportunities ("bottom-
up assessment').
Risk and opportunity monitoring and reporting: Our risk and opportunity management system aims to
increase the transparency of risks and opportunities. As both risks and opportunities are subject to
constant change, Risk Owners not only monitor developments but also the adequacy and effectiveness
of the current risk-handling strategy on an ongoing basis.
Risk and opportunity handling: Risks and opportunities are treated in accordance with the company's
risk and opportunity management principles as described in the Risk Management Policy. Risk Owners
are in charge of developing and implementing appropriate risk-mitigating action within their area of
responsibility. In addition, the Risk Owners need to determine a general risk-handling strategy for the
identified risks, which is either risk avoidance, risk reduction with the objective to lower impact or
likelihood, risk transfer to a third party or risk acceptance. The decision on the implementation of the
respective risk-handling strategy also takes into account the costs in relation to the benefit of any
planned mitigating action if applicable. The Risk Management department works closely with the Risk
Owners to monitor the continuous progress of planned mitigating action and assess the viability of
already implemented mitigating action. Depending on the risk class determined by the risk and
opportunity evaluation, the authority to make decisions to accept risks resides with the Executive
Board, leaders reporting directly to an Executive Board member and the operational management on
the next hierarchical level. The decision to accept material risks without taking additional mitigating
action can only be made by the entire Executive Board. In its decision-making process, the Executive
Board takes into account the relationship between risk and opportunity profile (i.e., the company's
aggregated risk position) and risk appetite as well as risk capacity. To support the Executive Board, the
Risk Management department defined clear thresholds for the likelihood that the company's
aggregated risk exceeds the defined risk appetite and risk capacity. The company's risk appetite must
not be exceeded with a likelihood of at least 95%; the company's risk capacity must not be exceeded
with a likelihood of at least 99%.
We aggregate risks and opportunities using a stochastic simulation (Monte Carlo simulation) to
determine the company's risk and opportunity profile (i.e., the company's aggregated risk position),
considering interdependencies of individual risks and opportunities. To identify a potential threat to the
company as a going concern, we compare the risk and opportunity profile to the company's defined
risk capacity and determine the likelihood that the aggregated risk exceeds the risk capacity; to identify
a potential threat to the company's rating, we compare the risk and opportunity profile to the defined
risk appetite and determine the likelihood that the aggregated risk exceeds the risk appetite.
Regular risk reporting takes place half-yearly and consists of a five-step reporting stream:
this way, we ensure continuous monitoring of the accuracy of risk and opportunity evaluations across
the
company, , which enables us to continuously improve evaluation methodology based on our findings.
5
TO OUR SHAREHOLDERS
In assessing the potential effect from opportunities, each opportunity is appraised with respect to
viability, commerciality and potential risks. This approach is not only applied to longer-term strategic
prospects but also to shorter-term tactical and opportunistic initiatives at the corporate level as well
as at the market and brand level. In contrast to the risk evaluation, only the net perspective exists for
assessing opportunities.
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
1
to increase to a level of
between 51.5%
and 52.0%
4.0%
Operating margin
0.7pp
to increase to a level of
between 9%
and 10%
to increase to a level of
between 9.5%
and 10.0%
9.4%
5.3pp
Net income from
461
to increase to a level of
between 10.5%
and 11.0%
(€ in millions)
to decrease to a level
below 20%
to increase to a level of
between € 1.25 billion
and € 1.45 billion
to increase to a level of
between € 1.4 billion
and € 1.5 billion
1,492
223%
to increase to a level of
between € 1.8 billion
and € 1.9 billion
Average operating
25.3%
50.7%
working capital
continuing operations
to increase at a rate
between 12%
and 14%
COMPANY TARGETS VERSUS ACTUAL KEY METRICS
to increase
up to 20%
to increase to a level of
between 50.5%
and 51.0%
2
20.0%
3
4
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
MANAGEMENT ASSESSMENT OF PERFORMANCE,
RISKS AND OPPORTUNITIES, AND OUTLOOK
ASSESSMENT OF PERFORMANCE VERSUS TARGETS
We communicate our financial targets on an annual basis. We also provide updates throughout the year as
appropriate. In 2021, financial results especially in Greater China and Asia-Pacific were still impacted by
the coronavirus pandemic. On the other hand, EMEA and North America were able to offset some of these
challenges. As there were still covid-19-related lockdowns in some countries, our digital platforms
facilitated consumer engagement, seamless personal experiences and brand building even in times of
social distancing. At the same time, we saw increased traffic in our physical stores compared to 2020 due
to fewer store closures and less restrictive covid-19 regulation. Moreover, global trends such as the
increasing penetration of sportswear ('athleisure') and rising awareness for health and wellness further
supported adidas' development throughout the year. As a result, we delivered top- and bottom-line results
which were in line with the guidance provided at the beginning of the year. SEE ECONOMIC AND SECTOR DEVELOPMENT
2020
Results
2021
2021
Initial Targets²
Updated Targets³
2021
Results
2022
Outlook
Currency-neutral
(13%)
sales development
to increase at a
mid- to high-teens rate
50.0%
Gross margin
to increase to a level of
around 52%
16%
(5.3pp)
2021
in % of net sales4
SEE INTERNAL MANAGEMENT SYSTEM
OVERVIEW OF CURRENT STATUS AND OBJECTIVES FOR SELECTED STRATEGIC KPIS
DTC share
E-commerce revenues
38%
Objective 2025
to increase to around
50% of net sales
€ 3.942 billion
to increase to a level of between
€ 8 billion and € 9 billion
Member base in membership
program
Sustainable article offering¹
Share of women in management
240 million members
69%
37%
positions
1 Meaning that they are - to a significant degree - made with environmentally preferred materials.
to increase to around
500 million members
9 out of 10 articles to be sustainable
to increase to more than 40%
ASSESSMENT OF OVERALL RISKS AND OPPORTUNITIES
Our Risk Management team aggregates all risks and opportunities identified through the half-yearly risk
and opportunity assessment process to determine the company's risk and opportunity profile (i.e., the
company's aggregated risk position). Results from this process are analyzed and reported to the Executive
Board accordingly. The Executive Board discusses and assesses risks and opportunities on a regular basis
and takes into account the relationship between risk and opportunity profile (i.e., the company's
aggregated risk position) and risk appetite as well as risk capacity in its decision-making. Compared to the
prior year, our assessment of certain risks and opportunities has changed in terms of likelihood of
occurrence and/or potential financial impact. Our risk and opportunity aggregation using a Monte-Carlo
simulation determined that the company's aggregated risk does not exceed the company's risk capacity
threshold with a likelihood of at least 99%. Therefore, we do not foresee any material jeopardy to the
viability of the company as a going concern. SEE RISK AND OPPORTUNITY REPORT
210
ANNUAL REPORT 2021
Beyond our financial performance, we also actively monitor strategic KPIs in order to track the progress of
our strategy 'Own the Game.' These strategic KPIs include the share of our direct-to-consumer business,
the development of our e-commerce revenues, the number of members in our membership program,
the share of our sustainable article offering as well as the share of women in management positions in our
organization.
to decrease to a level
below 20%
‣ SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS
supply chain costs with an increase in our operating overhead efficiency. Net income from continuing
operations increased 223% to € 1.492 billion, and thus exceeded our initial guidance of an improvement to
a level of between € 1.25 billion and € 1.45 billion. SEE INCOME STATEMENT
Capital expenditure
442
(€ in millions) 4,5
to increase to a level of
around € 700 million
to increase to a level of
667
up to € 900 million
1 Figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
2 As published on March 10, 2021.
3 As published on August 5, 2021. For Gross margin as of November 10, 2021.
4 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
5 Excluding acquisitions and leases.
In 2021, revenues increased 16% on a currency-neutral basis. The improvement was driven by increases
across all market segments and was in line with the guidance provided at the beginning of the year. Sales
grew significantly faster than initially expected in EMEA, North America and Latin America. At the same
time, revenues in Greater China and Asia-Pacific increased below our initial projections due to the impact
from covid-related restrictions as well as - in the case of Greater China - the challenging market
environment and natural disasters. Gross margin ended the year at 50.7%, reflecting an increase of
0.7 percentage points versus the prior year level. While higher full-price sales, lower inventory allowances
as well as the non-recurrence of last year's purchase order cancellation costs drove the increase,
unfavorable currency developments and a less favorable channel and market mix weighed on the gross
margin development in 2021. In addition, significantly higher supply chain costs as a result of pandemic-
related challenges in global logistics markets put further pressure on our gross margin. As a result, the
gross margin came in below our initial expectations. Our operating margin increased 5.3 percentage
points to 9.4%, in line with our guidance provided in March as we were able to compensate the spike in
209
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Average operating working capital as a percentage of sales ended the year 2021 at a level of 20.0%. This
reflects a year-over-year decrease of 5.3 percentage points and is only slightly above the targeted level.
Capital expenditure increased 51% to € 667 million in 2021, in line with our guidance. More than 70% of
these investments were spent on controlled space initiatives as well as on Digital and IT activities.
Controlled space initiatives comprise investments in new or remodeled own-retail or franchise stores as
well as in shop-in-shop presentations of our products in our customers' stores.
1
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203
adidas might be involved in legal disputes and proceedings in different jurisdictions. Legal action taken
against adidas due to the company's use of technologies or other intellectual property that are owned by a
third party may result in the loss of rights to use those technologies or rights, imposed royalty payments,
withdrawal of products from the market, legal costs, or reputational damage. In December 2021, Nike filed
5
LITIGATION RISKS
After completion of the divestiture of Reebok to the new owner, a gradual transfer of assets to the
respective legal successors is taking place. Additionally, adidas must fulfill the contractually agreed
transitional services. This could require additional resources and efforts, cause management distraction,
and result in lower efficiency and higher costs. Furthermore, lower-than-planned income for provided
transitional services could result in higher-than-planned stranded costs.
RISKS RELATED TO REEBOK DIVESTITURE
We seek to manage tax and customs risks in a balanced way that bears an appropriate relationship to the
operating structure, commercial and economic substance, and other business risks. To proactively
manage such risks, we constantly seek expert advice from specialized independent law and tax advisory
firms in areas such as process design, transaction advisory, compliance, and tax or customs audits.
Processes are in place requiring that attention is regularly directed to potential areas of tax or customs
risk (e.g., a quarterly tax risk questionnaire) and the corporate tax and customs teams are involved in
critical business transactions. Compliance with global tax and customs policies and controls is monitored
by the Corporate Tax and Customs teams, internal controls experts and the Internal Audit department. We
closely monitor changes in legislation to properly adopt regulatory requirements regarding customs and
taxes; apply any available and applicable guidance from tax authorities and organizations such as the
OECD, the World Customs Organization and the World Trade Organization; and seek guidance from
individual authorities, as appropriate, which may include requesting tax rulings from a tax authority. In
addition, our internal legal, customs, and tax teams advise our operational management teams to ensure
appropriate and compliant business practices. Our specialized staff receive adequate training for their role
and non-tax, or non-customs staff are made aware of potential tax and customs matters relevant to their
roles. Furthermore, we work closely with customs authorities and governments worldwide to make sure
we adhere to customs and trade regulations at import and export to ensure the availability and obtain the
required clearance of products to fulfill sales demand. SEE SUSTAINABILITY
Numerous laws and regulations regarding customs and taxes as well as changes in such laws and
regulations affect the company's business practices worldwide. Non-compliance with regulations
concerning product imports (including calculation of customs values), intercompany transactions, or
income taxes could lead to substantial financial penalties and additional costs as well as negative media
coverage and therefore reputational damage, for example in case of understatements or underpayments
of corporate income taxes or customs duties. Changes in regulations regarding customs and taxes may
also have a substantial impact on the company's sourcing costs or income taxes. Therefore, we also create
provisions in accordance with the relevant accounting regulations to account for potential disputes with
customs or tax authorities. Increasingly aggressive positions taken by tax and customs authorities in
audits could increase the potential impact of such risks and the likelihood that they materialize. In 2021,
the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting' agreed on a two-pillar solution to
address the tax challenges arising from the digitalization of the economy. Once details are clearly defined,
these new requirements could have a considerable impact on income tax expense.
RISKS RELATED TO TAX AND CUSTOMS REGULATIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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To mitigate these risks, a cross-functional project team has been set up. The team drives the carve-out
process supported by external advisors with profound expertise in comparable transactions. In addition,
dedicated transition teams in our market organizations drive execution of transition activities to enable a
smooth handover of the Reebok business.
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To mitigate these risks, we pursue proactive, open communication and engagement with key stakeholders
(e.g., consumers, media, the financial community, non-governmental organizations, governmental
institutions) on a continuous basis. In addition, we have established clear crisis communication processes
to ensure a quick and effective response to adverse developments. We have also strengthened social
media capabilities and created various digital newsrooms around the globe that enable continuous
monitoring of social media content related to the company's products and activities and allow early
Adverse or inaccurate media coverage on our products or business practices as well as negative social
media discussion may significantly harm the adidas' reputation and brand image, lead to public
misperception of the company's business performance and eventually result in a sales slowdown.
Similarly, certain activities on the part of key stakeholders (e.g., non-governmental organizations,
governmental institutions) could cause reputational damage, distract top management, and disrupt
business activities.
GROUP MANAGEMENT REPORT -
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RISKS RELATED TO MEDIA AND STAKEHOLDER ACTIVITIES
As climate change intensifies, the likelihood and intensity of natural disasters such as storms, floods,
droughts, pandemics, or heat waves increases, and so does adidas' potential risk. In addition, our business
activities could be impacted by port congestions, strikes, riots, or terrorist attacks. All of the above could
damage our offices, stores, or distribution centers or disrupt our operational processes leading to loss of
sales, higher cost, and a decrease in profitability.
HAZARD RISKS
To mitigate these risks, our IT organization proactively engages in system preventive maintenance, service
continuity planning, adherence to IT policies and maintenance of a comprehensive information security
program. Information security governance, data security, security architecture design, continuity
management, and employee awareness programs help us to protect the company adequately. We have
also secured limited insurance coverage for damage resulting from cyber security incidents.
Theft, leakage, corruption, or unavailability of critical information (e.g., consumer data, employee data,
product data) and systems could lead to reputational damage, regulatory penalties, or the inability to
perform key business processes. Key business processes, including product marketing, order
management, warehouse management, invoice processing, customer support, and financial reporting, are
all dependent on IT systems. Significant outages, application failures, or cyber security threats to our
infrastructure, or that of our business partners, could therefore result in reputational damage, regulatory
penalties, or cause considerable business disruption or impact to business-critical data.
IT AND CYBER SECURITY RISKS
Our Legal Intellectual Property and Trademark team is actively defending adidas' intellectual property and
associated rights and regularly exchanging with internal business partners to ensure that designs and
innovations are cleared for use and protected. Furthermore, we engage with qualified external consultants
and lawyers in case legal actions are taken against the company.
two complaints against adidas alleging that adidas footwear (Primeknit) infringes certain U.S. patents
protecting Nike's Flyknit technology. SEE NOTE 38
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
To manage and mitigate these risks, we continuously monitor potential threats and have implemented
business continuity plans including but not limited to fallback solutions for transportation, dynamic
capacity management of containers and carriers, and reallocation of production. We also maintain high
safety standards in all our locations and have secured insurance coverage for property damage and
business interruptions.
TO OUR SHAREHOLDERS
4
3
adidas interacts and enters into partnerships with various third parties, such as athletes, creative
partners, innovation partners, retail partners, or suppliers of goods or services. As a result, the company
is exposed to a multitude of business partner risks.
BUSINESS PARTNER RISKS
To mitigate these risks, identifying and responding to shifts in consumer demand as early as possible is a
key responsibility of our brand and sales organizations and, in particular, of the respective Risk Owners.
Therefore, we utilize extensive primary and secondary research tools as outlined in our risk and
opportunity identification process. By putting the consumer at the center of our decision-making, we
intend to create higher brand advocacy and attract new consumers. We continuously expand our consumer
analytics efforts to read and quickly react to changes in demand or trend shifts. In addition, direct
touchpoints with consumers via our own digital channels, such as the adidas app with the 'Creators Club'
membership program, and direct communication with consumers on social media platforms strengthen
our understanding of consumer preferences and behavior and, as a result, help us to reduce our
vulnerability to changes in demand. Through continuous monitoring of sell-through data and disciplined
product life-cycle management, in particular for our major product franchises, we are able to better detect
demand patterns and prevent excess supply. By leveraging our promotion partnerships and by carefully
orchestrating launch events across markets and channels, we intend to maintain brand desire and
consumer demand at a constantly high level. Utilizing external insights and capabilities in product creation
helps us strengthen our product offering and drive consumer demand, brand desire, market share, and
profitability.
Our success largely depends on our ability to continuously create new, innovative, and sustainable
products. Consumer demand changes can be sudden and unexpected, particularly when it comes to the
more fashion-related part of our business. Therefore, we face a risk of short-term revenue loss in cases
where we are unable to anticipate consumer demand or respond quickly to changes. In addition, creating
and offering products that do not resonate with consumers and our retail partners is a critical risk to the
success of our brands, especially considering our focus on key product franchises. This risk could be
exacerbated if our marketing activities and brand campaigns fail to generate consumer excitement. We
consider this risk most relevant in our key markets Greater China, EMEA, and North America. Even more
critical in the long term, however, are the risks of continuously overlooking new trends and failing to
continuously introduce and successfully commercialize new product innovation.
RISKS RELATED TO CONSUMER DEMAND AND PRODUCT OFFERING
In the context of these and other risks relating to consumer demand, product offering, ongoing
coronavirus pandemic or supply chain challenges, our business in China is of particular importance. As
one of our strategic markets, we are already focusing on this market as part of our 'Own the Game'
strategy. In order to meet the specific needs of consumers in this market, we are pursuing a tailored
approach - as in other strategic focus markets such as North America – that takes up local trends in
products and marketing.
By building on our leading position within the sporting goods industry, we actively engage in supporting
policymakers and regulators in their efforts to liberalize global trade and curtail trade barriers, and to
proactively adapt to significant changes in the regulatory environment.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
We work with strategic partners in various areas of our business (e.g., product creation, manufacturing,
research, and development) or distributors in a few selected markets whose approach might differ from
our own business practices and standards, which could also negatively impact the company's business
performance and reputation. Similarly, failure to maintain strong relationships with our partners could
negatively impact the company's sales and profitability. Risks may also arise from a dependency on
particular partners. For example, the overdependency on a supplier or customer increases the company's
adidas
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We are taking various measures to ensure that we maintain a culture that fosters 'DEI.' Through several
specialized programs, 'DEI' is embedded into our recruitment processes. In 2021, we also launched the
'Global DEI Council' that drives the increase of representation, retention, and advancement of diverse
talents within our global workforce. Furthermore, our workforce takes part in 'DEI' learning programs. We
have also established a global Leadership Framework that is inclusive and articulates the behaviors
expected of our leaders to ensure effective leadership across the company. In addition, we offer a portfolio
of leadership development experiences designed for every level of management across all markets and
functions. To optimize staffing levels and resource allocation (i.e., having the right people with the right
skillsets in the right roles at the right time), we have a dedicated workforce management process in place.
Organizational transformations and reorganizations are supported by change activations with our
leadership teams and organizational design consultancy. We continuously invest in improving employer
branding activities and our global recruiting organization constantly enhances our internal and external
recruiting services and capabilities. Our global succession management helps create internal talent
pipelines for critical leadership positions and therefore reduces succession risk.
Achieving the company's strategic and financial objectives is highly dependent on our employees and their
talents. In this respect, strong leadership and a performance-enhancing culture are critical to the
company's success. Therefore, ineffective leadership as well as the failure to install and maintain a
performance-oriented culture that fosters 'Diversity, Equity, and Inclusion' ('DEI') and strong employee
engagement amongst our workforce could substantially impede our ability to achieve our goals. An
ineffective, unbalanced, or insufficient allocation of resources to business activities as well as improper
planning and untimely execution of reorganization and transformation initiatives may reduce employee
engagement, cause business disruption and inefficiencies, and may negatively affect business
performance. In addition, global competition for highly qualified personnel remains fierce. As a result, the
loss of key personnel in strategic positions and the inability to identify, recruit, and retain highly qualified
and skilled talent who best meet the specific needs of our company pose risks to our business
performance.
PERSONNEL RISKS
To mitigate business partner risks, adidas has implemented various measures. For example, we generally
include clauses in contractual agreements with partners that allow us to suspend or even terminate our
partnership in case of improper or unethical conduct. In addition, we work with a broad portfolio of
promotion partners to reduce the dependency on the success and popularity of a few individual partners.
We utilize a broad distribution strategy, which includes further expansion of our direct-to-consumer
business to reduce the risk of overreliance on key customers. Specifically, no single customer accounted
for more than 5% of the company's sales in 2021. To reduce risk in the supply chain, we work with
suppliers who demonstrate reliability, quality, and innovation. Furthermore, in order to minimize any
potential negative consequences such as a violation of our Workplace Standards by our suppliers, we
enforce strict control and inspection procedures at our suppliers and also demand adherence to social and
environmental standards throughout our supply chain. In addition, we have selectively bought insurance
coverage for the risk of business interruptions caused by physical damage to suppliers' premises. To
reduce supplier dependency, the company follows a strategy of diversification. In this context, adidas
works with a broad network of suppliers in different countries and, for the vast majority of its products,
does not have a single-sourcing model.
vulnerability to delivery and sales shortfalls, respectively, and could lead to significant margin pressure.
Business partner default (including insolvency) or other disruptive events such as strikes may negatively
affect the company's business activities and result in additional costs and liabilities as well as lower sales
for the company. Unethical business practices on the part of business partners or improper behavior of
individual athletes, influencers or partners in the entertainment industry could have a negative spillover
effect on the company's reputation, lead to higher costs or liabilities or even disrupt business activities.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
4
5
5
GROUP MANAGEMENT REPORT -
OUR COMPANY
OPPORTUNITIES RELATED TO CONSUMER DEMAND AND PRODUCT OFFERING
Well-executed campaigns and marketing initiatives could increase brand desire and consumer appeal,
which may drive full-price sell-through and result in higher-than-expected sales and profit. In addition,
outstanding competitive performance of promotion partners such as individual athletes, club teams, or
national teams may further increase their popularity among consumers. As a result, adidas may generate
higher sales of signature footwear or licensed apparel and accessories. We believe that our continued
focus on product innovation and the ability to fully commercialize such innovation through an attractive
product offering that resonates with consumers could provide further upside potential both in terms of
sales and profit. In that respect, we see untapped potential particularly in sport-inspired apparel, in our
women's and basketball business, and in the metaverse sphere. Furthermore, we are convinced that a
continued focus on sustainability represents an opportunity for the company, in particular in the medium
to long term. Consumers are increasingly looking for products composed of more sustainable materials
and manufactured in an innovative and yet socially and environmentally responsible way. SEE SUSTAINABILITY
15% - 30%
Medium
(30%-50%)
↑ (<15%)
(2020 rating)
↓(30% - 50%)
↓(30% - 50%)
Likelihood
15% - 30%
15% - 30%
15% - 30%
15% - 30%
15% - 30%
↑ (Medium)
(Significant)
OPPORTUNITIES RELATED TO THE DISTRIBUTION STRATEGY
High
Significant
Significant
Significant
Change
Change
(2020 rating)
Potential impact
Personnel opportunities
Opportunities related to data analytics
Significant
Opportunities related to tax regulations
The further expansion of our own e-commerce activities and the amplification of our digital partner
commerce business could provide further upside potential in terms of sales and profit. In addition, our
wholesale channel, where we clearly focus on partners that provide consumers with the best shopping
experience and customer service, could generate higher-than-expected sales and profit.
Favorable exchange rate developments can potentially have a positive impact on the company's financial
results. Translation effects from the conversion of non-euro-denominated results into our company's
functional currency, the euro, might also positively impact our company's financial performance.
Legislative and regulatory changes such as the elimination of trade barriers due to free trade agreements
can create cost savings or potentially open up new channels of distribution and, as a result, positively
impact profitability.
TO OUR SHAREHOLDERS
Creating and managing a performance-oriented culture that fosters 'Diversity, Equity, and Inclusion' as
well as leadership accountability and clear values in the workplace could lead to increased diversity of
thought, increased creativity and innovation, and higher employee satisfaction and engagement. This may
positively impact the company's financial performance. A workforce that includes diverse talent and
reflects the diversity of our customers and consumers helps us better serve the communities we work in
and strengthens brand reputation among our consumers, which could potentially create a competitive
advantage and positively impact top- and bottom-line performance.
PERSONNEL OPPORTUNITIES
Data and analytics play a crucial role in enabling fact-based decision-making. Therefore, we have a
dedicated Data and Analytics team to support business decision-making by leveraging the power of data.
The continuous enhancement of our existing capabilities to build and scale insights-driven use cases and
the use of the latest technology could bring value to our business operations across the entire company.
As a result, we see the opportunity to become faster and more efficient in our operations. We may increase
visibility and understanding of consumer preferences, apply these insights in our product creation and, as
a result, increase sales and reduce cost of sales. Leveraging data may also help us, for instance, optimize
order book management, inventory management, and purchasing. All this could result in improved
financial performance.
OPPORTUNITIES RELATED TO DATA ANALYTICS
OPPORTUNITIES RELATED TO TAX REGULATIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
MACROECONOMIC, SOCIOPOLITICAL, REGULATORY, AND CURRENCY OPPORTUNITIES
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
207
GROUP MANAGEMENT REPORT -
OUR COMPANY
opportunities
The potential release of valuation allowances on deferred tax assets or the release of tax risk reserves
(e.g., relating to transactions or internal reorganizations in prior years) could positively impact income tax
expense. In addition, changes in local tax regulations may offer the company the option to realize benefits
that could result in a reduction of tax expenses and higher net income.
Opportunities related to the distribution strategy
5
4
3
2
ANNUAL REPORT 2021
TO OUR SHAREHOLDERS
1
adidas
GROUP MANAGEMENT REPORT -
OUR COMPANY
205
Changes in the competitive landscape and the retail environment could impact the company's success.
Strategic alliances among competitors or retailers, the increase in retailers' own private-label businesses
and intense competition for consumers, production capacity, and promotion partnerships between well-
established industry peers and new market entrants pose a substantial risk to adidas. This could lead to
harmful competitive behavior, such as sustained periods of discounting in the marketplace or intense
bidding for promotion partnerships. Failure to recognize and respond to consolidation in the retail industry
could lead to increased dependency on particular retail partners, reduced bargaining power, and,
consequently, margin erosion. Sustained pricing pressure in key markets could threaten the company's
financial performance and the competitiveness of our brands. Aggressive competitive practices could also
drive increases in marketing costs and market share losses, thus hurting the company's profitability and
market position. The inability to adjust our distribution strategy in a timely manner to a changing retail
industry, which is experiencing rapid substitution of physical retail stores by digital commerce platforms
as well as increasing connectivity between physical and digital retail, could result in sales and profit
shortfalls. A decline in the attractiveness of particular shopping locations such as shopping malls could
lead to sales shortfalls in our customers' and our own stores, higher inventory in the marketplace,
increased clearance activity and margin pressure.
RISKS RELATED TO THE COMPETITIVE AND RETAIL ENVIRONMENT
We manage projects utilizing reviews by project teams as well as project steering committees to evaluate
the progress, quality, and costs of those projects on a regular basis. This approach allows early detection
of project risks and quick implementation of corrective action or timely cancelation of projects with a low
chance of success. To ensure true end-to-end management of key projects we have established a network
of program and project management departments across all main functions (i.e., Sales, Marketing,
Operations, Finance, IT, and Human Resources). We also work with external partners for project
management support in areas where we do not have the required expertise or experience in-house.
To effectively support further business growth and improve efficiency, adidas continuously invests in new
projects such as the creation, implementation, expansion, harmonization, or modernization of IT systems,
distribution centers, or office buildings. Ineffective project management could delay the execution of
critical projects and lead to higher expenditures. Inadequate project planning and controlling as well as
executional mistakes or ineffective change management could cause inefficiencies, delays, or business
disruption, resulting in higher costs and sales shortfalls. Inappropriate project governance, prioritization,
and oversight of the project portfolio may lead to suboptimal resource allocation and undesired project
results.
management of potentially damaging social media discussion. On a case-by-case basis, we seek external
advice from experts in communication and stakeholder management.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Macroeconomic, sociopolitical, regulatory, and currency
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
To mitigate these risks, we continuously monitor and analyze information on our competitors and markets
in order to be able to anticipate unfavorable changes in the competitive environment rather than merely
reacting to such changes. This enables us to proactively adjust our marketing and sales activities (e.g.,
product launches or selective pricing adjustments) when needed. We also continuously and closely
monitor numerous indicators (e.g., order placement, sell-through rates at the point of sale, average
selling prices, discounts, store traffic) that help us identify changes in the retail environment and quickly
take appropriate action such as closing or remodeling our own stores. We constantly adjust our
segmentation strategies to ensure that the right product is sold at the right point of sale at an appropriate
price. Continuous investment in research and development ensures that we remain innovative and distinct
from competitors. We also pursue a strategy of entering into long-term agreements with key promotion
partners. In addition, our product and communication initiatives are designed to increase brand desire,
drive market share growth, and strengthen our brand's market position.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
PROJECT RISKS
COMPLIANCE RISKS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
CORPORATE OPPORTUNITIES OVERVIEW
Opportunities related to consumer demand and product offering
ILLUSTRATION OF OPPORTUNITIES
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
In this report, we illustrate financial and non-financial opportunities considered most relevant in 2022 and
beyond. According to our assessment methodology, opportunities related to consumer demand and
product offering; opportunities related to the distribution strategy; macroeconomic, sociopolitical,
regulatory and currency opportunities; opportunities related to tax regulations; and opportunities related
to data analytics are considered material. The assessment is illustrated in the opportunities overview
table.
3
As a globally operating company, adidas is subject to various laws and regulations. Non-compliance with
such laws and regulations could lead to penalties and fines and cause reputational damage. For example,
non-compliance with laws and regulations concerning data protection and privacy, such as the EU General
Data Protection Regulation (GDPR), may result in substantial fines. In addition, publication of failure to
comply with data protection and privacy regulations could cause reputational damage and result in a loss
of consumer trust in our brands. We also face the risk that members of top management as well as our
employees breach rules and standards that guide appropriate and responsible business behavior. This
includes the risks of fraud, financial misstatements or manipulation, anti-competitive business practices,
bribery, corruption, discrimination, and harassment in the workplace.
4
Our Compliance Management System (CMS) helps us to prevent, detect, and adequately respond to these
risks. Our Global Policy Manual provides a framework for basic work procedures and processes, and our
Fair Play Code of Conduct stipulates that every employee and our business partners shall act ethically in
compliance with the laws and regulations of the legal systems where they conduct company business. In
addition, our Regional Compliance Managers and Local Compliance Officers guide and advise our
operating managers regarding fraud and corruption topics. Furthermore, we utilize controls such as
segregation of duties in IT systems and data analytics technology to prevent or detect fraudulent activities.
We are also working with external partners and law firms to ensure we are informed about legal
requirements across the globe, and we take appropriate action to ensure compliance. To mitigate the risk
of non-compliance with laws and regulations concerning data protection and privacy, we developed a
global privacy management framework that introduces the company's privacy principles and provides
guidance for the use and deletion of personal information. This framework applies to all adidas businesses
worldwide and also sets our expectations of third-party business partners for managing personal
information for or on behalf of adidas. Our Global Privacy Officer and the Global Privacy department drive
the operational establishment of the framework and monitoring capabilities to track and report its
implementation. During the implementation, they are continuously providing further implementation
guidance and training.
206
Opportunity categories
1
ANNUAL REPORT 2021
adidas
2
Total equity
Retained earnings
Shareholders' equity
192
195
(2)
(474)
n.a.
7,259
8
7,519
6,454
17
Non-controlling interests
group)
6,733
25
17
Reserves (thereof at Dec. 31st, 2021
(35)
Total liabilities and equity
Non-current accrued liabilities
20
8
8
(3)
€ 128 million relating to the Reebok disposal
Other non-current liabilities
9
(46)
Total non-current liabilities
5,334
5,535
(4)
Share capital
24
2
Repurchase of adidas AG shares
4
Repurchase of adidas AG shares due to share-based payments
[32]
(29)
Proceeds from reissuance of treasury shares due to
27
share-based payments
25
25
(Repayments of)/ Proceeds from short-term borrowings
16
(79)
24
Net cash (used in)/ generated from financing activities -
continuing operations
(2,952)
229
(257)
(1,000)
25
(17)
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
ADIDAS AG CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS) € IN MILLIONS
Year ending
Year ending
Note
3
Dec. 31, 2021
Repayments of lease liabilities
(572)
(582)
Dividend paid to shareholders of adidas AG
25
(585)
Dividend paid to non-controlling interest shareholders
Dec. 31, 2020
149
20
Other non-current provisions
363
446
(19)
Income taxes
34
536
562
(5)
Other current provisions
18
1,458
1,609
[9]
Current accrued liabilities
2,684
17
Other current financial liabilities
2
563
Note
31. Dec. 2021
Dec. 31, 2020
Change in %
Short-term borrowings
16
29
2,172
686
Accounts payable
2,294
2,390
(4)
Current lease liabilities
19
573
(96)
24
Other current liabilities
21
5
Other non-current financial liabilities
22
51
115
(55)
Pensions and similar obligations
2,159
23
284
(6)
Deferred tax liabilities
34
122
241
(49)
267
18
2,263
Non-current lease liabilities
434
398
9
Liabilities classified as held for sale
03
594
n.a.
19
Total current liabilities
8,827
2
Long-term borrowings
16
2,466
2,482
(1)
8,965
69
ANNUAL REPORT 2021
ADIDAS AG CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS) € IN MILLIONS
Total comprehensive
income
Repurchase of adidas AG
25
(1)
shares
Repurchase of adidas AG
shares due to equity-settled
25
share-based payment
Reissuance of treasury
shares due to equity-settled
25
share-based payment
Dividend payment
Equity-settled share-based
26
payment
First-time consolidation due
Net income
(264)
(264)
(263)
(100)
7
(30)
(17)
(519)
(21)
(540)
432
432
to obtaining control in
11
(380)
(100)
7
(30)
(17)
432
(87)
(10)
(97)
443
(380)
accordance with IFRS 10
December 31, 2020/
(23)
(235)
6,733
6,454
237
6,691
Total comprehensive
income
Repurchase of adidas AG
shares
25
[3]
Repurchase of adidas AG
shares due to equity-settled
25
share-based payment
Reissuance of treasury
shares due to equity-settled
25
share-based payment
(3)
(250)
(850)
887
January 1, 2021
Other comprehensive
income
Net income
(29)
(29)
11
36
36
Balance at
161
36
(17)
(17)
2
2
2
3
3
195
(29)
7,058
514
261
(30)
Currency translation differences
330
(401)
Subtotal of items of other comprehensive income that will be
reclassified to profit or loss when specific conditions are met
521
(524)
Other comprehensive income
573
(540)
Total comprehensive income
Attributable to shareholders of adidas AG
Attributable to non-controlling interests
2,731
(97)
2,650
81
1 Includes actuarial gains or losses relating to defined benefit obligations, return on plan assets (excluding interest income) and the asset ceiling effect.
The accompanying Notes are an integral part of these consolidated financial statements.
216
11
28
7
[6]
Dec. 31, 2021
Year ending
Dec. 31, 2020
2,158
443
23
50
(15)
28
1
(87)
(2)
52
(17)
Items of other comprehensive income that will be reclassified
to profit or loss when specific conditions are met
Net gain/(loss) on cash flow hedges and net foreign investment
hedges, net of tax
28
186
(100)
Net (loss) / gain on cost of hedging reserve - options, net of tax
Net gain/(loss) on cost of hedging reserve - forward contracts,
net of tax
28
62
(10)
adidas
1
Hedging
reserve
reserve
- options
forward
con-
tracts
Other Retained
reserves earnings
Share-
holders'
con-
equity
Non-
trolling
interests
196
887
(470)
(150)
(10)
6
(218)
6,555
6,796
Total
equity
Dividend payment
Cost of
hedging
lative
currency
trans-
lation
differ-
ences
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
hedging
reserve
CONSOLIDATED STATEMENT OF CHANGES IN
ADIDAS AG CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS) € IN MILLIONS
Cumu-
Cost of
Balance at January 1, 2020
Other comprehensive
income
Note
Share
capital
Capital
reserve
EQUITY
Note
Equity-settled share-based
payment
1,770
Income taxes paid
(444)
(403)
Net cash generated from operating activities –
continuing operations
2,873
1,366
Net cash generated from operating activities -
320
120
discontinued operations
Net cash generated from operating activities
3,192
1,486
Investing activities:
Purchase of trademarks and other intangible assets
(173)
(64)
Proceeds from sale of trademarks and other intangible assets
3,316
Cash generated from operations before taxes
(117)
226
51
35
Losses on sale of property, plant and equipment and
intangible assets, net
13
28
28
Other non-cash effects from operating activities
29,30
6
1
2
3,135
2,031
(Increase]/Decrease in receivables and other assets
(170)
337
Decrease/(Increase) in inventories
125
(481)
Increase/[Decrease) in accounts payable and other liabilities
Operating profit before working capital changes
Unrealized foreign exchange losses, net
4
(494)
(11)
(424)
(115)
Financing activities:
Repayment of eurobond
16
[600]
Proceeds from issuance of bonds
16
1,490
Reverse transaction of buyback of eurobonds
16
11
Interest paid
(111)
(151)
218
adidas
1
[9]
Net cash used in investing activities - discontinued operations
Net cash used in investing activities
(105)
(415)
(368)
Proceeds from sale of property, plant and equipment
1
16
Proceeds from sale of a disposal group
12
1
Proceeds from disposal of discontinued operations
177
Purchase of property, plant and equipment
41
0
289
Proceeds from/ (Purchase of) investments and other long-term
assets
49
(49)
Interest received
13
25
Net cash used in investing activities - continuing operations
Proceeds from sale of short-term financial assets
156
111
32
2,650
81
2,731
(1,001)
(1,004)
(1,004)
(32)
(32)
[32]
35
35
35
(585)
(585)
(585)
1
1
[8]
192
2,116
35
11
(6)
Cancellation of treasury
25
shares
Balance at
December 31, 2021
8
308
186
(6)
895
11
534
39
573
2,116
2,116
42
2,158
3081
186
35
(542)²
(64)
(8)
Note
Dec. 31, 2021
Year ending
Dec. 31, 2020
Income before taxes from continuing operations
1,852
578
Adjustments for:
Depreciation, amortization and impairment losses
11, 12, 30, 32
Year ending
1,149
Reversals of impairment losses
29
(34)
(5)
Interest income
32
(13)
(25)
Interest expense
1,261
26
Operating activities:
CONSOLIDATED STATEMENT OF CASH FLOWS
(12)
(200)
7,259
7,519
318
7,837
The accompanying Notes are an integral part of these consolidated financial statements.
1 Total net loss of foreign currency translation differences for discontinued operations for 2021 are reflected within this position in an amount to € 79 million
2 Total net loss of cumulative foreign currency translation differences for discontinued operations are reflected within this position in an amount to € 128 million
217
ADIDAS AG CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS) € IN MILLIONS
adidas
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
1
Liabilities and equity
Year ending
Items of other comprehensive income that will not be
reclassified subsequently to profit or loss
2
ANNUAL REPORT 2021
1
adidas
315
312
220
218
217
216
215
213
212
RESPONSIBILITY STATEMENT
SHAREHOLDINGS
NOTES
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
1,952
2,175
05
Accounts receivable
(4)
3,994
3,828
04
Cash and cash equivalents
CONSOLIDATED INCOME STATEMENT
Assets
Dec. 31, 2020
Dec. 31, 2021
Note
ADIDAS AG CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS) € IN MILLIONS
POSITION
CONSOLIDATED STATEMENT OF FINANCIAL
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Change in %
11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED
34
7,837
6,691
17
22,137
21,053
5
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED INCOME STATEMENT
237
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
318
4
ANNUAL REPORT 2021
adidas
211
We believe our outlook for 2022 realistically describes the underlying development of the company.
However, the outlook for 2022 as outlined in this report is subject to change depending on further
developments related to the coronavirus pandemic and industry-wide supply chain challenges. In addition,
ongoing uncertainties regarding the economic outlook, the impact from geo-political conflicts and
consumer sentiment in both advanced and developing economies as well as re-escalating trade tensions
represent risks to the achievement of our stated financial goals and aspirations. No other material event
between the end of 2021 and the publication of this report has altered our view. SEE OUTLOOK
Following the recovery from the coronavirus pandemic in 2021, we project further strong top-line
improvements in 2022. Long-term industry trends such as increasing sports participation, the growing
penetration of sports-inspired apparel and footwear ('athleisure') and digitalization are benefitting this
development. As a result, we expect sales to increase between 12% and 14% on a currency-neutral basis
in 2022. Gross margin is forecast to continue to recover as significantly higher supply chain costs will be
more than offset by a positive channel mix effect, price increases as well as the positive impact from
favorable currency developments. The strong top-line development in combination with the expected
margin expansion is projected to result in an increase in net income from continuing operations to a level
of between € 1.8 billion and € 1.9 billion in 2022. SEE OUTLOOK
We project currency-neutral revenues to increase at a rate of between 8% and 10% per annum on average
between 2021 and 2025. Our bottom-line is expected to grow sustainably, as we expect net income from
continuing operations to increase by an average of between 16% and 18% per annum in the four-year
period between 2021 and 2025. SEE STRATEGY SEE OUTLOOK
In March 2021, we unveiled 'Own the Game,' our strategy for the period until 2025, which defines strategic
priorities and objectives for the period up to 2025. The strategy is focused on capturing consumer-driven
opportunities which, in turn, is expected to spur above industry top- and sustainable bottom-line growth.
ASSESSMENT OF FINANCIAL OUTLOOK
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
5
Other current financial assets
06
745
Other non-current assets
2
1,233
1,263
34
Deferred tax assets
(61)
414
160
14
Other non-current financial assets
(18)
353
290
13
Long-term financial assets
34
252
336
15
74
103
(28)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
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TO OUR SHAREHOLDERS
4
3
2
1
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
12
ANNUAL REPORT 2021
5
21,053
22,137
213
Total assets
(8)
8,899
8,193
Total non-current assets
adidas
Other intangible assets
(98)
750
2,033
03
Assets classified as held for sale
6
999
1,062
08
Other current assets
(17)
0
109
34
Income tax receivables
(9)
4,397
4,009
07
Inventories
6
702
91
ADIDAS AG CONSOLIDATED INCOME STATEMENT (IFRS) € IN MILLIONS
802,611
13,944
16
12
Trademarks
2
1,208
1,228
11
Goodwill
6
Total current assets
2,430
10
Right-of-use assets
5
2,157
2,256
09
Property, plant, and equipment
15
12,154
2,569
Remeasurements of defined benefit plans (IAS 19), net of tax¹
Net gain/(loss) on other equity investments (IFRS 9), net of tax
Subtotal of items of other comprehensive income that will not
be reclassified subsequently to profit or loss
Year ending
Note
03
60
666
[19]
n.a.
net of tax
Net income
(% of net sales)
Net income attributable to shareholders
(% of net sales]
Net income attributable to non-controlling
interests
2,158
443
387.4%
10.2%
2.4%
7.8pp
2,116
432
4.5pp
2.5%
7.0%
223.4%
(22.0%)
1,852
578
220.2%
8.7%
3.1%
5.6pp
34
360
389.6%
117
(% of income before taxes)
Net income from continuing operations
(% of net sales)
Gain/(loss) from discontinued operations,
19.4%
20.2%
(0.8pp)
1,492
461
207.9%
196
10.0%
7.6pp
2.21
392.1%
and discontinued operations (in €]
215
adidas
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3
4
TO OUR SHAREHOLDERS
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5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
ADIDAS AG CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS) € IN MILLIONS
Net income after taxes
10.90
35
Diluted earnings per share from continuing
discontinued operations (in €)
42
11
296.5%
Basic earnings per share from continuing
35
7.47
2.31
223.3%
operations (in €)
2.3%
Diluted earnings per share from continuing
7.47
2.31
223.3%
operations (in €)
Basic earnings per share from continuing and
35
10.90
2.21
392.1%
35
153
32
(32.1%)
Other operating income
29
28
42
(34.8%)
Other operating expenses
09, 12, 30, 31
8,892
8,580
3.6%
(% of net sales]
41.9%
46.5%
(4.7pp)
Marketing and point-of-sale expenses
2,547
2,373
7.3%
(% of net sales)
40.9%
61
86
Royalty and commission income
Dec. 31, 2021
Dec. 31, 2020
Change
Net sales
Cost of sales
Gross profit
(% of net sales]
36
21,234
12.0%
18,435
10,469
9,213
13.6%
10,765
9,222
16.7%
50.7%
50.0%
0.7pp
15.2%
12.9%
(0.9pp)
Distribution and selling expenses
0.4%
0.6%
(0.3pp)
6
111
(94.9%)
1,986
746
166.3%
(34.5%)
9.4%
5.3pp
Financial income
Financial expenses
Income before taxes
(% of net sales)
Income taxes
32
19
29
4.0%
Year ending
116
(0.5pp)
(% of net sales)
General and administration expenses
4,782
4,601
3.9%
22.5%
25.0%
(2.4pp)
1,481
76
1,379
(% of net sales]
Sundry expenses
(% of net sales)
Impairment losses (net) on accounts
receivable and contract assets
Operating profit
(% of net sales]
7.0%
7.5%
7.4%
Net cash used in financing activities - discontinued operations
Net cash (used in)/ generated from financing activities
27
(35)
4
TO OUR SHAREHOLDERS
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OUR COMPANY
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NOTES
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas AG is a listed German stock corporation and parent of the adidas Group located at Adi-Dassler-
Str. 1, 91074 Herzogenaurach, Germany, and is entered into the commercial register at the Local Court of
Fürth (HRB 3868). adidas AG and its subsidiaries (collectively ‘adidas,' 'the Group' or 'the company')
design, develop, produce and market a broad range of athletic and sports lifestyle products.
01 GENERAL
The consolidated financial statements of adidas AG as at December 31, 2021, comprise adidas AG and its
subsidiaries and are prepared in compliance with International Financial Reporting Standards (IFRS), as to
be applied in the European Union (EU) as at December 31, 2021, and the additional requirements pursuant
to § 315e section 1 German Commercial Code (Handelsgesetzbuch – HGB).
The following amendments to existing standards and interpretations are effective for financial years
beginning on January 1, 2021, and have been applied for the first time to these consolidated financial
statements:
Amendment to IFRS 4: Extension of the temporary exemption from application of IFRS 9 (IASB
effective date: January 1, 2021): In order to reduce the impact of the differing effective dates of IFRS 9
and IFRS 17, by amending IFRS 4 the expiration of the temporary exemption from the application of
IFRS 9 is postponed to financial years beginning on or after January 1, 2023. IFRS 4 Insurance
Contracts is currently not applied by the Group, which is why the amendments did not have any impact
on the consolidated financial statements as at December 31, 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16: Interest Rate Benchmark Reform - Phase
2 (IASB effective date: January 1, 2021): The amendments provide temporary reliefs that address the
financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly
risk-free interest rate. The amendments include the following: a practical expedient that contractual
changes or changes to cash flows that are directly required by the reform can be treated as changes to
a floating interest rate; the permission that changes required to hedge designations and hedge
documentation can be made without the hedging relationship being discontinued; and a temporary
relief from having to meet the separately identifiable requirement when a respective instrument is
designated as a hedge of a risk component. These amendments had no material impact on the
consolidated financial statements as at December 31, 2021.
-
220
214
[39]
3
2
Amendments to IFRS 16: covid-19-Related Rent Concessions beyond 30 June 2021 (IASB effective
date: April 1, 2021): On May 28, 2020, the IASB issued covid-19-Related Rent Concessions
amendments to IFRS 16. The amendments were initially intended to apply until June 30, 2021. As the
impact of the covid-19 pandemic is, however, continuing, on March 31, 2021, the IASB extended the
period of application to June 30, 2022. The amendments provide relief to lessees from applying IFRS 16
guidance on lease modification accounting for rent concessions arising as a direct consequence of the
covid-19 pandemic, but to account for any change the same way it would account for the change under
IFRS 16, if the change were not a lease modification. The amendments did not have any impact on the
consolidated financial statements as at December 31, 2021, as adidas does not apply that accounting
option for covid-19-Related Rent Concessions, but accounts for such concessions as lease modification
in accordance with IFRS 16.
1
ANNUAL REPORT 2021
(2,991)
479
57
(75)
(Decrease]/Increase in cash and cash equivalents
[165]
1,774
Cash and cash equivalents at beginning of year
Effect of exchange rates on cash
3,994
2,220
Cash and cash equivalents at end of period
04
3,828
3,994
219
04
adidas
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ANNUAL REPORT 2021
Transactions in foreign currencies are initially recorded in the respective functional currency by applying
the spot exchange rate valid at the transaction date to the foreign currency amount.
adidas
226
The consolidated financial statements are presented in euros (€), which is also the parent company's
functional currency. For each entity, the Group determines the functional currency.
CURRENCY TRANSLATION
Fair value through
other comprehensive
income
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
income
1
5
GBP
In the individual financial statements of subsidiaries, monetary items denominated in non-functional
currencies of the subsidiaries are generally translated into the functional currency at closing exchange
rates at the balance sheet date. The resulting currency gains and losses are recognized directly in profit or
loss.
Fair value through
other comprehensive
1.1836
2021
Spot rates at Dec. 31,
Average rates for the year
ending Dec. 31,
RUB
CNY
JPY
USD
€ 1 equals
EXCHANGE RATES
A summary of exchange rates to the euro for major currencies in which the Group operates is as follows:
Assets and liabilities of the company's non-euro functional currency subsidiaries that are included in the
consolidated financial statements are translated using closing exchange rates at the balance sheet date
into the presentation currency, the euro. For practical reasons, revenues and expenses are translated at
average rates for the period, which approximate the exchange rates on the transaction dates. The
resulting exchange differences arising on consolidation are recognized in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of the gain or loss on the change in fair value of the item.
This excludes monetary items that are designated as part of the hedge of the Group's net investment in a
foreign operation. These are recognized in other comprehensive income (OCI) until the net investment is
disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits
attributable to exchange differences on those monetary items are also recognized in OCI.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Amortized cost
GROUP MANAGEMENT REPORT -
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Subsequent
measurement
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Financial assets are classified and measured according to IFRS 9. All purchases and sales of financial
assets, with the exception of trade receivables, are recognized on the trade date and initially measured at
fair value. At initial recognition, trade receivables that do not have a significant financing component are
measured at their transaction price. Subsequently, a financial asset is measured at amortized cost, fair
value through other comprehensive income (debt instrument), fair value through other comprehensive
income (equity instrument), or fair value through profit or loss. A financial asset is measured at amortized
cost if it meets both of the following conditions and is not designated at fair value through profit or loss: a
financial asset which is held within a business model whose objective is to hold assets to collect
contractual cash flows (business model 'Hold to collect'); and the financial asset's contractual terms give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Projected unit credit method
Expected settlement amount
Amortized cost
Amortized cost
Lease liabilities
Accrued liabilities
Other provisions
Pensions
0.8601
Fair value through
profit or loss
5
A financial asset is measured at fair value through other comprehensive income if it meets both of the
following conditions and is not designated at fair value through profit or loss: financial asset which is held
within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets (business model 'Hold to collect and sell'); and its contractual terms give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
These assets are subsequently measured at fair value.
Interest income calculated using the effective interest
method, foreign exchange gains and losses and
impairment losses are recognized in profit or loss.
Other net gains and losses are recognized in other
comprehensive income. On derecognition, accumulated
gains and losses are reclassified to profit or loss.
These assets are subsequently measured at fair value.
Dividends are recognized as income in profit or loss
unless the dividend clearly represents a recovery of
part of the cost of the investment. Other gains and
losses are recognized in other comprehensive income
and are never reclassified to profit or loss.
These assets are subsequently measured at amortized
cost using the effective interest method. The amortized
cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment losses
are recognized in profit or loss. Any gain or loss on
derecognition is recognized in profit or loss.
These assets are subsequently measured at fair value.
Net gains and losses, including any interest or dividend
income, are recognized in profit or loss.
Subsequent measurement principle
(equity instrument)
Fair value through
other comprehensive
income
(debt instrument)
Fair value through
other comprehensive
income
Amortized cost
IFRS 9 category
Fair value through
profit or loss
OVERVIEW OF FINANCIAL ASSET SUBSEQUENT MEASUREMENT PRINCIPLES ACCORDING TO IFRS 9
The subsequent measurement of financial assets is as follows:
Financial assets are only reclassified when the business model for managing financial assets is changed,
in which case all affected financial assets are reclassified.
All financial assets, which are not classified as measured at amortized cost or at fair value through other
comprehensive income as described above, are measured at fair value through profit or loss.
In principle, all investments in equity instruments are measured at fair value through profit or loss. At
initial recognition, an entity may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument that is neither held for
trading nor a contingent consideration acquired by a purchaser in a business combination. This election is
made on an investment-by-investment basis.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
129.8295
1
2020
1.1410
0.8889
121.7887
7.8717
82.4398
Part of cash equivalents includes investments in money market funds. Classification and measurement
under IFRS 9 are performed based on the company's business model for managing these financial assets
and the contractual cash flow characteristics. Investments in money market funds contain cash flows
other than those of principal and interest on principal. As a result, those investments are measured at fair
value through profit or loss.
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents represent cash at banks, cash on hand, and short-term deposits with
maturities of three months or less from the date of acquisition such as commercial papers and
investments in money market funds.
CASH AND CASH EQUIVALENTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ACCOUNTS RECEIVABLE
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A receivable is recognized if an amount of consideration that is unconditional is due from the customer
(i.e., if only the passage of time is required before payment of that consideration is due). Accounts
receivable that do not contain a significant financing component are recognized at the transaction price,
which represents the amount of consideration to which the company expects to be entitled in exchange for
transferring promised goods or services to a customer, excluding amounts collected on behalf of third
parties. Subsequently, these are measured at amortized cost.
OTHER FINANCIAL ASSETS
Other financial assets are classified and measured under IFRS 9, based on the company's business model
for managing these assets and the contractual cash flow characteristics. Those other financial assets that
give rise to cash flows consisting only of payments of principal and interest and are assigned to the
business model 'Hold to collect' are measured at amortized cost. adidas mainly has security deposits and
receivables from credit card companies and electronic marketplaces that fall under this category.
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Debt instruments are measured depending on the company's business model for managing financial
assets and the contractual cash flows. Only financial assets that are held within the business model 'Hold
to collect' with the objective to collect the contractual cash flows, which represent solely payments of
principal and interest on the principal amount outstanding on a specific date, are measured at amortized
cost. adidas classifies certain loans within this category. All other financial assets which do not fulfill one
of these criteria are measured at fair value - either at fair value through profit or loss or at fair value
through other comprehensive income (debt). adidas has no long-term financial assets in the category fair
value through comprehensive income (debt instrument) and shows loans which do not fulfill the
contractual cash flow characteristics in the category fair value through profit or loss.
Long-term financial assets are distinguished between debt and equity instruments and classified
according to IFRS 9 as follows:
LONG-TERM FINANCIAL ASSETS
Other financial assets, which are neither within the business model 'Hold to collect' nor 'Hold to collect
and sell,' are measured at fair value through profit or loss. This category mainly includes secured
promissory notes and earn-out components.
Other financial assets that give rise to cash flows consisting only of payments of principal and interest and
that are assigned to the business model 'Hold to collect and sell' are measured at fair value through OCI.
This category mainly includes other investments and securities to hedge long-term variable compensation
components.
adidas
228
The fair values of currency options, forward exchange contracts, and forward stock transactions are
determined on the basis of market conditions on the reporting date. The fair value of a currency option is
determined using generally accepted models. The fair value of an option is influenced not only by the
remaining term of the option but also by additional factors, such as the actual foreign exchange rate and
the volatility of the underlying foreign currency base. The company determines fair values taking the
counterparty risk into consideration.
adidas documents the relationship between hedging instruments and hedge objects as well as the risk
management objectives and strategies for undertaking various hedge transactions at transaction
inception. This process includes linking all derivatives designated as hedges to specific firm commitments
and forecast transactions. adidas also assesses the effectiveness and possible ineffectiveness of its
hedged derivatives by using generally accepted methods of effectiveness testing, such as the 'hypothetical
derivative method' or the 'dollar offset method.' The economic relationship between the hedging
instrument and hedged item is qualitatively and quantitatively ascertainable and adidas judges the
effectiveness of the hedging relationship with the hypothetical derivative method. The main sources of
expected ineffectiveness are due to changes in the credit risk and in the timing of the hedged transactions.
Non-monetary assets that have been restated following the guidance in IAS 29 are still subject to
impairment assessment in accordance with the guidance in the relevant IFRS.
Gains and losses from hyperinflation are included in the financial result.
NOTE 33
To reflect changes in purchasing power at the balance sheet date, the carrying amounts of non-monetary
assets and liabilities, shareholders equity and comprehensive income of subsidiaries in hyperinflationary
economies are restated in terms of a measuring unit current at the balance sheet date. These are indexed
using a general price index in accordance with IAS 29 Financial Reporting in Hyperinflationary Economies.
In contrast, no restatement is required for monetary assets and liabilities carried at amounts current at
the end of the balance sheet date because they represent money held, to be received, or to be paid. ▸ SEE
HYPERINFLATION
90.6529
7.9441
126.4900
130.3800
7.2266
84.1438
0.8990
0.8403
1.2271
1.1326
2020
2021
227
7.6362
87.1946
adidas
ANNUAL REPORT 2021
Certain derivative transactions, while providing effective economic hedges under the company's risk
management policies, do not qualify for hedge accounting under the specific rules of IFRS 9.
Hedges of net investments in foreign entities are accounted for in a similar way to cash flow hedges. The
effective currency gains and losses in the derivative and all gains and losses arising on the translation of
the borrowing are recognized in equity with the exception of the cross-currency basis spread.
adidas applies the cost of hedging' approach for dedicated cash flow hedges. Changes in the fair value of
the time value component of currency options, as well as the forward element in forward exchange
contracts, are separately accounted for as a cost of hedging and are recognized separately in equity as a
cost of hedging reserve. When the effectiveness is not 100%, the ineffective portion of the change in the
fair value is recognized in the consolidated income statement. Accumulated gains and losses in equity are
transferred to the consolidated income statement in the same periods, during which the hedged forecast
transaction affects the consolidated income statement.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges or net
investments that are effective as defined in IFRS 9 are recognized in equity.
Derivative financial instruments are initially recognized in the statement of financial position at fair value,
and are subsequently also measured at their fair value. The method of recognizing the resulting gains or
losses is dependent on the nature of the hedge. On the date a derivative contract is entered into, adidas
designates derivatives as either a hedge of a forecast transaction (cash flow hedge) or a hedge of a net
investment in a foreign operation. In applying cash flow hedge accounting, adidas designates the spot
element of forward exchange contracts and the intrinsic value of currency options to hedge its currency
risk and applies a hedge ratio of 1:1 (spot-to-spot designation). The forward element of forward exchange
contracts and the time value component of currency options are excluded from the designation of the
hedging instrument.
adidas uses derivative financial instruments, such as currency options, forward exchange contracts, and
stock price options, as well as forward stock transactions and currency swaps, to hedge its exposure to
foreign-exchange and stock-price risks. In accordance with its Treasury Policy, the company does not
enter into transactions with derivative financial instruments for trading purposes.
DERIVATIVE FINANCIAL INSTRUMENTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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Provisions:
Amortized cost
Liabilities/provisions for cash-settled share-based
Fair value
August 12, 2021, the Reebok operating business is reported as discontinued operations and classified as a
disposal group held for sale since the resolution has been passed. The prior-year figures of the
consolidated income statement and the consolidated statement of cash flows have been restated to report
the discontinued operations separately from continuing operations. ▸ SEE NOTE 03
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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5
The consolidated financial statements are presented in euros (€) and, unless otherwise stated, all values
are presented in millions of euros (€ in millions). Due to rounding principles, numbers presented may not
exactly sum up to totals provided. This can also lead to individual amounts rounded to zero.
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On February 11, 2021, adidas decided to begin a formal process aimed at divesting Reebok. Due to the
initiation of that selling process, which led to a binding agreement with Authentic Brands Group LLC, on
3
02 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are prepared in accordance with the consolidation, accounting, and
valuation principles described below.
PRINCIPLES OF CONSOLIDATION
2
125
121
2020
2021
December 31
Intercompany mergers
Deconsolidated/divested subsidiaries
Thereof: newly founded
First-time consolidated subsidiaries
January 1
NUMBER OF CONSOLIDATED SUBSIDIARIES
The number of consolidated subsidiaries developed as follows in 2021 and 2020, respectively:
Effective as of December 2019, an amendment to the contractual arrangements existing between Agron,
Inc. and adidas entered into force granting adidas the power to approve key financial and operational
targets as well as the organizational structure of Agron, Inc. adidas has the right to, and is exposed to, the
returns from its contractual business relations with Agron, Inc., which are dependent on the level of its net
sales and overall profitability. As a result of the extended power, adidas has the ability to directly influence
the amount of these variable returns and consequently obtained control over Agron. As adidas holds no
equity interests of Agron, Inc., both net assets as well as income and expenses are attributable entirely to
the non-controlling interest. adidas has not transferred any consideration to the owners of Agron, Inc. in
relation to the amendment of the contractual arrangements.
The consolidated financial statements include the financial statements of adidas AG and all its direct and
indirect subsidiaries, which are prepared in accordance with uniform accounting principles. An entity is
considered a subsidiary if it is controlled by adidas AG. Control exists when adidas is exposed to, or has
rights to, variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee.
Business development in 2021 continued to be impacted by the effects of the coronavirus pandemic, albeit
less than in the financial year 2020. Estimates and assumptions relevant to the financial statements were
made to the best of our knowledge, based on current events and actions. Due to the ongoing pandemic, it
is still difficult to predict the impact on assets and liabilities as well as income and expenses. The impact
of the coronavirus pandemic is described in the individual Notes to the consolidated financial statements,
if relevant.
The consolidated financial statements have in principle been prepared on the historical cost basis with the
exception of certain items in the statement of financial position, such as certain originated financial
instruments, derivative financial instruments, and plan assets, which are measured at fair value.
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (IASB effective date: January 1, 2023): The amendments to IAS 12 clarify that the initial
recognition exemption provided in IAS 12 does not apply to transactions in relation to leases and
decommissioning obligations, and that entities hence have to recognize deferred taxes for transactions
when an asset and a liability are recognized at the inception of the lease, or when an entity recognizes
a liability and includes the decommissioning costs in the cost of the asset. The amendments are
effective for annual reporting periods beginning on or after January 1, 2023. The amendments are not
expected to have a material impact on the Group, in particular since adidas did not apply the initial
recognition exemption in the context of leases under IFRS 16.
Amendments to IAS 8: Definition of Accounting Estimates (IASB effective date: January 1, 2023):
The amendments to IAS 8 introduce a new definition of accounting estimates' which clarifies the
distinction between changes in accounting estimates and changes in accounting policies and the
correction of errors. The amendments further provide guidance how entities can develop accounting
estimates. The amendments to IAS 8 are effective for annual reporting periods beginning on or after
January 1, 2023, and apply to changes in accounting policies and changes in accounting estimates that
occur on or after the start of that period. Depending on the changes in accounting policies and changes
in accounting estimates after that date, the amendments are currently not expected to have a material
impact on the consolidated financial statements.
-
IFRS 17 Insurance Contracts and Amendments to IFRS 17 (IASB effective date: January 1, 2023): The
new standard covers the recognition and measurement, presentation and disclosure related to all
types of insurance contracts. IFRS 17 is effective for reporting periods beginning on or after January 1,
2023, and once effective, will replace IFRS 4 Insurance Contracts. Neither IFRS 4 nor IFRS 17 are
applicable to the Group, which is why no material impact is expected on the consolidated financial
statements.
The following new standards and interpretations and amendments to existing standards and
interpretations issued by the International Accounting Standards Board (IASB), endorsed by the EU, and
which are effective for financial years beginning after January 1, 2021, have not been applied in preparing
these consolidated financial statements:
New standards and interpretations as well as amendments to existing standards and interpretations are
usually not applied by adidas before the EU effective date.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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Amendments to IFRS 3: Reference to the Conceptual Framework (IASB effective date: January 1,
2022): The amendments to IFRS 3 replace a reference to the Framework for the Preparation and
Presentation of Financial Statements (1989) with a reference to the Conceptual Framework for
Financial Reporting issued in March 2018. At the same time, the amendments clarify that by replacing
the reference to the Framework for the Preparation and Presentation of Financial Statements, the
existing guidance in IFRS 3 for contingent assets would not be affected. The amendments are effective
for annual reporting periods beginning on or after January 1, 2022, and apply prospectively. The
amendments are not expected to have a material impact on the consolidated financial statements.
2
Amendments to IAS 16: Property, Plant, and Equipment: Proceeds before Intended Use (IASB
effective date: January 1, 2022): Due to the amendments to IAS 16, it will no longer be possible to
deduct from the cost of an item of property, plant, and equipment any proceeds from selling items
produced while bringing that asset to the location and condition necessary for it to be capable of
operating. Instead, an entity recognizes the proceeds from selling such items in profit or loss. The
amendments are effective for annual reporting periods beginning on or after January 1, 2022, and are
not expected to have a material impact on the consolidated financial statements.
Annual improvements to IFRS Standards (2018-2020): (IASB effective date: January 1, 2022): The
annual improvements to IFRS standards process particularly includes amendments to IFRS 1.
Subsidiary as a first-time adopter, Amendments to IFRS 9 Fees in the '10 per cent' test for
derecognition of financial liabilities and amendments to IAS 41 Taxation in fair value measurements.
The amendments are applicable for annual periods beginning on or after January 1, 2022. The
amendments are not expected to have a material impact on the consolidated financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies (IASB
effective date: January 1, 2023): The amendments provide guidance and examples to help entities
apply materiality judgments to accounting policy disclosures. By replacing the requirement for entities
to disclose their 'significant' accounting policies with a requirement to disclose their 'material'
accounting policies, the amendments aim to help entities provide accounting policy disclosures that
are more relevant and useful for the users of the financial statements. The amendments to IAS 1 are
applicable for annual periods beginning on or after January 1, 2023. Since the amendments to the
Practice Statement 2 provide non-mandatory guidance, an effective date for these amendments has
not been determined. Subject to the ongoing assessment it is currently not expected that the
amendments will have a material impact on the Group's accounting policy disclosures.
Amendment to IAS 1: Classification of Liabilities as Current or Non-current (IASB effective date:
January 1, 2023): The amendments to IAS 1 specify the requirements for classifying liabilities as
current or non-current. The amendments are effective for annual reporting periods beginning on or
after January 1, 2023, and must then generally be applied retrospectively. Currently being assessed, it
is not expected that the amendments will have a material impact on the Group's consolidated financial
statements.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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221
The following new standards and interpretations as well as amendments to existing standards and
interpretations were issued by the IASB. These are not yet endorsed by the EU and hence have not been
applied in preparing these consolidated financial statements:
Amendments to IAS 37: Onerous Contracts - Costs of Fulfilling a Contract (IASB effective date:
January 1, 2022): The amendments to IAS 37 specify that costs that relate directly to a contract are
considered the costs of fulfilling a contract ('directly related cost approach') and hence include both
incremental costs and an allocation of costs directly related to contract activities. The amendments are
effective for annual reporting periods beginning on or after January 1, 2022. The Group will apply these
amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the
financial year in which it first applies the amendments. The amendments are not expected to have a
material impact on the consolidated financial statements.
Expected settlement amount
(2)
(1)
Borrowings
Liabilities
Financial assets
With indefinite useful life
With definite useful life
Intangible assets (except goodwill):
Accounts payable
Goodwill
Assets and liabilities classified as held for sale
Inventories
Contract assets
Accounts receivable
money market funds)
Cash and cash equivalents (investments in certain
Property, plant, and equipment
Right-of-use assets
5
payment arrangements
Contract liabilities
Amortized cost
Amortized cost
See separate table
Impairment-only approach
Amortized cost
Impairment-only approach
Amortized cost
Amortized cost
Lower of carrying amount of the disposal group and fair
value less costs to sell
Lower of cost and net realizable value
Impairment-only approach
Amortized cost
Fair value through profit or loss
Amortized cost
Other financial liabilities
Cash and cash equivalents
Assets
Subsequent measurement principle
OVERVIEW OF SELECTED SUBSEQUENT MEASUREMENT PRINCIPLES
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223
The subsidiaries are held either directly by adidas AG or indirectly via the two holding companies adidas
Beteiligungsgesellschaft mbH in Germany or adidas International B.V. in the Netherlands.
121
120
(3)
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
(1)
A schedule of the shareholdings of adidas AG is shown in Attachment I to the consolidated financial
statements. This schedule comprises information about the name and domicile of all consolidated
subsidiaries, as well as the respective share held in the capital of these subsidiaries. Furthermore, the
schedule of the shareholdings of adidas AG is published on the electronic platform of the German Federal
Gazette. SEE SHAREHOLDINGS
Acquisitions of additional investments in subsidiaries which are already controlled are recorded as equity
transactions. Therefore, neither fair value adjustments of assets and liabilities nor gains or losses are
recognized. Any difference between the cost for such an additional investment and the carrying amount of
the net assets at the acquisition date is recorded directly in shareholders' equity.
The following table includes an overview of selected subsequent measurement principles used in the
preparation of the consolidated financial statements.
PRINCIPLES OF MEASUREMENT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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224
The financial effects of intercompany transactions as well as any unrealized gains and losses arising from
intercompany business relations are eliminated in preparing the consolidated financial statements.
Within the scope of the first-time consolidation, all acquired assets and liabilities are recognized in the
statement of financial position at fair value at the acquisition date. A debit difference between the
acquisition cost and the proportionate fair value of assets, liabilities, and contingent liabilities is
recognized as goodwill. A credit difference is recorded in the consolidated income statement after a
reassessment of the fair value of the assets, liabilities and contingent liabilities has been performed. In
cases where not all of the shares in the investment in a subsidiary are acquired, a non-controlling interest
measured initially as a proportionate share of net assets is recognized at the date of the first-time
consolidation.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
-
The designation of certain equity instruments at fair value through other comprehensive income (equity) is
based on a strategic Management decision.
230
These are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are
the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance
costs and income tax expense.
The sale must be expected to be completed within one year from the date of the classification. Assets and
liabilities classified as held for sale are hence presented separately as current items in the consolidated
statement of financial position.
Assets/liabilities and disposal groups classified as held for sale are non-current assets and liabilities
expected to be realized principally through a sale rather than through continuing use. The criteria for held
for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal
group is available for immediate sale in its present condition. It being unlikely that significant changes to
the sale will be made or that the decision to sell will be withdrawn is also a prerequisite for the
classification.
ASSETS/LIABILITIES AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
Discontinued operations are excluded from the net income/loss from continuing operations and are
presented as a single amount as gain/loss from discontinued operations, net of tax in the consolidated
income statement. When an operation is classified as a discontinued operation, the comparative
consolidated income statement and consolidated statement of cash flows are restated and presented as if
the operation had been classified as such from the start of the comparative year. SEE NOTE 03
is a subsidiary acquired exclusively with a view to resale.
Generally, all investments in equity instruments are measured at fair value through profit or loss, unless
these investments represent investments that the company intends to hold for long-term strategic
purposes, which are then designated as equity securities at fair value through other comprehensive
income (equity).
is part of a single coordinated plan to dispose of a separate major line of business or geographic area
of operations, or
represents a separate major line of business or geographic area of operations,
A part of the adidas group, whose operations and cash flows can be clearly distinguished operationally and
for financial reporting purposes from the other operating businesses, is classified as a discontinued
operation if the component either has been disposed of or is classified as held for sale, and:
DISCONTINUED OPERATIONS
Finished goods and merchandise are valued at the lower of cost or net realizable value, which is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale. Costs are determined using a standard valuation method, the
'average cost method.' Costs of finished goods include cost of direct materials and labor and the
components of the manufacturing overheads which can be reasonably attributed to finished goods. The
allocation of overheads, is based on the planned average utilization. The net realizable value allowances
are computed consistently throughout the company based on the age and expected future sales of the
items on hand.
INVENTORIES
– is a subsidiary
INTEREST
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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1
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adidas
237
Interest is recognized as income or expense as incurred using the effective interest method' with the
exception of interest that is directly attributable to the acquisition, construction, or production of a
qualifying asset. This interest is capitalized as part of the cost of the qualifying asset.
4
Interest paid is presented within the net cash used in financing activities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
adidas receives government grants in the form of subsidies, subventions or premiums from local, national,
or international government authorities such as those of the Free State of Bavaria, the Federal Republic of
Germany, and the European Union.
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238
When there is uncertainty over income tax treatments, adidas recognizes and measures current or
deferred tax assets or liabilities applying the requirements of IAS 12 and IFRIC 23. On a case-by-case
basis, adidas determines whether to consider each uncertain tax treatment separately or together with
one or more other uncertain tax treatments, depending on which approach better predicts the resolution
of the uncertainty.
GOVERNMENT GRANTS
Income tax is recognized in the consolidated income statement unless it relates to items recognized
directly in equity, in which case it is recognized in equity. Deferred tax relating to items recognized outside
profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the
underlying transaction either in other comprehensive income or directly in equity.
Promotional expenses including one-time up-front payments for promotion contracts are principally
expensed on a straight-line basis over the term of the agreement.
adidas computes deferred taxes for all temporary differences between the carrying amount and the tax
base of its assets and liabilities as well as for tax loss carry-forwards. As it is not permitted to recognize a
deferred tax liability for the initial recognition of goodwill, adidas does not compute any deferred taxes
thereon.
Current income taxes are computed in accordance with the applicable taxation rules established in the
countries in which adidas operates.
INCOME TAXES
Government grants are reported in the consolidated income statement as a deduction from the related
expenses.
Government grants are recognized if there is adequate certainty that the grants will be received and that
the company satisfies the conditions attached.
Deferred tax assets arising from deductible temporary differences and tax loss carry-forwards which
exceed taxable temporary differences are only recognized to the extent that it is probable that the entity
concerned will generate sufficient taxable income to realize the associated benefit. The carrying amount of
deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilized.
Advance payments for media campaigns are included in prepaid expenses within other current and non-
current assets until the services are received, and upon receipt are expensed in full. Significant costs for
media campaigns are expensed on a straight-line basis over the intended duration of the media campaign.
REVENUE
In addition, adidas generates revenue from the licensing-out of the right to use the brands to third parties.
The resulting sales-based royalty and commission income is recognized based on the contract terms on
an accrual basis, i.e., revenue is already realized even though the payment takes place at a later point in
time. Contracts with guaranteed minimum income result in contract assets and contract liabilities
depending on the timing of yearly payments received from customers. The performance obligation related
to these contract assets and liabilities is satisfied over the life of the contract, i.e., the guaranteed
minimum income per year is evenly distributed over twelve months, whereby payments are recorded as
arranged in the contract with the customer.
236
Contract assets and liabilities are recognized in connection with revenues arising from the licensing-out of
the right to use the brands to third parties. Contract assets represent the company's right to consideration
CONTRACT ASSETS AND CONTRACT LIABILITIES
When adidas AG shares are repurchased and recognized as treasury shares, the amount of the
consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a
deduction from equity. The nominal value of € 1 per treasury share is debited to share capital. Any
premium or discount to the nominal value is shown as an adjustment to the retained earnings. If treasury
shares are sold or re-issued, the nominal value of the shares will be credited to share capital and the
amount exceeding the nominal value will be added to the retained earnings.
TREASURY SHARES
Contingent liabilities are possible obligations that arise from past events and whose existence will be
confirmed only by the occurrence of one or more uncertain future events not wholly within the control of
adidas. Additionally, contingent liabilities may be present obligations that arise from past events, but which
are not recognized because it is not probable that an outflow of resources will be required to settle the
obligation, or the amount of the obligation cannot be measured with sufficient reliability. Contingent
liabilities are not recognized in the consolidated statement of financial position but are disclosed and
explained in the Notes. SEE NOTE 38
adidas
CONTINGENT LIABILITIES
PENSIONS AND SIMILAR OBLIGATIONS
Accrued liabilities are liabilities to pay for goods or services that have been received or supplied but have
not been paid, invoiced, or formally agreed with the supplier, including amounts due to employees. Here,
however, the timing and amount of an outflow of resources is not uncertain.
Provisions are recognized where a present obligation (legal or constructive) to third parties has been
incurred as a result of a past event which can be estimated reliably and is likely to lead to an outflow of
resources, and where the timing or amount is uncertain. The expense relating to a provision is presented
in the consolidated income statement. Non-current provisions are discounted if the effect of discounting is
material, with the interest expense being reported as financial expenses.
PROVISIONS AND ACCRUED LIABILITIES
interest and principal payments of a comparable liability without conversion rights, applying risk-adjusted
interest rates. The liability component is subsequently measured at amortized cost using the effective
interest method.' The equity component is determined as the difference between the fair value of the total
compound financial instrument and the fair value of the liability component and is reported within equity.
There is no subsequent measurement of the equity component. At initial recognition, directly attributable
transaction costs are assigned to the equity and liability component pro rata on the basis of the respective
carrying amounts.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Provisions and expenses for pensions and similar obligations relate to the company's obligations for
defined benefit and defined contribution plans. The obligations under defined benefit plans are determined
separately for each plan by valuing the employee benefits accrued in return for their service during the
current and prior periods. These benefit accruals are discounted to calculate their present value, and the
fair value of any plan assets is deducted in order to determine the net liability. The discount rate is set on
the basis of yields of high-quality fixed-rate corporate bonds at the balance sheet date provided there is a
deep market for such corporate bonds in a given currency. Otherwise, government bond yields are used as
a reference. Calculations are performed by qualified actuaries using the 'projected unit credit method' in
accordance with IAS 19 Employee Benefits. Obligations for contributions to defined contribution plans are
recognized as an expense in the consolidated income statement as incurred.
ADVERTISING AND PROMOTIONAL EXPENDITURE
1
2
Customer incentives and options as well any obligation for adidas to pay for the delivery of goods to the
customer do not create separate performance obligations under IFRS 15 and are separated from revenue.
Customer incentives that were not contractually agreed upon as well as promises that were implied by
adidas' customary business practice and did not bear the characteristics of a discount are accounted for
as marketing and point-of-sale expenses.
Provided that the customers meet certain predefined conditions, adidas grants its customers different
types of globally aligned performance-based rebates. Examples include rebates for customers' increasing
adidas product sales, for customer loyalty, and for sell-out support, e. g., through retail space/franchise
store management. As soon as it is assumed that the customer fulfills the requirements for being granted
the rebate, this amount is accounted for by means of an accrued liability for marketing and sales.
Under certain conditions and in accordance with contractual agreements, the company's customers have
the right to return products and to either exchange them for similar or other products or to return the
products against the issuance of a credit note. Amounts for estimated returns related to revenues are
accrued based on past experience of average return rates and average actual return periods by means of a
refund liability. The return assets are measured at the former carrying amount of the
inventories/products, less any handling costs and any potential impairment.
The amount of recognizable revenue is measured at the fair value of the consideration received or
receivable, net of returns, early payment discounts and rebates.
Revenue derived from the sale of goods is recognized when adidas has satisfied the respective
performance obligation by transferring the promised goods to the customer. The goods are transferred at
the point in time when the customer obtains control of the respective goods. The timing of the transfer of
control depends on the individual terms of the sales agreement (terms of delivery).
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ANNUAL REPORT 2021
in exchange for rights that adidas has transferred to a third party and contract liabilities represent the
company's obligation to transfer rights to a third party for which adidas has already received consideration
from the third party. The subsequent measurement of contract assets follows the impairment-only
approach for financial assets within the scope of IFRS 9. Contract liabilities are measured at the expected
settlement amount.
5
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3
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
4
the single most likely amount or
GROUP MANAGEMENT REPORT -
OUR COMPANY
2021
2020
Operational business
Net sales
1,767
1,409
Expenses
(1,467)
(1,371)
Gain/(loss) from reversal/impairment of Reebok trademark
549
(41)
Gain/(loss) from operating activities before taxes
849
(3)
Income taxes
(171)
240
Gains from discontinued operations for the financial year 2021 include a write-up of the previously
impaired Reebok trademark in the amount of € 549 million. The related deferred tax expense amounts to
€ 143 million. The calculated fair value of the Reebok disposal group, derived from the purchase price
agreement, is higher than its carrying amount, including the carrying amount of the Rebook trademark,
(32)
654
(24)
Gain/(loss) from discontinued operations, net of tax
Full year
Transaction costs, net of tax
(30)
Transaction costs
(32)
678
Gain/(loss) from operating activities, net of tax
(29)
Income taxes
Full year
DISCONTINUED OPERATION REEBOK € IN MILLIONS
The prior-year figures of the consolidated income statement and the consolidated statement of cashflows
have been restated in accordance with IFRS 5 to report the discontinued operations separately from
continuing operations.
For cash-settled share-based payment transactions, the goods or services acquired, and the liability
incurred are measured at the fair value of the liability. Until the liability is settled, the fair value of the
liability is remeasured at the end of each reporting period and at the date of settlement, with all changes in
fair value recognized in profit or loss for the period.
Equity-settled share-based payment transactions with parties other than employees are generally
measured at the fair value of the goods or services received, except where the fair value cannot be
estimated reliably, in which case they are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service.
No expense is recognized for awards that do not ultimately vest because non-market performance and/or
service conditions have not been met.
Service and non-market performance conditions are not taken into account when determining the fair
value of awards at the grant date, but the likelihood of the conditions being met is assessed as part of the
company's best estimate of the number of equity instruments that will ultimately vest. If the estimate is
changed, even a credit in the consolidated income statement for the period can be possible as it reflects
the movement in cumulative expenses from the beginning to the end of that period.
The cost of equity-settled share-based payment transactions with employees is determined by the fair
value at the grant date using an appropriate valuation model. That cost is recognized in personnel
expenses, together with a corresponding increase in equity (retained earnings), over the period in which
the service and, where applicable, the performance conditions are fulfilled (the vesting period). The
cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the company's best estimate of the number
of equity instruments that will ultimately vest. ▸ SEE NOTE 26
SHARE-BASED PAYMENT
ESTIMATION UNCERTAINTIES AND JUDGMENTS
In assessing whether and how an uncertain tax treatment affects the determination of taxable profits (tax
losses), tax bases, unused tax losses, unused tax credits, and tax rates, adidas assumes that a taxation
authority will examine amounts it has a right to examine and will have full knowledge of all relevant
information when making those examinations.
5
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Where it is not considered probable that the tax authority will accept an uncertain tax treatment, adidas
reflects the effects of the uncertainty by using one of the following methods, depending on which method
better predicts the resolution of the uncertainty:
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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the expected value based on the sum of the probability-weighted amounts.
TO OUR SHAREHOLDERS
The preparation of financial statements in conformity with IFRS requires the use of assumptions and
estimates that affect reported amounts and related disclosures. Although such estimates are based on the
best of our knowledge of current events and actions, actual results may ultimately differ from these
estimates. In 2021, assumptions and estimates continued to be significantly impacted by the coronavirus
pandemic, and due to the ongoing situation, future assumptions and estimates will be impacted by the
coronavirus pandemic.
adidas
On February 11, 2021, the company decided to initiate a formal process aimed at divesting Reebok, which
was completed with signing of a sales agreement with Authentic Brands Group LLC on August 12, 2021.
Due to the concrete plans to divest Reebok and the approval by the relevant committees, the Reebok
operating business has been reported as discontinued operations and classified as a disposal group held
for sale since the resolution. The fair value was calculated based on the existing purchase price
agreement. The majority of the purchase price will be paid in cash upon completion of the transaction, with
the remainder comprising deferred and contingent consideration. The fair value of earn-out components
was determined using the discontinued cash flow method and Monte Carlo method, respectively. The
transaction is expected to be completed in the first quarter of 2022.
03 DISCONTINUED OPERATIONS
Judgments have also been used in determining the lease term for lease contracts as well as in selecting
valuation methods for intangible assets. SEE NOTE 10 SEE NOTE 12 SEE NOTE 19
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, which have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are outlined in the respective Notes, which include in
particular non-current assets held for sale and discontinued operations, accounts receivable, inventories,
right-of-use-assets, goodwill, other provisions, pensions, derivatives, and income taxes, as well as other
financial commitments and contingencies. SEE NOTE 03 SEE NOTE 05 SEE NOTE 07 SEE NOTE 10 SEE NOTE 11 SEE NOTE 18
▶ SEE NOTE 23 ▶SEE NOTE 28 SEE NOTE 34 SEE NOTE 38
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
239
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IMPAIRMENT LOSSES ON FINANCIAL ASSETS
An impairment loss recognized in goodwill is not reversible. With respect to all other impaired assets, an
impairment loss recognized in prior periods is only reversed affecting the consolidated income statement
if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
that would have been determined (net of depreciation or amortization) if no impairment loss had been
recognized.
Irrespective of whether there is an impairment indication, intangible assets with an indefinite useful life
and goodwill acquired in business combinations are tested annually on December 31 for impairment. In
the case that indicators for impairment are present at any point in time other than on December 31, these
assets are also tested for impairment at this point in time.
The impairment test for trademarks with indefinite useful lives is performed on the relevant level of cash-
generating units.
amount is lower than the carrying amount, the other non-current assets of the group of cash-generating
units are reduced pro rata on the basis of the carrying amount of each asset in the group of cash-
generating units. In allocating an impairment loss, the carrying amount of an individual asset is not
reduced below its fair value. The amount of the impairment loss that would otherwise have been allocated
to the asset is allocated pro rata to the other assets of the cash-generating unit and groups of cash-
generating units.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Impairment losses for financial assets measured at amortized cost or at fair value through other
comprehensive income (debt instrument) are recognized in accordance with IFRS 9 Financial Instruments.
The standard requires that not only historical data, but also future expectations and projections are taken
into consideration when accounting for impairment losses ('expected credit loss' model).
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adidas consistently applies the simplified approach and recognizes lifetime expected credit losses for all
accounts receivable. In order to calculate a collective loss allowance, all accounts receivable sharing
similar credit risk characteristics are allocated into several portfolios based on geographical regions and
macroeconomic indicators. Historical payment and aging patterns for accounts receivable are analyzed
individually for each of the portfolios to determine the probability of default, which is further adjusted by
forward-looking factors derived primarily from the Credit Default Swap (CDS) spreads of the countries
where adidas runs its operations. The adjusted probability of default is then applied in combination with a
loss given default and exposure at default as a percentage rate to calculate the expected credit loss for
each portfolio and aging bucket. The percentage rates are reviewed on a regular basis to ensure that they
reflect the latest data on credit risk. In case objective evidence of credit impairment is observed for
accounts receivable from a specific customer, a detailed analysis of the credit risk is performed, and an
appropriate individual loss allowance is recognized for this customer. Accounts receivables are considered
to be in default when it is expected that the debtor will not fulfill its credit obligations toward adidas.
232
Objective evidence that credit impairment of financial assets has occurred includes, for instance,
significant financial difficulty of the debtor/issuer, indications of their potential bankruptcy, the
Other financial assets within the scope of IFRS 9 impairment analysis include mainly security deposits as
well as accounts receivable from credit card companies and electronic marketplaces. The credit risk
associated with such financial assets is determined based on the economic environment, external credit
ratings, and/or CDS spreads of counterparty financial institutions. Other financial assets are considered to
be in default when they are more than 90 days past due.
default and recovery rates derived from CDS spreads or external credit ratings of the counterparties. Cash
and cash equivalents are considered to be in default when they are more than 90 days past due.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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Cash and cash equivalents measured at amortized cost are subject to a general impairment approach
under IFRS 9. adidas applies the low credit risk exemption for the majority of such instruments due to the
low credit risk for these investments, which is based upon the investment grade of their counterparties
(defined by the company as equivalent of BBB+ or higher). A significant increase of credit risk is assumed
for cash and cash equivalents when the instruments are more than 30 days past due. adidas monitors the
credit risk associated with cash and cash equivalents taking into consideration the economic environment,
external credit ratings, and/or CDS spreads of counterparty financial institutions, and using established
exposure limits. Expected credit loss of cash and cash equivalents is calculated based on the probability of
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TO OUR SHAREHOLDERS
deterioration of the market for their products and general macroeconomic problems. The gross carrying
amount of financial assets is written off when adidas, based on a case-by-case assessment, assumes that
their recovery is no longer possible.
adidas
The impairment test for goodwill is performed based on groups of cash-generating units, which represent
the lowest level within the company at which goodwill is monitored for internal management purposes. If
there is an impairment loss for a group of cash-generating units, first the carrying amount of any goodwill
allocated to the group of cash-generating units is reduced. Subsequently, provided that the recoverable
Additional disclosures are provided in these Notes. ▸ SEE NOTE 03
Impairment losses on initial classification as held-for-sale or held for distribution and subsequent gains
and losses on remeasurement are recognized in profit or loss. Reversals of impairment losses due to a
subsequent increase in fair value are recognized up to a maximum of the amount of impairment losses
that, unless attributable to goodwill, were recognized prior to classification of the asset or disposal group
in accordance with IFRS 5 and IAS 36, or were recognized at or after the date of classification in
accordance with IFRS 5.
Assets classified as held for sale are not depreciated on a straight-line basis.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
PROPERTY, PLANT, AND EQUIPMENT
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
3
2
ANNUAL REPORT 2021
GROUP MANAGEMENT REPORT -
OUR COMPANY
adidas
TO OUR SHAREHOLDERS
231
Property, plant, and equipment are measured at amortized cost. This comprises all costs directly
attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner
intended by Management less any accumulated depreciation and accumulated impairment losses.
Depreciation is recognized for those assets, with the exception of land and construction in progress, over
the estimated useful life utilizing the 'straight-line method' and taking into account any potential residual
value, except where the 'declining-balance method' is more appropriate in light of the actual utilization
pattern. Parts of an item of property, plant, and equipment with a cost that is significant in relation to the
total cost of the item are depreciated separately.
ESTIMATED USEFUL LIVES OF PROPERTY, PLANT, AND EQUIPMENT
An impairment loss is recognized in other operating expenses or reported in goodwill impairment losses if
the carrying amount exceeds the recoverable amount.
If facts and circumstances indicate that non-current assets (e.g., property, plant, and equipment as well as
intangible assets including goodwill) might be impaired, the recoverable amount is determined. This is
measured at the higher of fair value less costs of disposal (net disposal price) and value in use. Non-
financial items measured at the recoverable amount primarily relate to impaired property, plant, and
equipment being measured based on value in use or on fair value taking unobservable inputs (e.g., profit
or cash flow planning) into account. The fair value is measured at Level 3 according to IFRS 13 Fair Value
Measurement.
IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS
Expenditure for repairs and maintenance is expensed as incurred. Renewals and improvements are
capitalized and depreciated separately, if the recognition criteria are met.
2-10
3-5
Estimated useful lives are as follows:
20-50
-
Years
Technical equipment and machinery as well as other equipment
Furniture and fixtures
Buildings and leasehold improvements
Land
indefinite
Impairment losses on accounts receivable are presented in the line item 'Impairment losses (net) on
accounts receivable and contract assets' while impairment losses on all other financial assets are shown
in the line item 'Financial expenses' in the consolidated income statement.
1
adidas assesses whether a contract is or contains a lease according to IFRS 16 Leases at the inception of
the contract. IFRS 16 defines a lease as a contract that conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. A contract conveys the right to control the use of
an identified asset if the lessee has the right to obtain substantially all the economic benefits from the use
of the identified asset (e.g., by having the exclusive right to use the asset throughout that period) and the
right to direct the use of the identified asset throughout the period of use.
Patents, trademarks and licenses
Software
Trademarks
ESTIMATED USEFUL LIVES OF INTANGIBLE ASSETS
Estimated useful lives are as follows:
Expenditure during the development phase of internally generated intangible assets is capitalized as
incurred if it fulfills the recognition criteria under IAS 38 Intangible Assets.
Websites
Intangible assets with definite useful lives are valued at amortized cost. Amortization is calculated on a
straight-line basis over the estimated useful life, taking into account any potential residual value.
INTANGIBLE ASSETS (EXCEPT GOODWILL)
Goodwill is carried in the functional currency of the acquired foreign entity.
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment
losses (Impairment-only approach). ▸ SEE NOTE 12
Goodwill is an asset representing the future economic benefits arising from assets acquired in a business
combination that are not individually identified and separately recognized. This results when the purchase
cost exceeds the fair value of acquired identifiable assets, liabilities and contingent liabilities. Goodwill
arising from the acquisition of a foreign entity and any fair value adjustments to the carrying amounts of
assets received, liabilities, and contingent liabilities are treated as assets, liabilities and contingent
liabilities of the respective reporting entity, and are translated at exchange rates prevailing at the date of
the initial consolidation.
GOODWILL
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Intangible assets with indefinite useful lives (in particular trademarks) are recognized at purchase cost
and are subject to an impairment test at least on an annual basis (impairment-only approach).
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Years
3-7
LEASES
4
3
ANNUAL REPORT 2021
1
adidas
indefinite
235
Borrowings (e.g., eurobonds) and other liabilities are recognized at fair value using the effective interest
method,' net of transaction costs incurred. In subsequent periods, long-term borrowings are stated at
amortized cost using the effective interest method.' Any difference between proceeds (net of transaction
costs) and the redemption value is recognized in the consolidated income statement over the term of the
borrowing.
BORROWINGS AND OTHER LIABILITIES
Research costs are expensed in full as incurred. Development costs for internally generated intangible
assets are also expensed as incurred if they do not meet the recognition criteria of IAS 38 Intangible
Assets.
RESEARCH AND DEVELOPMENT
2
5-15
Compound financial instruments (e.g., convertible bonds) are divided into a liability component shown
under borrowings and into an equity component resulting from conversion rights. The equity component is
included in the capital reserve. The fair value of the liability component is determined by discounting the
GROUP MANAGEMENT REPORT -
OUR COMPANY
2
5
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
1
adidas
233
adidas recognizes a right-of-use asset and a corresponding lease liability at the lease commencement
date. At the commencement date, adidas initially measures the lease liability at the present value of the
lease payments that are not paid at that date. This includes fixed payments (including in-substance fixed
payments), less any lease incentives receivable, variable lease payments based on an index or a rate,
amounts expected to be payable by adidas under residual value guarantees, the exercise price of a
purchase option if adidas is reasonably certain to exercise that option, and payments of penalties for
terminating the lease, if the lease term reflects the lessee exercising that option. Other variable lease
adidas makes use of the recognition exemption in IFRS 16 to not recognize right-of-use assets and lease
liabilities for leases of low-value assets (i.e., value of the underlying asset, when new, is € 5,000 or less)
and short-term leases (shorter than twelve months and the agreement does not include a purchase
option). The lease payments associated with these leases are recognized as an expense on a straight-line
basis over the lease term. Real estate and automobile leases are excluded from the classification as 'low-
value assets.'
In its role as a lessee, adidas leases various types of assets, particularly buildings (retail stores, offices,
warehouses, etc.), land, technical equipment and machinery (warehouse equipment, production machines,
etc.), motor vehicles, and computer hardware, as well as furniture and fixtures. Lease contracts are
typically negotiated for fixed periods of up to 99 years but may include extension or termination options.
Lease terms are negotiated individually and may contain a wide range of different terms and conditions.
ANNUAL REPORT 2021
payments are excluded from the measurement of the lease liability. The lease payments are discounted
using the interest rate implicit in the lease. If this rate cannot be readily determined, adidas uses its
incremental borrowing rate. Generally, adidas uses the incremental borrowing rate as the discount rate,
adjusted to reflect the country-specific risk, the contract currency-specific risk and the lease term.
Furthermore, adidas exercises the option for lessees to combine lease payments with payments for non-
lease components in the calculation of the lease liability and right-of-use asset for all lease asset classes
except for real estate.
At the commencement date, the right-of-use asset is initially measured at cost, which is comprised of the
amount of the initial measurement of the lease liability, any lease payments made at or before the
commencement date, less any lease incentives received, any initial direct costs incurred by the lessee and
an estimate of costs to be incurred by adidas in dismantling and removing the underlying asset, restoring
the site on which it is located, or restoring the underlying asset to the condition required by the terms and
conditions of the lease. The right-of-use asset is subsequently measured at cost less any accumulated
depreciation and impairment losses and adjusted for certain remeasurements of the lease liability. In
principle, the right-of-use asset is depreciated on a straight-line basis over the lease term or the useful
life of the leased asset, whichever is shorter.
3
2
ANNUAL REPORT 2021
TO OUR SHAREHOLDERS
After the commencement date, lease payments are split into redemption payments and interest payments.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest cost on
the lease liability using the effective interest rate and reducing the carrying amount to reflect the lease
payments made. The carrying amount of the lease liability is remeasured provided any reassessments/
lease modifications occur (including changes in the assessment of whether an extension or termination
option is reasonably certain to be exercised).
adidas
4
1
adidas does not own any investment property.
statements.
In rare cases, adidas acts as a lessor when the company signs sub-leasing contracts for real estate
properties with third parties. These contracts are not material to the company's consolidated financial
Lease reassessments are the result of changes in assumptions or judgments, such as changes in lease
term due to amended estimates surrounding existing extension and termination options. It is necessary to
remeasure the lease liability using the discounted or existing future lease payments and make a
corresponding adjustment to the right-of-use asset.
Lease contract renegotiations that result in changes to the original contractual conditions, e.g., changes in
scope, consideration (including discounts and concessions), or lease term contain judgments and are
treated as lease modifications, even if they are a result of the coronavirus pandemic. Depending on the
circumstances of the renegotiation, lease modifications are either accounted for as a new separate
contract or they trigger a remeasurement of the lease liability using the discounted future lease payments.
In the latter case, a corresponding adjustment is made to the right-of-use asset with, in some instances, a
difference recognized in profit or loss.
adidas applies judgment in determining the lease term for lease contracts including extension or
termination options. The assessment of whether the options are reasonably certain to be exercised has an
impact on the lease term and therefore may significantly affect the measurement of lease liabilities and
right-of-use assets, respectively.
234
1,319
230
620
December 31, 2020/
differences
(0)
(98)
(19)
(30)
Currency translation
(21)
2,169
(147)
January 1, 2021
3
127
losses
21
(9)
(8)
(0)
[1]
Depreciation
Reversals of impairment
0
1
Impairment losses
421
250
44
4
Transfers
287
(146)
2,025
1,291
214
520
January 1, 2020
and impairment
Depreciation
Accumulated depreciation
212
1,794
473
2,093
December 31, 2021
differences
4,571
(175)
128
195
(6)
[23]
Disposals
losses
(6)
(5)
42
[1]
16
10
0
6
Impairment losses
456
Reversals of impairment
Disposals
ANNUAL REPORT 2021
[6]
in progress
fixtures
machinery
buildings
Construction
furniture, and
plant, and
equipment
and
Property,
Other
equipment,
Technical
equipment
PROPERTY, PLANT, AND EQUIPMENT € IN MILLIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
Land and
TO OUR SHAREHOLDERS
January 1, 2020
219
197
1,389
17
December 31, 2021
2,157
258
1,322
482
1,231
January 1, 2021
December 31, 2020/
2,380
221
618
185
4
3
2
sale
(113)
(0)
(69)
(7)
(37)
Currency translation
Transfers to assets held for
(1)
1
Transfers
(263)
0
(219)
(0)
32
14
61
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
1
adidas
245
Net carrying amount
2,316
0
1,336
276
704
December 31, 2021
differences
107
0
[38]
76
fixtures
80
204
294
340
430
401
15
16
58
41
1,066
1,003
(4)
(4)
1,062
999
Prepaid expenses mainly relate to promotion and service contracts. The increase in the line item ‘Tax
receivables other than income taxes' relates mainly to value-added tax.
244
PROPERTY, PLANT, AND EQUIPMENT € IN MILLIONS
The following table presents a reconciliation of the carrying amount of property, plant, and equipment:
09 PROPERTY, PLANT, AND EQUIPMENT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
270
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
3
2
ANNUAL REPORT 2021
1
adidas
TO OUR SHAREHOLDERS
Dec. 31, 2020
Dec. 31, 2021
Other current assets, net
0
0
0
Work in progress
Inventories
8
8
0
7
Raw materials
1,239
1,239
1,556
458
1,556
7
Technical
equipment
4,159
4,009
Less: accumulated allowances
Other current assets, gross
Sundry
Contract assets
Tax receivables other than income taxes
Return assets
(149)
Prepaid expenses
Other current assets consist of the following:
08 OTHER CURRENT ASSETS
Goods in transit mainly relate to shipments of finished goods and merchandise from suppliers in Asia to
subsidiaries in Europe, North America, Asia, and Latin America.
4,397
(171)
4,568
OTHER CURRENT ASSETS € IN MILLIONS
Land and
buildings
and
machinery
Other
equipment,
furniture, and
(47)
Disposals
494
183
197
19
(7)
94
January 1, 2021
4,326
258
1,800
416
1,852
Additions
December 31, 2020/
(231)
(285)
Currency translation
sale
(157)
[2]
(79)
[8]
[1]
(67)
(1)
(243)
30
32
180
Transfers
Transfers to assets held for
21
differences
(13)
165
13
73
Additions
4,405
221
128
1,910
1,842
January 1, 2020
Acquisition cost
Property,
plant, and
equipment
in progress
Construction
432
(251)
378
(32)
(129)
(28)
[82]
Currency translation
(1)
(75)
Disposals
17
51
Transfers
(205)
(4)
(162)
(7)
6
212
This calculation uses cash-flow projections based on the financial planning in line with our new strategy
'Own the Game, 'covering a four-year period in total. The planning is based on long-term expectations of
the company and in total for the groups of cash-generating units, reflects an average annual mid-single-
to low-double-digit sales increase with varying forecast growth prospects for the different groups of cash-
generating units. Furthermore, adidas expects the operating margin to improve to a level of between 12%
and 14% for the Group, and for individual groups of cash-generating units to a level of between 11% and
17% by 2025, primarily driven by an improvement in gross margin, as well as lower operating expenses as
a percentage of sales. The planning for capital expenditure and working capital is primarily based on past
experience. The planning for future tax payments is based on current statutory corporate tax rates of the
individual groups of cash-generating units. Cash flows beyond this four-year period are extrapolated using
steady growth rates of 1.7% (2020: 1.7%). According to the company's expectations, these growth rates do
not exceed the long-term average growth rate of the business sector in which the respective group of
cash-generating units operates.
As a general principle, it is regularly assessed whether there are any indications that property, plant, and
equipment might be impaired.
669
25
694
North America
77
77
n.a.
Greater China
n.a.
269
10
280
Asia-Pacific
361
(269)
66
157
5
ANNUAL REPORT 2021
1
adidas
249
Due to the classification of Reebok as discontinued operations and disposal group, the goodwill allocated
to the group of cash generating units Europe, Middle East and Africa (EMEA), North America, Greater
China and Asia-Pacific (APAC) was split and re-allocated between adidas and Reebok cash-generating
units based on relative values (fair values), respectively.
EMEA
Due to the change in the composition of the company's operating segments and associated cash-
generating units respectively, in the first quarter 2021, adidas assessed whether goodwill impairment was
required. The underlying value drivers and key assumptions for impairment testing purposes remained in
principle unchanged compared to the impairment test performed for the consolidated financial statements
as of December 31, 2020. In this context, there was no need for goodwill impairment.
1,208
Total
n.a.
(178)
178
adidas Golf
1,208
n.a.
(76)
76
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
1
adidas
248
adidas determines whether goodwill impairment is necessary at least on an annual basis. The impairment
test for goodwill is performed based on groups of cash-generating units which represent the lowest level
within the company at which goodwill is monitored for internal management purposes. This requires an
estimation of the recoverable amount of the groups of cash-generating units to which the goodwill is
allocated. The recoverable amount of a group of cash-generating units is determined based on its value in
use. Estimating the value in use requires adidas to make an estimate of the expected future cash flows
from the groups of cash-generating units and also to choose a suitable discount rate to calculate the
present value of those cash flows.
The majority of goodwill, which primarily relates to the acquisition of the Reebok business in 2006, is
denominated in US dollars. A currency translation effect of € 48 million and negative € 49 million is
recorded for the years ending December 31, 2021 and 2020, respectively.
1,208
ANNUAL REPORT 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Discount rates are based on a weighted average cost of capital calculation considering a five-year average
market-weighted debt/equity structure and financing costs referencing major competitors for the
respective group of cash-generating units. The discount rates used are after-tax rates and reflect the
specific equity and country risk of the respective group of cash-generating units.
Following the company's internal management reporting by markets, the number of cash-generating units
decreased to a total of six effective January 1, 2021. In the first quarter 2021, the number of cash-
generating units further decreased to a total of five as the cash-generating unit North America Reebok is
classified as disposal group and shown in 'Assets/liabilities classified as held for sale.'
Emerging Markets
n.a.
[593]
593
Europe
Jan. 1, 2021
The groups of cash-generating units are defined as the regional markets that are responsible for the
distribution of the adidas brands The regional markets are Europe, Middle East and Africa (EMEA), North
America, Greater China, Asia-Pacific (APAC), and Latin America. The number of groups of cash-generating
units amount to a total of five at the end of 2021 (2020: nine).
(Re-)
allocation
adidas Golf
EMEA
Dec. 31, 2020
Goodwill (€ in millions)
(Re-)
allocation
Aggregation
ALLOCATION OF GOODWILL
Due to the changes in segmental reporting, the carrying amounts of acquired goodwill have been
reallocated to the new groups of cash-generating units in the first quarter 2021 as follows:
Asia-Pacific
2
3
4
8.8%
8.2%
Jan. 1, 2021
Discount rate (after taxes)
Dec. 31, 2021
Jan. 1, 2021
694
700
77
Dec. 31, 2021
Total
Asia-Pacific
Greater China
North America
EMEA
ALLOCATION OF GOODWILL
Goodwill (€ in millions)
The carrying amounts of acquired goodwill allocated to the respective groups of cash-generating units and
the respective discount rates applied to the cash flow projections are as follows:
77
7.2%
Goods in transit
250
Future changes in expected cash flows and discount rates may lead to impairments of the reported
goodwill in the future.
A change in the discount rate by up to approximately 16 percentage points or a reduction of planned free
cash inflows by up to approximately 76% would not result in any impairment requirement.
1,208
1,228
7.3%
8.3%
157
161
8.1%
7.9%
280
290
7.9%
1,228
In the first quarter 2021, the goodwill re-allocated to the Reebok disposal group was initially measured
according to IAS 36 Impairment of Assets and was subsequently transferred to 'Assets/liabilities classified
as held for sale' due to the concrete plans to divest Reebok.
161
77
694
January 1, 2021
Total
Pacific
China
280
Asia-
North
America
EMEA
RECONCILIATION OF GOODWILL, NET € IN MILLIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Greater
1,228
157
Reebok disposal group
290
77
700
December 31, 2021
48
5
1,208
13
differences
Currency translation
(27)
(1)
(3)
(24)
30
(376)
(402)
1,584
25
Reversal of impairment losses
(3)
[3]
Impairment losses
(625)
25
(20)
[563]
Depreciation
(94)
[1]
(94)
Transfer to assets held for sale
(42)
Disposals
Currency translation differences
0
Technical
equipment
and
machinery
Land and
buildings
RIGHT-OF-USE ASSETS € IN MILLIONS
2,569
24
52
89
2,493
(0)
4
222
Net change due to remeasurements
December 31, 2021
89
0
226
Other
equipment,
521
2
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
1
adidas
246
Further information on total depreciation and amortization expenses, impairment losses, and reversals of
impairment losses is provided in these Notes. ▸ SEE NOTE 31
Impairment losses recognized in the reported financial years mainly relate to the company's own-retail
activities, for which, contrary to expectations, no sufficient future economic benefit is expected. Further
information on the methodology on impairment losses for adidas' own-retail stores is provided in these
notes. SEE NOTE 10
Irrespective of the existence of such indications, furniture and fixtures in adidas' own-retail stores are
tested annually for impairment, whereby the recoverable amount, as part of determining the profitability of
the adidas' own-retail stores, is calculated using the 'discounted cash flow method'.
ANNUAL REPORT 2021
19
10 RIGHT-OF-USE ASSETS
RIGHT-OF-USE ASSETS € IN MILLIONS
500
2,430
25
88
2,317
assets
The company recognized right-of-use assets in an amount of € 2.6 billion (2020: € 2.4 billion). The
following table presents a reconciliation of the carrying amount of right-of-use assets:
fixtures
furniture, and
Other
equipment,
Technical
equipment
and
machinery
Land and
buildings
Additions
January 1, 2021
Right-of-use
2,256
furniture, and
fixtures
ANNUAL REPORT 2021
1
adidas
247
In 2020, impairment losses where recognized for non-current assets (e.g., property, plant, and equipment,
right-of use assets and intangible assets including goodwill) as a result of the coronavirus pandemic. They
Reversals of impairment losses/impairment losses for right-of-use assets recognized in the reported
financial years mainly relate to the company's own-retail activities, for which, contrary to expectations
based in 2020, there will be a sufficient/insufficient future economic benefits. The income from reversal of
impairments in 2021 amounts to € 25 million and is mainly related to EMEA with € 23 million.
2
As a general principle, it is regularly assessed whether there are any indications that right-of-use assets
might be impaired. Irrespective of the existence of such indications, right-of-use assets in adidas' own-
retail stores are tested annually for impairment, whereby the recoverable amount, as part of determining
the profitability of the adidas' own-retail stores, is calculated using the 'discounted cash flow method.'
25
88
2,317
December 31, 2020
(10)
(0)
2,430
(0)
3
5
Dec. 31, 2020
Dec. 31, 2021
1,630
Less: accumulated impairment losses
Goodwill, net
Goodwill, gross
GOODWILL € IN MILLIONS
Goodwill primarily relates to the acquisitions of the Reebok and Runtastic businesses as well as
acquisitions of subsidiaries, primarily in the USA, Australia, New Zealand, the Netherlands, Denmark and
Italy.
4
11 GOODWILL
Income from sub-leasing of right-of-use assets recognized in the consolidated income statement in 2021
amount to € 2.7 million (2020: € 2.4 million).
related to EMEA with € 31 million; North America with € 16 million; Greater China with € 18 million; and
Asia-Pacific with € 2 million.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Further information on total depreciation and amortization expenses, impairment losses and reversals of
impairment losses is provided in these Notes. SEE NOTE 31
Right-of-use
(10)
(162)
(0)
(75)
Disposals
507
14
36
(8)
456
2,931
46
100
2,785
January 1, 2020
assets
Additions
Other changes
(83)
(611)
(2)
(0)
[161]
Currency translation differences
1
1
Depreciation
Reversal of impairment losses
(1)
[69]
Impairment losses
(684)
(25)
(48)
(69)
goods on hand
84
(171)
NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
04 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash held by banks, cash on hand, and short-term deposits.
Short-term deposits are only shown as cash and cash equivalents if they are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
The credit risk of cash and cash equivalents measured at amortized cost is insignificant due to their short-
term maturity, counterparties' investment grade credit ratings, and established exposure limits.
Therefore, adidas does not recognize any credit impairment losses for these financial assets.
Further information about cash and cash equivalents is presented in these Notes. ▸ SEE NOTE 28
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
05 ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE € IN MILLIONS
Dec. 31, 2021
Individual
loss
allowance
Total
Collective loss allowance
Past due
Accounts receivable consist mainly of the currencies US dollar, euro, and Chinese renminbi and are as
follows:
Not yet
due
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
1
425
594
In addition, effects related to the divestiture of the former TaylorMade and CCM Hockey operations that
were sold in previous periods, are shown as discontinued operations in the consolidated income
statement. This relates mainly to the valuation and payment of earn-out components. In the course of
2021, the last claims were settled and thus these sales transactions are completely finalized.
Gains from discontinued operations for the year 2021 in an amount of € 666 million (2020: loss of
€ 19 million) are entirely attributable to the shareholders of adidas AG. The tax expense in respect of
discontinued operations amounts to € 168 million (2020: tax expense of € 43 million).
GROUP MANAGEMENT REPORT -
OUR COMPANY
241
1
ANNUAL REPORT 2021
2
3
4
5
adidas
31 - 90
days
Past due > 90 days
Not
96.1%
8.7%
Loss allowance
(17)
(14)
(6)
65.4%
[26]
(208)
Accounts receivable, net
1,884
263
8
14
(145)
42.5%
5.1%
0.9%
Not
credit-
impaired
credit-
impaired
Not
credit-
impaired
Credit-
impaired
Credit-
impaired
Accounts receivable, gross
1,900
277
15
40
150
2,383
Weighted average loss rate
0
0
4
304
Other current assets
Total current assets
Long-term financial assets
Property, plant, and equipment
Right-of-use assets
Goodwill
Other current financial assets
Trademark Reebok
Other non-current financial assets
Total non-current assets
Total assets
Liabilities classified as held for sale € in millions
Accounts payable
Current lease liabilities
Deferred tax assets
Inventories
Accounts receivable
Assets classified as held-for-sale € in millions
3,150
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
and higher than the impairment losses in previous years, so that the previously impaired trademark was
written up.
As of December 31, 2021, the disposal group Reebok was recognized at the lower of its carrying amount
and fair value less costs to sell, and comprising the following main categories of assets and liabilities:
GROUP OF ASSETS AND LIABILITIES
Other current provisions
6
Current accrued liabilities
Other current liabilities
26
3
1,622
2,033
Dec 31, 2021
35
1,368
33
55
7
6
169
114
2
33
28
102
11
Total current liabilities
Pensions and similar obligations
Deferred tax liabilities
Other non-current provisions
Non-current accrued liabilities
Other non-current financial liabilities
Other non-current liablilities
Total non-current liabilities
Total liabilities
Dec 31, 2021
82
300
14
15
411
Other current financial liabilities
2,175
Non-current lease liabilities
Accounts receivable, gross
71
55
Sundry
46
161
Other current financial assets, gross
Other Investments
Less: accumulated allowances
754
715
[8]
(13)
745
702
Other current financial assets, net
68
91
Receivables from retail business
Suppliers with debit balances
41
42
Revaluation of total return swap
16
60
Security deposits
48
36
Receivables from credit cards and similar receivables
172
161
Promissory notes
12
6
Further information about currency options and forward exchange contracts is contained in these Notes.
117
▶ SEE NOTE 28
adidas
obsoles-
Gross
value
cence
Net value
value
Gross
obsoles-
cence
Merchandise and finished
2,596
(149)
2,446
Dec. 31, 2020
3,321
Net value
for
for
Allowance
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
07 INVENTORIES
Inventories by major classification are as follows:
Dec. 31, 2021
Dec. 31, 2020
Allowance
243
236
INVENTORIES € IN MILLIONS
8
(267)
Accounts receivable, net
1,686
224
19
21
2
1,952
242
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
(201)
3
(34)
(12)
235
1,699
Forward exchange contracts
27
55
203
2,219
Weighted average loss rate
0.7%
4.9%
29.0%
61.5%
98.8%
Loss allowance
(13)
[8]
4
12.0%
GROUP MANAGEMENT REPORT -
OUR COMPANY
(12)
(1)
(2)
208
267
As at December 31, 2021, the loss allowance for not credit-impaired accounts receivable in the amount of
€ 230 million and credit-impaired accounts receivable in the amount of € 0.4 million was not recognized
as adidas holds credit enhancement instruments, mainly in the form of credit insurance and bank
guarantees, which mitigate the credit risk of those financial assets. Compared to December 31, 2020, the
loss allowance decreased as the previous year was impacted by the effects of the global coronavirus
pandemic, resulting in a positive development in the age structure of accounts receivable compared to the
previous year.
Further information about credit risks is contained in these Notes. SEE NOTE 28
06 OTHER CURRENT FINANCIAL ASSETS
Other current financial assets consist of the following:
OTHER CURRENT FINANCIAL ASSETS € IN MILLIONS
Dec. 31, 2021
TO OUR SHAREHOLDERS
21
Currency options
Dec. 31, 2020
7
(5)
There are no material balances of accounts receivable written off but subject to enforcement activity.
[3]
MOVEMENT IN LOSS ALLOWANCES FOR ACCOUNTS RECEIVABLE € IN MILLIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Net remeasurement of loss allowances
Write-offs charged against the loss allowance accounts
Loss allowances at January 1
Other changes
Loss allowances at December 31
Currency translation differences
2020
267
189
(61)
98
2021
denomination of € 1,000. The bond was issued with a spread of 100 basis points over the corresponding
average euro swap rate, with the issue price being 99.357%.
Two Eurobonds were issued on October 1, 2014. A €600 million Eurobond with a term of seven years and a
coupon of 1.25% was redeemed on July 8, 2021. A bond with a term of twelve years and a volume of
€400 million has a coupon of 2.25% and matures on October 8, 2026. The Eurobond was issued with a
3,168
255
The final salary defined benefit pension scheme in the UK is closed to new entrants and to future accrual.
The benefits are mainly paid out in the form of pensions. The scheme operates under UK trust law as well
as under the jurisdiction of the UK Pensions Regulator and therefore is subject to a minimum funding
requirement. The Trustee Board is responsible for setting the scheme's funding objective, agreeing the
contributions with the company and determining the investment strategy of the scheme.
adidas
1
ANNUAL REPORT 2021
2
3
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Other current financial liabilities consist of the following:
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
In 2020, adidas issued three rated eurobonds with a size of € 500 million and denominations of €100,000
each. The four-year eurobond maturing on September 9, 2024, with a coupon of 0.00% and the fifteen-year
eurobond maturing on September 10, 2035, with a coupon of 0.625% were issued on September 1, 2020.
These bonds were priced with a spread of 33 basis points and 63 basis points, respectively, above the
corresponding euro mid-swap rate. The issue price was fixed at 100.321% and 99.360%, respectively. In
adidas' inaugural sustainability bond issuance on September 29, 2020, an eight-year eurobond was issued
with a coupon of 0.00% maturing on October 5, 2028. The sustainability bond was priced with a spread of
40 basis points above the corresponding euro mid-swap rate. The issue price was fixed at 99.410%.
Proceeds from the issuance will be used in accordance with adidas' newly created sustainability bond
framework. Eligible sustainable projects include investments into sustainable materials and processes, as
well as projects with a positive impact on the community. More specifically, this includes the sourcing of
recycled materials for sustainably manufactured products, investments into renewable energy production
and energy-efficient buildings as well as various initiatives aimed at creating lasting change in
underrepresented communities.
On September 5, 2018, adidas AG issued a € 500 million equity-neutral convertible bond with a coupon of
0.05% due on September 12, 2023. The issue price was fixed at 104% of the notional amount,
corresponding to an annual yield to maturity of negative 0.73%. The initial conversion price was
determined to be € 291.84, a conversion premium of 40% over the reference share price of € 208.46. The
economic risk exposure of share price movements was hedged by purchased call options on ordinary
adidas AG shares.
Further details on future cash outflows are provided in this Annual Report. SEE RISK AND OPPORTUNITY REPORT
260
17 OTHER CURRENT FINANCIAL LIABILITIES
In South Korea, adidas grants a final salary defined pension plan to certain employees. This plan is open to
new entrants. The benefits are paid out in the form of a lump sum. The pension plan operates under the
Employee Retirement Benefit Security Act (ERSA). This regulation requires a minimum funding amounting
to 90% of the present value of the vested benefit obligation. The annual contribution includes at least the
minimum amount in order to meet the funding requirements.
4
1,416
189
528
Between 1
and 3 years
Between 3
and 5 years
Up to 1 year
In Germany, adidas AG grants its employees contribution-based and final salary defined benefit pension
schemes, which provide employees with entitlements in the event of retirement, disability, and death.
German pension plans operate under the legal framework of the German Company Pensions Act
('Betriebsrentengesetz') and under general German labor legislation. Active existing employees and new
entrants are entitled to benefits in accordance with the general company agreement 'Core Benefits: adidas
company pension plan.' This is a pension plan with a basic employer contribution, possible salary
sacrifices, and additional matching contribution. Thus, the contributions to this pension plan are partly
paid by the employee and partly paid by the employer. The contributions are transferred into benefit
components. The benefits are paid out in the form of a pension, a lump sum, or installments. The pension
plans in Germany are financed using book reserves, a contractual trust arrangement (CTA) and, for certain
former members of the Executive Board of adidas AG, a pension fund ('Pensionsfonds') in combination
with a reinsured provident fund ('Unterstützungskasse'). Further details about the pension entitlements of
members of the Executive Board of adidas AG are provided in this Annual Report. SEE COMPENSATION REPORT
More than
5 years
Total
Bank borrowings incl.
87
37
38
538
27
Eurobond
599
500
1,389
2,488
Equity-neutral convertible
491
491
bond
Total
686
commercial paper
Given the company's diverse subsidiary structure, different defined benefit pension plans exist, comprising
a variety of post-employment benefit arrangements. The company's major defined benefit pension plans
relate to adidas AG and its subsidiaries in the UK and South Korea. The defined benefit pension plans
generally provide payments in case of death, disability, or retirement to former employees and their
survivors. The obligations arising from defined benefit pension plans are partly covered by plan assets.
85
The total expense for defined contribution pension plans amounted to € 73 million in 2021 (2020:
€ 67 million).
Embedded derivatives relate to the equity-neutral convertible bond which was issued on September 5,
2018.
115
51
4
31
9
15
17
6
Dec. 31, 2020
Dec. 31, 2021
Further information about forward exchange contracts is provided in these Notes. SEE NOTE 28
398
49
25
0
3
75
83
20
26
GROSS BORROWINGS AS AT DECEMBER 31, 2020 € IN MILLIONS
44
55
434
DEFINED BENEFIT PENSION PLANS
259
1
DEFINED CONTRIBUTION PENSION PLANS
279
267
2
1
277
266
Dec. 31, 2020
Dec. 31, 2021
Pensions and similar obligations
Similar obligations
adidas
Liability arising from defined benefit pension plans
adidas has recognized post-employment benefit obligations arising from defined benefit plans. The
benefits are provided pursuant to the legal, fiscal, and economic conditions in each respective country and
mainly depend on the employees' years of service and remuneration.
23 PENSIONS AND SIMILAR OBLIGATIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
ANNUAL REPORT 2021
PENSIONS AND SIMILAR OBLIGATIONS € IN MILLIONS
2,495
93
436
Dec. 31. 2020
12
19
10
2
17
31
85
91
12
166
17
20
160
414
Options are related to the hedging of the equity-neutral convertible bond which was issued on
September 5, 2018.
Further information about currency options and forward exchange contracts is contained in these Notes.
‣ SEE NOTE 28
Further information about promissory notes and earn-out components is provided in these Notes. SEE
NOTE 28 SEE NOTE 03
15 OTHER NON-CURRENT ASSETS
Other non-current assets consist of the following:
OTHER NON-CURRENT ASSETS € IN MILLIONS
Dec. 31. 2021
Other non-current financial assets
Sundry
Promissory notes
0
211
290
353
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
Prepaid expenses
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
14 OTHER NON-CURRENT FINANCIAL ASSETS
Other non-current financial assets consist of the following:
OTHER NON-CURRENT FINANCIAL ASSETS € IN MILLIONS
Currency options
Forward exchange contracts
Revaluation of total return swap
Options
Security deposits
Earn-out components
TO OUR SHAREHOLDERS
998
Sundry
Prepaid expenses mainly relate to long-term promotion contracts. SEE NOTE 38
Between 3
and 5 years
More than
5 years
Total
Bank borrowings incl.
29
38
37
7
111
commercial paper
Eurobond
500
399
991
1,890
Equity-neutral convertible
494
494
bond
Total
29
1,032
Between 1
and 3 years
Up to 1 year
GROSS BORROWINGS AS AT DECEMBER 31, 2021 € IN MILLIONS
The amounts reported as gross borrowings represent outstanding borrowings under the following
arrangements with aggregated expiration dates as follows:
254
Dec. 31, 2021
74
Dec. 31, 2020
100
0
2
74
103
adidas
1
ANNUAL REPORT 2021
Other non-current assets
2
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
16 BORROWINGS AND CREDIT LINES
Borrowings are denominated in a variety of currencies in which adidas conducts its business. Whereas the
largest portion of effective gross borrowings (before liquidity swaps for cash management purposes) as at
December 31, 2021, are mainly denominated in euros (2021: 100%; 2020: 98%).
The weighted average interest rate on the Group's gross borrowings decreased to 0.7% in 2021 (2020:
1.0%).
As at December 31, 2021, adidas had cash credit lines and other long-term financing arrangements
totaling € 6.6 billion (2020: € 7.3 billion); thereof unused credit lines accounted for € 4.1 billion (2020:
€ 4.1 billion). In addition, as at December 31, 2021, adidas had separate lines for the issuance of letters of
credit and guarantees in an amount of approximately € 0.6 billion (2020: € 0.5 billion).
On November 6, 2020, adidas entered into a new syndicated credit facility agreement with twelve banks
totaling € 1.5 billion. The credit facility agreement was subsequently amended on October 8, 2021. The
amended and restated credit facility with eleven partner banks will run until November 2026 and includes
an extension option of one year exercisable in 2022. It can be drawn in euros and US dollars. The interest
bearing is based on a defined margin on a reference rate (€STR or EURIBOR for euros).
3
243
54
Other non-current financial liabilities
(25)
37
182
Customs
1
2
(12)
[9]
24
49
Taxes, other than income taxes
709
51
(7)
(124)
(685)
657
818
Returns and warranty
84
284
14
(33)
(1)
193
Sundry
367
257
Transfers include reclassifications to liabitlies held for sale in an amount of € 43 million.
Management follows past experience from similar transactions when assessing the recognition and the
measurement of provisions; in particular, external legal opinions are considered for provisions for
customs risks and for litigation and other legal risks. All evidence from events until the preparation of the
consolidated financial statements is taken into account.
Sundry provisions mainly include provisions for onerous contracts as well as for dismantling and
restoration costs.
Provisions for taxes other than income taxes mainly relate to value added tax, real estate tax, and motor
vehicle tax.
Provisions for returns and warranty primarily arise due to the obligation of fulfilling customer claims with
regard to the return of products sold by adidas. The amount of the provision follows the historical
development of returns and warranty as well as current agreements.
Provisions for personnel mainly consist of provisions for short- and long-term variable compensation
components as well as of provisions for social plans relating to restructuring measures.
Marketing provisions mainly consist of provisions for promotion contracts, which are comprised of
obligations to clubs and athletes.
149
1,607
71
(27)
(43)
(1,040)
972
1,838
Other provisions
64
345
3
(3)
(24)
(78)
80
(190)
adidas
(228)
398
5
ANNUAL REPORT 2021
1
adidas
256
Further information about forward exchange contracts is contained in these Notes. ▸ SEE NOTE 28
The line item 'Sundry' mainly relates to payables due to customs duties.
446
363
81
110
83
70
282
183
Dec. 31, 2020
Dec. 31, 2021
Other current financial liabilities
Sundry
Customer with credit balances
Forward exchange contracts
OTHER CURRENT FINANCIAL LIABILITIES € IN MILLIONS
0
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
Personnel
22
1
0
(3)
(15)
14
24
Marketing
Thereof
non-current
Dec. 31, 2021
160
differences
Reversals
Usage
Additions
Jan. 1, 2021
Currency
translation
OTHER PROVISIONS € IN MILLIONS
Other provisions consist of the following:
18 OTHER PROVISIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Transfers
Dec. 31, 2021 Dec. 31, 2020
1
2
ANNUAL REPORT 2021
1
adidas
258
8
2,180
8
2,692
2
28
1
32
1
181
0
453
Accrued liabilities
Sundry
Personnel
3
1,037
4
1,205
2
3
4
5
Sundry
Embedded derivatives
Revaluation of total return swap
Forward exchange contracts
OTHER NON-CURRENT FINANCIAL LIABILITIES € IN MILLIONS
Other non-current financial liabilities consist of the following:
22 OTHER NON-CURRENT FINANCIAL LIABILITIES
Other current liabilities
Sundry
Contract liabilities
Deferred income
Marketing and sales
Liabilities due to social security
Tax liabilities other than income taxes
OTHER CURRENT LIABILITIES € IN MILLIONS
Other current liabilities consist of the following:
21 OTHER CURRENT LIABILITIES
Sundry accrued liabilities include accruals for interest.
Accrued liabilities for personnel mainly consist of accruals for outstanding salary payments, such as
bonuses and overtime, as well as outstanding vacation.
Accrued liabilities for marketing and sales mainly consist of accruals for distribution, such as discounts,
rebates, and sales commissions.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Liabilities due to personnel
ANNUAL REPORT 2021
2
2
2,836
26
25
84
56
2,611
2,756
Dez. 31, 2020
Dec. 31, 2021
Lease liabilities
Other equipment, furniture and fixtures
Technical equipment and machinery
Land and buildings
LEASE LIABILITIES € IN MILLIONS
The company recognized lease liabilities in an amount of € 2.8 billion (2020: € 2.7 billion).
19 LEASE LIABILITIES
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2,722
The contractual payments for lease liabilities held by adidas as at December 31, 2021, in an amount of
€ 3.1 billion (2020: € 3.1 billion) mature as follows:
CONTRACTUAL PAYMENTS FOR LEASE LIABILITIES
Within 1 year
1,002
Goods and services not yet invoiced
Thereof:
non-current
Dec. 31, 2020
Thereof:
non-current
Dec. 31, 2021
ACCRUED LIABILITIES € IN MILLIONS
Accrued liabilities consist of the following:
20 ACCRUED LIABILITIES
In 2021, the total cash outflows for leases, including the above-mentioned leases not included in the
calculation of the lease liability, amounted to € 789 million (2020: € 816 million).
Expenses from leases classified as short-term, low-value, or variable are excluded from the
measurement of the lease liability. Further information on total expenses relating to short-term, low-
value, and variable leases is provided in these Notes. SEE NOTE 31
934
Interest recognized on lease liabilities in 2021 amounted to € 66 million (2020: € 82 million).
3,057
789
842
1,641
1,580
644
Dec. 31, 2020
Dec. 31, 2021
635
Total
After 5 years
Between 1 and 5 years
3,074
183
Additions
84
104
0
Amortization
781
553
January 1, 2020
Accumulated amortization and impairment
Impairment losses
December 31, 2021
Transfers to assets held for sale
Transfers
1,223
32
23
105
(8)
Currency translation differences
(1,368]
41
(12)
7
Currency translation differences
(8)
(536)
Transfers to assets held for sale
(73)
Disposals
Disposals
96
Amortization
856
545
December 31, 2020/January 1, 2021
(18)
[48]
Currency translation differences
0
1
(73)
Disposals
TRADEMARKS AND OTHER INTANGIBLE ASSETS € IN MILLIONS
Trademarks and other intangible assets consist of the following:
12 TRADEMARKS AND OTHER INTANGIBLE ASSETS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
Other
intangible
3
STATEMENTS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
5
ANNUAL REPORT 2021
1
adidas
121
2
Trademarks
assets
Acquisition cost
173
Additions
1,107
1,295
December 31, 2020/January 1, 2021
(26)
(117)
Currency translation differences
3
Increase in companies consolidated
1
(22)
1,086
1,412
Transfers
Disposals
January 1, 2020
16
December 31, 2021
64
887
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
ANNUAL REPORT 2021
adidas
252
Discount rates were based on a weighted average cost of capital calculation considering a five-year
average market weighted debt/equity structure and financing costs referencing major competitors for
each Reebok market. The discount rates used were after-tax rates and reflected the specific equity and
country risk of the relevant Reebok markets. The respective discount rates applied to the cash flow
This calculation used cash flow projections based on the financial planning covering a five-year period in
total. The planning was based on long-term expectations of the company and, in total for the Reebok
markets an average annual mid-single to-low-double-digit sales increase with varying forecast growth
prospects for the different Reebok markets. Furthermore, adidas expected the operating margin to
expand, primarily driven by an improvement in the gross margin, as well as lower operating expenses as a
percentage of sales. The planning of capital expenditure and working capital was primarily based on past
experience. The planning for future tax payments was based on current statutory corporate tax rates of
the individual Reebok markets. Cash flows beyond the detailed planning period of the respective Reebok
markets were extrapolated using a steady growth rate of 1.7% (2020: 1.7%). According to the company's
expectations, this growth rate did not exceed the long-term average growth rate of the business sector in
the individual markets in which Reebok operates.
The impairment test for the Reebok trademark was performed based on Reebok cash-generating units in
the individual markets until the reclassification of the trademark as 'assets classified as held for sale.'
This required an estimate of the recoverable amount of the Reebok groups of cash-generating units to
which the Reebok brand was allocated as a corporate asset based on projected revenues of the respective
Reebok markets. The recoverable amount of the respective Reebok markets was determined on the basis
of value in use based on the present value of the expected future cash flows.
Due to the classification of Reebok as a discontinued operation and held for sale, the Reebok trademark
was initially measured in accordance with IAS 36 'Impairment of Assets' and subsequently reclassified to
'Assets/Liabilities classified as held for sale.'
Due to the change in the composition of the company's operating segments and associated cash-
generating units respectively, the Reebok trademark was tested for impairment in the first quarter 2021.
The individual Reebok markets are defined as the regional markets which are responsible for the
distribution of the Reebok brand. The regional Reebok markets are Europe, the Middle East and Africa
(EMEA), North America, Greater China, Asia-Pacific (APAC), and Latin America. The number of cash-
generating Reebok business units amounted to a total of five (2020: six). The underlying value drivers and
key assumptions for impairment testing purposes remained in principle unchanged compared to the
impairment test performed for the consolidated financial statements as at December 31, 2020. In this
context, there was no need for Reebok trademark impairment.
1
adidas tests at least on an annual basis whether trademarks with indefinite useful lives are impaired
based on the value-in-use concept on the basis of the relevant cash-generating units.
projections of the respective cash-generating Reebok business units ranged from 7.2% to 11.8% (2020:
7.2% to 11.8%).
Further information on total depreciation and amortization expenses, impairment losses, and reversals of
impairment losses is provided in these Notes. SEE NOTE 31
16
83
87
87
Dec. 31, 2020
Dec. 31, 2021
253
In connection with the impairment test in the first quarter of 2021, an adjustment of the discount rate by
approximately 0.2 percentage points or a reduction of planned free cash inflows by approximately 9%
Iwould have not resulted in an impairment requirement.
Long-term financial assets
Other investments
Other equity investments
Investment in FC Bayern München AG
LONG-TERM FINANCIAL ASSETS € IN MILLIONS
Other equity investments include minority shareholdings. These shares are unlisted and do not have any
active market price. There is currently no intention to sell these shares. Other minority shareholdings
include positive fair value adjustments in an amount of € 1 million in 2021 (2020: positive adjustment of
€ 1 million).
Long-term financial assets primarily include an 8.33% investment in FC Bayern München AG (2020: 8.33%)
of € 87 million (2020: € 87 million). This investment is classified as fair value through profit or loss and is
recorded at fair value. This equity security does not have a quoted market price in an active market.
Therefore, existing contractual arrangements are used in order to calculate the fair value as at
December 31, 2021 and 2020.
13 LONG-TERM FINANCIAL ASSETS
Loans
750
The line item 'Other investments' comprises investments which are mainly invested in insurance products,
which are measured at fair value, and securities for long-term variable compensation components. Other
investments include positive fair value adjustments in an amount of € 0 million in 2021 (2020: positive
adjustment of € 0 million).
(545)
5
ANNUAL REPORT 2021
1
adidas
251
Runtastic.
At December 31, 2021, trademarks, mainly related to the acquisition of Runtastic GmbH in 2015, have
indefinite useful lives. This is due to the expectation of permanent use of the acquired trademark
336
16
750
305
859
December 31, 2021
December 31, 2020/January 1, 2021
January 1, 2020
16
Net carrying amount
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
252
4
1,295
[16]
32
3
32
32
Dec. 31, 2021
Trademarks, net
Less: accumulated amortization and impairment losses
Dec. 31, 2020
1,263
Other
Reebok
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Trademarks, gross
TRADEMARKS € IN MILLIONS
2
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
4
3
1
ANNUAL REPORT 2021
All equities and bonds are traded freely and have a quoted market price in an active market.
GROUP MANAGEMENT REPORT -
OUR COMPANY
At each balance sheet date, the company analyzes the over- or underfunding and, where appropriate,
adjusts the composition of plan assets.
Other non-current liabilities
Other non-current liabilities consist of the following:
OTHER NON-CURRENT LIABILITIES € IN MILLIONS
Deferred income
Liabilities due to personnel
Sundry
Dec. 31, 2021
Dec. 31, 2020
7
5
adidas
2
2
24 OTHER NON-CURRENT LIABILITIES
458
264
2
Cash and cash equivalents
0
Equity instruments
Bonds
Real estate
Pension plan reinsurance
Investment funds
Other assets
Fair value of plan assets
Dec. 31, 2021
Dec. 31, 2020
503
27
124
95
126
120
90
89
57
53
71
56
7
43
10
3
17
CONTINGENT CAPITAL 2018
The following overview of the Contingent Capital is based on § 4 section 4 of the Articles of Association of
adidas AG as well as on the underlying resolution of the Annual General Meeting held on May 9, 2018.
Additional contingent capital does not exist.
The nominal capital is conditionally increased by up to € 12.5 million divided into no more than 12,500,000
no-par-value shares (Contingent Capital 2018). The contingent capital increase serves the issuance of
registered no-par-value shares when exercising option or conversion rights or fulfilling the respective
option and/or conversion obligations or when exercising the company's right to choose to partially or in
total deliver registered no-par-value shares of the company instead of paying the due amount to the
holders or creditors of bonds issued by the company or a subordinated Group company up to May 8, 2023,
on the basis of the authorization resolution adopted by the Annual General Meeting on May 9, 2018. The
new shares will be issued at the respective option or conversion price to be established in accordance with
the aforementioned authorization resolution. The contingent capital increase will be implemented only to
the extent that holders or creditors of option or conversion rights, or the persons obligated to exercise the
option or conversion obligations based on bonds issued by the company, or a subordinated Group
company, pursuant to the authorization of the Executive Board granted by the resolution adopted by the
Annual General Meeting on May 9, 2018 (Agenda Item 8), up to May 8, 2023, and guaranteed by the
company, exercise their option or conversion rights or, if they are obligated to exercise the option or
266
adidas
1
ANNUAL REPORT 2021
2
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
The authorization to exclude subscription rights under this authorization, however, may only be used to
the extent that the pro-rata amount of the new shares in the nominal capital together with the pro-rata
amount in the nominal capital of other shares which have been issued while excluding subscription
rights by the Company since May 12, 2021, subject to the exclusion of subscription rights on the basis
of an authorized capital or following a repurchase or for which subscription or conversion rights or
subscription or conversion obligations have been granted, through the issuance of convertible bonds
and/or bonds with warrants, does not exceed 10% of the nominal capital existing on the date of the
entry of this authorization with the commercial register or - if this amount is lower - as of the
respective date on which the resolution on the utilization of the authorization is adopted. The previous
sentence does not apply to the exclusion of subscription rights for residual amounts. The Authorized
Capital 2021/|| must not be used to issue shares within the scope of compensation or participation
programs for Executive Board members or employees or for members of the management bodies or
employees of affiliated companies.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
conversion obligations, fulfill their obligations to exercise the warrant or convert the bond, or to the extent
that the company exercises its rights to choose to deliver adidas AG shares for the total amount or a part
amount instead of payment of the amount due and insofar as no cash settlement, treasury shares, or
shares of another public listed company are used to service these rights. The new shares will carry
dividend rights from the commencement of the financial year in which the shares are issued. The
Executive Board is authorized to stipulate any additional details concerning the implementation of the
contingent capital increase.
The Executive Board is also authorized, subject to Supervisory Board approval, to exclude shareholders'
subscription rights for residual amounts and to exclude shareholders' subscription rights insofar as this is
necessary for granting subscription rights to which holders or creditors of previously issued bonds are
entitled. Finally, the Executive Board is authorized, subject to Supervisory Board approval, to also exclude
shareholders' subscription rights if the issue price of the bonds is not significantly below the hypothetical
market value of these bonds and the number of shares to be issued does not exceed 10% of the nominal
capital. Treasury shares which are or will be sold with the exclusion of subscription rights in accordance
with § 71 section 1 no. 8 in conjunction with § 186 section 3 sentence 4 AktG between the starting date of
the term of this authorization and the issuance of the respective bonds shall be attributed to the
aforementioned limit of 10%. Shares which are or will be issued, subject to the exclusion of subscription
rights pursuant to § 186 section 3 sentence 4 AktG or pursuant to § 203 section 1 in conjunction with § 186
section 3 sentence 4 AktG between the starting date of the term of this authorization and the issuance of
the respective bonds in the context of a cash capital increase shall also be attributed to the
aforementioned limit of 10%. Finally, shares for which there are option or conversion rights or obligations
or a right to delivery of shares of the company in favor of the company due to bonds with warrants or
convertible bonds issued by the company or its subordinated Group companies, subject to the exclusion of
subscription rights in accordance with § 221 section 4 sentence 2 in conjunction with § 186 section 3
sentence 4 AktG during the term of this authorization based on other authorizations shall be attributed to
the aforementioned limit of 10%.
In the period up until the balance sheet date, the Executive Board of adidas AG did not issue any bonds
based on the authorization granted on May 9, 2018, and consequently did not issue any shares from the
Contingent Capital 2018.
The Annual General Meeting on May 12, 2021, granted the Executive Board an authorization to repurchase
adidas AG shares up to an amount totaling 10% of the nominal capital until May 11, 2026. The
authorization may be used by adidas AG but also by its subordinated Group companies or by third parties
on account of adidas AG or its subordinated Group companies or third parties assigned by adidas AG or
one of its subordinated Group companies.
Based on the above-mentioned authorization, the Executive Board of adidas AG commenced share
buyback programs on July 1, 2021, and October 18, 2021, respectively. Under the authorization granted,
adidas AG repurchased a total of 1,851,522 shares for a total price of € 549,999,787.55 (excluding
incidental purchasing costs), i. e., for an average price of € 297.05 per share, between July 1, 2021, and
September 30, 2021, inclusive (Share Buyback Program 2021/1). This corresponded to an amount of
€ 1,851,522 in the nominal capital and consequently to an approximate notional amount of 0.96% of the
nominal capital. Furthermore, adidas AG repurchased a total of 1,619,683 shares for a total price of
€ 499,999,974.77 (excluding incidental purchasing costs), i.e., for an average price of € 277.83 per share,
between October 18, 2021, and November 25, 2021, inclusive (Share Buyback Program 2021/II). This
corresponded to an amount of € 1,619,683 in the nominal capital and consequently to an approximate
notional amount of 0.84% of the nominal capital. In the year under review, adidas AG thus repurchased a
total of 3,471,205 shares for a total price of € 999,999,762.32 (excluding incidental purchasing costs), i.e.,
267
adidas
1
ANNUAL REPORT 2021
COMPOSITION OF PLAN ASSETS € IN MILLIONS
5
9
by issuing new shares against contributions in kind and/or cash once or several times by no more than
€ 20,000,000 altogether (Authorized Capital 2021/II), and, subject to Supervisory Board approval, to
exclude residual amounts from shareholders' subscription rights, to wholly or partly exclude
shareholders' subscription rights when issuing shares against contributions in kind and to exclude
shareholders' subscription rights when issuing shares against contributions in cash, if the new shares
against contributions in cash are issued at a price not significantly below the stock market price of the
company's shares already quoted on the stock exchange at the point in time when the issue price is
ultimately determined, which should be as close as possible to the placement of the shares; this
exclusion of subscription rights can also be associated with the listing of the company's shares on a
foreign stock exchange.
Based on the authorization granted by resolution of the Annual General Meeting of May 12, 2021 until
August 6, 2026
25 SHAREHOLDERS' EQUITY
As at December 31, 2020, the nominal capital of adidas AG amounted to € 200,416,186 divided into
200,416,186 registered no-par-value shares and was fully paid in.
With legal effect as at November 30, 2021, the nominal capital was reduced from € 200,416,186 to
€ 192,100,000 by cancelation of 8,316, 186 treasury shares. The change in the nominal capital due to the
cancelation of shares and the capital reduction was registered for declaratory entry in the commercial
register. The entry was made on January 27, 2022.
There were no other changes to the nominal capital. Thus, as at the balance sheet date, the nominal
capital of adidas AG amounted to a total of € 192,100,000 divided into 192,100,000 registered no-par-value
shares and is fully paid in.
Each share grants one vote and is entitled to dividends starting from the commencement of the year in
which it was issued. Treasury shares held directly or indirectly are not entitled to dividend payment in
accordance with § 71b German Stock Corporation Act (Aktiengesetz - AktG). As at the balance sheet date,
adidas AG held 505,145 treasury shares, corresponding to a notional amount of € 505,145 in the nominal
capital and consequently to 0.26% of the nominal capital.
AUTHORIZED CAPITAL 2021/1 AND 2021/11
The Executive Board of adidas AG did not utilize the existing amount of authorized capital of up to
€ 70 million in the 2021 financial year.
The authorized capital of adidas AG, which is set out in § 4 sections 2 and 3 of the Articles of Association on
the balance sheet date, entitles the Executive Board, subject to Supervisory Board approval, to increase
the nominal capital based on the following authorizations:
Based on the authorization granted by resolution of the Annual General Meeting of May 12, 2021 until
August 6, 2026:
265
adidas
-
1
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
-
by issuing new shares against contributions in cash once or several times by no more than
€ 50,000,000 and, subject to Supervisory Board approval, to exclude residual amounts from
shareholders' subscription rights (Authorized Capital 2021/I);
ANNUAL REPORT 2021
The expected total employer contributions for the 2022 financial year amount to € 24 million. Thereof,
€ 18 million relate to benefits directly paid to pensioners by the subsidiaries and € 6 million to employer
contributions paid into the plan assets. In 2021, the actual return on plan assets (including interest
income) was € 43 million (2020: return on plan assets of € 19 million).
South
Korea
Part of the plan assets in Germany is held by a trustee under a Contractual Trust Arrangement (CTA) for
the purpose of funding the pension obligations of adidas AG and insolvency insurance with regard to part
of the pension obligations of adidas AG. The trustee is the registered association adidas Pension Trust e.V.
The investment committee of the adidas Pension Trust determines the investment strategy with the goal to
match the pension liabilities as far as possible and to generate a sustainable return. In 2021, no additional
employer funding contribution was transferred to the trustee. The plan assets in the registered
association are mainly invested in real estate, cash and cash equivalents, equity index funds and hybrid
bonds. Another part of the plan assets in Germany is invested in insurance contracts via a pension fund
and a provident fund. For this portion, an insurance entity is responsible for the determination and the
implementation of the investment strategy.
Dec. 31, 2020
Germany
UK
2
South
Germany
UK
Korea
Present value of the obligation from
defined benefit pension plans
594
71
Dec. 31, 2021
16
62
16
Increase in the discount rate by
0.5%
546
52
63
15
542
55
15
Reduction in the discount rate by
0.5%
592
In the following table, the effects of reasonably conceivable changes in the actuarial assumptions on the
present value of the obligation from defined benefit pension plans are analyzed for Germany, the UK, and
South Korea. In addition, the average duration of the obligation is shown.
SENSITIVITY ANALYSIS OF THE OBLIGATION FROM DEFINED BENEFIT PENSION PLANS € IN MILLIONS
735
768
665
9
(7)
43
49
9
10
1
1
(20)
(19)
(0)
[16]
36
(22)
39
5
(3)
1
0
1
(0)
0
7
0
648
In the UK, the plan assets are held in an external trust. The investment strategy is aligned with the
structure of the pension obligations in these countries. In the rest of the world, the plan assets consist
predominantly of insurance contracts.
80
16
Contributions paid by plan participants
Interest income from plan assets
Return on plan assets (not included in net interest income)
Business combinations / transfers / divestitures
Fair value of plan assets as at December 31
2020
458
442
5
(4)
(8)
Contributions by the employer
(7)
7
1
1
6
7
38
13
2
503
458
Approximately 95% (2020: 96%) of the total plan assets are allocated to plan assets in the three major
countries: Germany (2021: 78%, 2020: 79%), UK (2021: 14%, 2020: 13%), and South Korea (2021: 3%, 2020:
5%).
2
Pensions paid
Currency translation differences
Fair value of plan assets as at January 1
649
70
17
Average duration of the obligations
(in years)
17
23
4
18
24
11
Since many pension plans are closed to future accrual, the salary trend plays a minor role in determining
pension obligations. Due to the fact that with the introduction of the Core Benefits arrangement, German
pension plans are mainly paid as lump sums, the pension increase rate and the mortality assumption have
significantly less impact than the discount rate when calculating the pension obligations.
263
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
FAIR VALUE OF PLAN ASSETS € IN MILLIONS
H2021
80
3
Purchase date
TO OUR SHAREHOLDERS
3,113
820,543.32
263.59
3,113
0.002
October 11, 2021
CHANGES IN THE PERCENTAGE OF VOTING RIGHTS
Pursuant to § 160 section 1 no. 8 AktG, existing shareholdings which have been notified to adidas AG in
accordance with § 33 section 1 or section 2 German Securities Trading Act (Wertpapierhandelsgesetz -
WpHG) need to be disclosed.
The table 'Notified reportable shareholdings' reflects reportable shareholdings in adidas AG as at the
balance sheet date which have each been notified to adidas AG. In each case, the details relate to the most
recent voting rights notification received by adidas AG from the parties obligated to notify. All voting rights
notifications disclosed by adidas AG in the year under review are available on the corporate website.
➤ ADIDAS-GROUP.COM/S/VOTING-RIGHTS-NOTIFICATIONS
NOTIFIED REPORTABLE SHAREHOLDINGS
Notifying party
October 7, 2021
Elian Corporate Trustee (Cayman)
Limited, Grand Cayman, Cayman
Islands
Gérald Frère²
The Desmarais Family Residuary
Trust, Montreal, Canada²
Date of reaching,
exceeding or
falling below
Notification obligations
Reporting
threshold
and attributions in
accordance with WPHG1
Shareholdings
in %
Number of
voting rights
November 30, 2021
Exceeding 3%
Ségolène Gallienne²
§§ 34, 38 par. 1 no. 2
July 9, 2021
3,593
Number of shares
purchasing costs)
January 8, 2021
2,843
840,550.80
in €
295.66
Amount in the
nominal capital
in €
Amount in the
nominal capital
in %
Transfer date to
employees
2,843
0.002
0.001
April 9, 2021
3,817
1,073,286.45
281.19
3,817
0.002
April 13, 2021
July 7, 2021
3,593
1,148,680.70
319.70
January 12, 2021
3.14
6,032,947
April 20, 2021
April 20, 2021
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
269
CAPITAL MANAGEMENT
adidas seeks to maintain a balance between a higher return on equity that might be possible with higher
levels of borrowings and the advantages and security afforded by a sound capital position. The company
further aims to maintain adjusted net borrowings below two times EBITDA (Earnings before interests,
taxes, depreciation and amortization and impairment losses and reversals) over the long term. adidas
intends to maintain a continuous rating in the middle of the upper rating class (S&P: A and Moody's: A2). In
August 2020, adidas was rated 'A +' by Standard & Poor's and 'A2' by Moody's for the first time. The
outlook for both ratings is stable. The respective rating was confirmed by Standard & Poor's in August
2021 and by Moody's in July 2021.
Financial leverage amounts to 39.4% (2020: 48.8%) and is defined as the ratio between adjusted net
borrowings in an amount of € 2.963 billion (2020: € 3.148 billion) and shareholders' equity in an amount of
€ 7.519 billion (2020: € 6.454 billion). EBITDA amounted to€ 3.066 billion for the financial year ending
December 31, 2021 (2020: € 1.967 billion). The ratio between adjusted net borrowings and EBITDA
amounted to 1.0 for the 2021 financial year (2020: 1.6).
In 2020, the definition of the ratio net borrowings over EBITDA was changed to adjusted net borrowings
over EBITDA to reflect changes in the company's Financial Policy. The most significant difference between
the previous net borrowings definition and the new adjusted net borrowings definition is the inclusion of
the present value of future lease and pension liabilities.
RESERVES
Reserves within shareholders' equity are as follows:
Capital reserve: primarily comprises the paid premium for the issuance of share capital as well as the
equity component of the issued convertible bond.
Cumulative currency translation differences: comprises all foreign currency differences arising from
the translation of the financial statements of foreign operations.
Hedging reserve: comprises the effective portion of the cumulative net change in the fair value of cash
flow hedges (intrinsic value for options and spot component for forward contracts) related to hedged
transactions that have not yet occurred, hedges of net investments in foreign subsidiaries and the
effective portion of the cumulative net change in the fair value of the total return swap.
Cost of hedging reserve - options: comprises the effective portion of the cumulative net change in the
fair value of cash flow hedges reflecting cost of hedging of options (time value and premium).
Cost of hedging reserve - forward contracts: comprises the effective portion of the cumulative net
change in the fair value of cash flow hedges reflecting cost of hedging of forward contracts (forward
component).
270
The company's policy is to maintain a strong capital base so as to uphold investor, creditor, and market
confidence and to sustain future development of the business.
The details on the percentage of shareholdings and voting rights may no longer be up to date.
1 The provisions of the WpHG stated refer to the version applicable at the time of publication of the respective individual voting rights notification.
2 Voluntary group notification due to crossing a threshold on subsidiary level.
1 no. 6
November 30, 2020
Exceeding 5%
Exceeding 5%
Exceeding 5%
§ 34
6.84
13,714,524
§ 34
6.84
13,714,524
§ 34
6.89
13,807,393
BlackRock, Inc., Wilmington, DE,
USA²
September 3, 2020
Exceeding 5%
§§ 34, 38 par. 1 no. 1,
6.39
38 par. 1 no. 2
12,799,500
Capital Research and Management
Company, Los Angeles, CA, USA
July 22, 2015
Exceeding 3%
§ 22 par. 1 sent.
3.02
6,325,110
Purchase date
Average purchase
price per share
Total price in €
(excluding
incidental
PURCHASE OF ADIDAS AG SHARES IN THE CONTEXT OF THE EMPLOYEE STOCK PURCHASE PLAN 2021/MATCHING SHARES
142,771,949.75
307.03
465,012
0.24
September
963,199
274,934,568.95
285.44
963,199
0.50
October
465,012
530,681
145,767,660.83
1,089,002 304,232,313.94
274.68
530,681
0.28
279.37
1,089,002
0.57
December
2021 financial
year total
3,471,205
November
August
0.22
423,311
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
for an average price of € 288.08 per share. This corresponded to an amount of € 3,471,205 in the nominal
capital and consequently to an approximate notional amount of 1.81% of the nominal capital. Further
information on the adidas AG shares repurchased in the 2021 financial year can be taken from the table
'Repurchase of adidas AG shares in the 2021 financial year.'
REPURCHASE OF ADIDAS AG SHARES IN THE 2021 FINANCIAL YEAR
Total price in €
(excluding
incidental
Month
Number of
shares
purchasing
costs)
Average
purchase price
per share
in €
Amount in the
nominal capital
in €
Amount in the
nominal capital
in %
January
February
March
April
May
June
July
423,311
132,293,268.85
312.52
999,999,762.32
4
288.08
1.81
295.66
23,652
0.01
January 12, 2021
April 9, 2021
24,032
6,757,458.75
281.19
24,032
0.01
April 13, 2021
6,992,862.30
July 7, 2021
7,345,418.23
319.70
22,976
0.01
October 7, 2021
25,790
6,811,853.86
263.59
25,790
0.01
July 9, 2021
October 11, 2021
22,976
23,652
January 8, 2021
Transfer date to
employees
The company may use the repurchased shares for all purposes admissible under the authorization
granted on May 12, 2021. adidas AG, however, plans to cancel the majority of the repurchased shares.
Accordingly, 8,316,186 treasury shares were canceled in the 2021 financial year within the framework of a
simplified capital reduction conducted pursuant to § 237 section 3 no. 2 AktG. Taking into account the
company held 5,350,126 treasury shares as at December 31, 2020, and the 3,471,205 shares repurchased
in the 2021 financial year, this results in 505,145 treasury shares held as at the balance sheet date. ▸ SEE
DISCLOSURES PURSUANT TO § 315A SECTION 1 AND § 289A SECTION 1 OF THE GERMAN COMMERCIAL CODE AND EXPLANATORY REPORT
EMPLOYEE STOCK PURCHASE PLAN
In the 2016 financial year, adidas AG introduced an employee stock purchase plan in favor of employees of
adidas AG and its affiliated companies.
In connection with this employee stock purchase plan, adidas shares were purchased by a service provider
on behalf of the participating employees in the 2021 financial year. For part of such shares, adidas AG
financed a discount of 15% and for the remaining shares (matching shares) adidas financed the full
purchase price. More details on the purchase of adidas AG shares in connection with the employee stock
purchase plan in the 2021 financial year are set out in the tables 'Purchase of adidas AG shares in the
context of the employee stock purchase plan 2021' and 'Purchase of adidas AG shares in the context of the
employee stock purchase plan 2021/Matching shares.' SEE DISCLOSURES PURSUANT TO § 315A SECTION 1 AND § 289A SECTION 1 OF THE
GERMAN COMMERCIAL CODE AND EXPLANATORY REPORT SEE NOTE 02
268
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
3
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
PURCHASE OF ADIDAS AG SHARES IN THE CONTEXT OF THE EMPLOYEE STOCK PURCHASE PLAN 2021
Total price in €
(excluding
incidental
Average purchase
price per share
735
Number of shares
purchasing costs)
in €
Amount in the
nominal capital
in €
Amount in the
nominal capital
in %
3,471,205
2020
REPURCHASE AND USE OF TREASURY SHARES
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
266
Net defined benefit liability
41
57
Present value of unfunded obligation from defined benefit pension plans
236
209
Funded status
277
(458)
694
711
Present value of funded obligation from defined benefit pension plans
Fair value of plan assets
Dec. 31, 2021 Dec. 31, 2020
AMOUNTS FOR DEFINED BENEFIT PENSION PLANS RECOGNIZED IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION € IN MILLIONS
The following tables analyze the defined benefit plans, plan assets, present values of the defined benefit
pension plans, expenses recognized in the consolidated income statement, actuarial assumptions, and
further information.
The Group's pension plans are subject to risks from changes in actuarial assumptions, such as the
discount rate, salary, and pension increase rates, and risks from changes in mortality. A lower discount
rate results in a higher defined benefit obligation and/or in higher contributions to the pension funds.
Lower than expected performance of the plan assets could lead to an increase in required contributions or
to a decline of the funded status.
16
(502)
62
Thereof: liability
282
3.6
3.6
1.3
Dec. 31, 2020
Dec. 31, 2021
1.6
261
Expected pension increases
Expected rate of salary increases
267
Discount rate
The determination of assets and liabilities for defined benefit plans is based upon actuarial valuations. In
particular, the present value of the defined benefit obligation is driven by financial variables (such as the
discount rates or future increases in salaries) and demographic variables (such as mortality and employee
turnover). The actuarial assumptions may differ significantly from the actual circumstances and could lead
to different cash flows.
Thereof: adidas AG
(5)
[1]
Thereof: asset
231
201
Thereof: adidas AG
WEIGHTED AVERAGE ACTUARIAL ASSUMPTIONS IN %
1.8
592
71
Germany
South
South
Dec. 31, 2020
Dec. 31, 2021
BREAKDOWN OF THE PRESENT VALUE OF THE OBLIGATION ARISING FROM DEFINED BENEFIT PENSION PLANS IN THE MAJOR COUNTRIES
€ IN MILLIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
UK
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
4
3
2
1
ANNUAL REPORT 2021
adidas
2021
GROUP MANAGEMENT REPORT -
OUR COMPANY
16
Active members
Korea
16
594
Total
7
110
8
107
Pensioners
rights
303
55
63
184
Former employees with vested
16
318
Korea
UK
Germany
163
1.6
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
1
2
ANNUAL REPORT 2021
1
adidas
262
Of the total pension expenses recorded in the consolidated income statement, an amount of € 34 million
(2020: € 42 million) relates to employees of adidas AG and € 3 million (2020: € 3 million) relates to
employees in South Korea. The pension expense is mainly recorded within other operating expenses. The
production-related part of the pension expenses is recognized within cost of sales.
75
(7)
3
23
(13)
(38)
0
1
(3)
5
39
(22)
(54)
36
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
adidas
5
Present value of the obligation from defined benefit pension plans
as at December 31
Business combinations/transfers/divestitures
Loss on plan settlements
Past service cost/[credit]
Thereof: due to experience adjustments
Thereof: due to changes in demographic assumptions
TO OUR SHAREHOLDERS
Thereof: due to changes in financial assumptions
Payments for plan settlements
Pensions paid
Contribution by plan participants
Interest cost
Current service cost
Currency translation differences
Present value of the obligation from defined benefit pension plans
as at January 1
PRESENT VALUE OF THE DEFINED BENEFIT OBLIGATION € IN MILLIONS
Actuarial (gains)/losses
(16)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
47
Loss on plan settlements
Past service cost/[credit]
Thereof: interest cost
Thereof: interest income
Net interest expense
Current service cost
PENSION EXPENSES FOR DEFINED BENEFIT PENSION PLANS € IN MILLIONS
Remeasurements, such as gains or losses arising from changes in the actuarial assumptions for defined
benefit pension plans or a return on the plan assets exceeding the interest income, are immediately
recognized outside the income statement as a change in other reserves in the consolidated statement of
comprehensive income.
As in the previous year, the calculation of the pension liabilities in Germany is based on a discount rate
determined using the 'Mercer Yield Curve (MYC)' approach.
The weighted average actuarial assumptions as at the balance sheet date are used to determine the
defined benefit liability at that date and the pension expense for the upcoming financial year.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
52
ANNUAL REPORT 2021
2
Expenses for defined benefit pension plans (recognized in the consolidated
income statement)
Actuarial (gains)/losses on liability
The actuarial assumptions for withdrawal and mortality rates are based on statistical information available
in the various countries. In Germany, the Heubeck 2018 G mortality tables are used. In the UK,
assumptions are based on the S3 base tables with modified improvement of the life expectancy mortality
tables. In South Korea, the KIDI 2019 tables from the Korea Insurance Development Institute are used.
Thereof: due to changes in financial assumptions
1
(7)
(6)
10
9
4
49
43
0
3
Year ending
Thereof: due to changes in demographic assumptions
Dec. 31, 2020
Thereof: due to experience adjustments
Return on plan assets (not included in net interest income)
(0)
Total
Year ending
Dec. 31, 2021
Remeasurements for defined benefit pension plans (recognized as
(increase]/decrease in other reserves in the consolidated statement of
comprehensive income)
GROUP MANAGEMENT REPORT -
OUR COMPANY
Based on the resolution of the 2021 Annual General Meeting, the dividend for 2020 was € 3.00 per share
(total amount: approx. € 585 million).
Profits distributable to shareholders are determined by reference to the retained earnings of adidas AG
and are calculated under German Commercial Law.
The capital reserve includes restricted capital in an amount of € 4 million (2020: € 4 million). Furthermore,
other reserves include additional restricted capital in an amount of € 115 million (2020: € 91 million).
Retained earnings: comprises both amounts which are required by the Articles of Association and
voluntary amounts that have been set aside by adidas. The reserve includes the unappropriated
accumulated profits less dividends paid, and consideration paid for the repurchase of adidas AG shares
exceeding the nominal value. In addition, the item includes the effects of the employee stock purchase
plan and the transition effects of the implementation of new IFRSS.
Other reserves: comprises the remeasurements of defined benefit plans consisting of the cumulative
net change of actuarial gains or losses relating to the defined benefit obligations, the return on plan
assets (excluding interest income) and the asset ceiling effect, the remeasurement of the fair value of
the equity investments measured at fair value through other comprehensive income, expenses
recognized for share option plans, and effects from the acquisition of non-controlling interests, as well
as reserves required by law.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
DISTRIBUTABLE PROFITS AND DIVIDENDS
494
4
3
2
ANNUAL REPORT 2021
1
adidas
631
572
572
The Executive Board of adidas AG will propose to use retained earnings of adidas AG in an amount of
491
TO OUR SHAREHOLDERS
€ 1.334 billion as reported in the 2021 financial statements of adidas AG for a dividend payment of € 3.30
per share and to carry forward the subsequent remaining amount.
As at
December
31, 2020
26 SHARE-BASED PAYMENT
Grant date
631
13th
investment
quarter
Oct. 1,
Oct. 1,
investment
quarter
13th
As at December 31, 2021
EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH EMPLOYEES
specific period of service an appropriate discount is taken into account. The effects are presented in the
following table:
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
As at February 21, 2022, 188,458,569 dividend-entitled shares exist. This would result in a dividend
payment of € 622 million.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
271
The plan enables employees to purchase adidas AG shares with a 15% discount ('investment shares') and
to benefit from free matching shares. Currently, eligible employees of adidas AG and seventeen other
subsidiaries can participate in the plan. Up to two weeks before the start of an investment quarter each
eligible employee can enroll for the plan. The company accepts enrolment requests on the first day of the
relevant investment quarter. This is the grant date for the investment and matching shares. The fair value
at the vesting date is equivalent to the fair value of the granted equity instruments at this date. The
employees invest an amount up to 10% of their gross base salary per quarter in the plan. A few days after
the end of the investment quarter the shares are purchased on the market at fair market value and
transferred to the employees. Thereby the amount invested during the quarter plus the top-up from adidas
is used. These shares can be sold at any time by the employee. If the shares are held for a period of one
year after the last day of an investment quarter, employees will receive, as a one-off, free matching shares
(one matching share for every six adidas AG shares acquired). This plan currently constitutes an equity-
settled share-based payment for both elements. For the component of the matching shares relating to the
In 2016, adidas announced the introduction of an open-ended employee stock purchase plan (the 'plan').
The plan is operated on a quarterly basis, with each calendar quarter referred to as an "investment
quarter.'
EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH EMPLOYEES
GROUP MANAGEMENT REPORT -
OUR COMPANY
Amortized cost
Thereof: equity investments
2
234
3,223
393
1,588
87
2,670
87
Financial assets at fair value
through other comprehensive
income (FVOCI)
80
80
2020
(without recycling to profit
and loss)
Financial assets at amortized
cost (AC)
Financial liabilities at fair value
through profit or loss (FVTPL)
Financial liabilities at amortized
cost (AC)
80
5,283
85
6,855
80
2,501
2,159
n.a. 2,263
4
n.a.
20
accounting
20
20
20
26
26
26
Derivatives not used in
hedge accounting
Fair value through
2
31
31
85
85
85
Other financial liabilities
Lease liabilities
Financial liabilities per level
Thereof: aggregated by category
according to IFRS 9
Financial assets at fair value
through profit or loss (FVTPL)
Thereof: held for trading
(FAHFT)
profit or loss
Amortized cost
31
2020
Expenses recognized relating to vesting of matching shares amounted to € 3.0 million in 2021 (2020:
€ 3.2 million).
15th
investment
quarter
April 1, 20
3-year
tranche
4-year
tranche
3-year
tranche
4-year
tranche
3-year
tranche
tranche
Tranche
4-year
2021
2020
2019
2018
Plan year
As at December 31, 2021
CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH EMPLOYEES
The value of one RSU is the average price of the adidas AG share as quoted for the first 20 stock exchange
trading days in January of the respective financial year. The effects are presented in the following table:
Once a year, one tranche with a three-year term and another with a four-year term are issued. The
number of RSUs granted depends on the seniority of the beneficiaries. In addition, for the four-year plan,
the number of RSUs also depends on the achievement of a target figure which is based on the growth of
the diluted earnings per share from continuing operations.
The total value of the cash remuneration payable to senior management is recalculated on each reporting
date and on the settlement date, based on the fair value of the RSUs, and recognized through an
appropriate increase in the provision as personnel expenses that are spread over the period of service of
the beneficiary. Furthermore, social security contributions are considered in the calculation of the fair
value, if appropriate for the respective country regulations and the seniority of the participants. All
changes to the subsequent measurement of this provision are reported under personnel expenses.
In 2017, adidas implemented a Long-Term Incentive Plan (LTIP), which is a share-based remuneration
scheme with cash settlement. RSUs (Restricted Stock Units) are granted on the condition that the
beneficiary is employed for three or four years by adidas AG or one of its subsidiaries in a position where
they are not under notice during that period. This minimum period of employment pertains to the calendar
year in which the RSUs are granted and the three subsequent calendar years.
CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH EMPLOYEES
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
4-year
tranche
GROUP MANAGEMENT REPORT -
OUR COMPANY
3-year
tranche
253.20
0.77%
0.86%
0.80%
0.86%
based on the share price
Average risk-free interest rate
as at December 31 (in €)
47,922
284,570
131,444
31,826
195,116
144,646
174,199
the share price
Number of granted RSUs based on
(in €)
245.86
241.79
249.69
245.86
253.20
249.69
Share price as at December 31
TO OUR SHAREHOLDERS
4
3
23,652
2,843
Number of actually purchased matching shares
Number of actually purchased investment shares
28,614
23,474
Number of granted investment shares based on the share price
as at December 31
253.20
297.90
Share price at December 31 (in €)
270.25
314.30
2021
21
21
270.75
295.40
278.90
278.90
Share price at grant date (in €)
Oct. 1,
July 1, 20
investment
quarter
17th
16th
investment
quarter
24,032
22,976
25,790
Outstanding granted matching shares based on the share price
as at December 31 or actually purchased investment shares
Average remaining vesting period in months as at December 31
(in months)
2
ANNUAL REPORT 2021
1
adidas
272
The second part of the agreement grants bonus shares of US $ 5 million if certain conditions are fulfilled.
This option can be granted twice. As at December 31, 2021, it was likely that the second bonus shares will
be issued, therefore, the accrual amounting to € 4 million for the second bonus shares was kept in 2021
(2020: € 4 million).
As at January 1, 2021 (grant date), an amount of US $ 5 million was recognized as expenses for basic
shares over the vesting period of twelve months.
In 2016, adidas entered into a promotion and advertising contract that includes a share-based payment
transaction with third parties. The contract has a general duration of five years until 2021 with an
automated renewal option of one year, if no termination has taken place. The first part of the agreement
grants a transfer of basic shares, which correspond to a value of US $ 5 million each year. Based on the
contractual terms, the fifth tranche for 2021 was already transferred in 2020. No additional transfer has
taken place in 2021. SEE NOTE 25
EQUITY-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH THIRD PARTIES
Further information about the purchase of shares for the employee stock purchase plan is provided in
these Notes. ‣ SEE NOTE 25
As at December 31, 2021, a total amount of € 6 million (2020: € 6 million) was invested by the participants
in the stock purchase plan and was not yet transferred into shares by the end of December 2021.
Therefore, this amount has been included in 'Other current financial liabilities.' SEE NOTE 17
14th
investment
quarter
Jan. 4,
2021
4,489
The number of forfeited matching shares during the period amounted to 3,681 (2020: 2,936).
12
9
6
3
12
4,769
4,306
3,829
4,006
3,912
As at December 31, 2021, the total expenses recognized relating to investment shares amounted to
€ 3.7 million (2020: € 3.8 million).
108
1
Level 1 is based on quoted prices in active markets for identical assets or liabilities.
Level 2 is based on inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3 is based on inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
adidas applies the Black-Scholes model.
The fair value is based on the market price of the
adidas AG share as at December 31, 2021, minus
accrued interest.
Not applicable
Not applicable
Not applicable
Not applicable
Category
Fair value
through profit
or loss
Fair value
through profit
or loss
n.a./fair value
through profit
or loss
n.a./fair value
through profit
or loss
Fair value
through profit
or loss
n.a./fair value
through profit
or loss
279
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
In 2021, adidas applied the par method (forward
NPV) for all currency pairs to calculate the fair
value, implying actively traded forward curves.
adidas applies the Garman-Kohlhagen model,
which is an extended version of the Black-
Scholes model.
Not applicable
The fair value is based on the market price of the
assets as at December 31, 2021.
Not applicable
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
FINANCIAL INSTRUMENTS LEVEL 2 MEASURED AT FAIR VALUE
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Туре
Cash equivalents
and
short-term financial
assets
GROUP MANAGEMENT REPORT -
OUR COMPANY
(money market
funds]
assets
(investment
securities)
Forward exchange
contracts
Currency options
Share option
(cash settled]
Total return swap
(for own shares)
Valuation method
The discounted cash flow method is applied,
which considers the present value of expected
payments, discounted using a risk-adjusted
discount rate. Due to their short-term maturities,
it is assumed that their respective fair value is
equal to the notional amount.
Significant
unobservable
inputs
Long-term financial
2
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Туре
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
NET GAINS/(LOSSES) ON FINANCIAL INSTRUMENTS RECOGNIZED IN THE CONSOLIDATED INCOME STATEMENT € IN MILLIONS
Financial assets classified at amortized cost (AC)
Financial assets at fair value through profit or loss (FVTPL)
Year ending
Dec. 31, 2021
(6)
[1]
Year ending
Dec. 31, 2020
(111)
18
Thereof: designated as such upon initial recognition
Thereof: classified as held for trading
2
Equity instruments at fair value through profit or loss (FVTPL)
Equity instruments at fair value through other comprehensive income (FVOCI)
Financial liabilities at amortized cost (AC)
8
38
Financial liabilities at fair value through profit or loss (FVTPL)
Thereof: designated as such upon initial recognition
Thereof: classified as held for trading
Net gains or losses on financial assets measured at amortized cost comprise mainly impairment losses
and reversals.
280
Fair value
through profit
or loss
or loss
Fair value
through profit
through profit
or loss
Investment in
FC Bayern
München AG
Earn-out
components
(assets)
Promissory notes
Investments in
other equity
instruments (fair
value through
profit or loss)
Investments in
other equity
instruments (fair
value through
other comprehen-
sive income)
Valuation method
This equity security does not have a quoted
market price in an active market. Existing
contractual arrangements (based on the
externally observable dividend policy of FC
Bayern München AG) are used in order to
calculate the fair value as at December 31, 2021.
These dividends are recognized in other
financial income.
The valuation follows an option price model
based on the Monte Carlo method to simulate
future EBITDA values. The derived earn-out
payments are discounted using a risk-adjusted
discount rate. The fair value adjustment is
recognized in discontinued
operations.
The discounted cash flow method is applied,
which considers the present value of expected
payments discounted using a risk-adjusted
discount rate. Fair value adjustments regarding
TaylorMade and CCM promissory notes are
recognized in discontinued operations. Fair
value adjustments regarding the Mitchell &
Ness promissory note are recognized in
financial result.
The significant inputs (financing rounds) used to
measure fair value include one or more events
where objective evidence of any changes was
identified, considering expectations regarding
future business development. The fair value
adjustment is recognized in other financial
result.
FINANCIAL INSTRUMENTS LEVEL 3 MEASURED AT FAIR VALUE
The option to measure equity instruments at fair
value through other comprehensive income
upon implementation of IFRS 9 has been
exercised. The significant inputs (financing
rounds) used to measure fair value include one
or more events where objective evidence of any
changes was identified, considering
expectations regarding future business
development. The fair value adjustment is
recognized in other reserves.
See column 'Valuation
method'
Risk-adjusted
maturity-specific
discount rate
(0.2% - 0.6%),
EBITDA values,
confidence level
Risk-adjusted
maturity-specific
discount rate
(0.6% - 4.4%)
See column
'Valuation method'
See column
'Valuation method'
Inter-relationship between
significant unobservable inputs
and fair value measurement
Category
The estimated fair value
would increase (decrease)
if EBITDA values were
higher (lower) or the risk-
adjusted discount rate was
lower (higher).
The estimated fair value
would increase (decrease)
if the risk-adjusted
discount rate was lower
(higher).
Fair value
Significant
unobservable inputs
ANNUAL REPORT 2021
1
adidas
Promissory notes (FVTPL)
171
(158)
(8)
7
12
Earn-out components - assets
(FVTPL)
12
[21]
9
277
adidas
0.80%
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
RECONCILIATION OF FAIR VALUE HIERARCHY LEVEL 3 IN 2020 € IN MILLIONS
|
instruments (FVOCI)
80
(10)
RECONCILIATION OF FAIR VALUE HIERARCHY LEVEL 3 IN 2021 € IN MILLIONS
Fair value
Jan. 1, 2021
Additions
Disposals
Gains
Realized
Unrealized
Losses
Gains
Losses
Currency
translation
Investments in other equity
instruments held for trading
(FAHFT)
Fair value
Dec. 31, 2021
instruments held for trading
87
87
(FAHFT)
Investments in other equity
2
2
instruments (FVTPL)
Investments in other equity
79
10
Investments in other equity
Investments in other equity
instruments (FVTPL)
Realized
Unrealized
171
12
(4)
12
Due to the short-term maturities of cash and cash equivalents, short-term financial assets, and accounts
receivable and payable, as well as other current financial receivables and payables, their respective fair
values equal their carrying amount.
The fair values of non-current financial assets and liabilities are estimated by discounting expected future
cash flows using current interest rates for debt of similar terms and remaining maturities and adjusted by
a company-specific credit risk premium.
Fair values of long-term financial assets are based on quoted market prices in an active market or are
calculated as present values of expected future cash flows.
adidas designated certain investments as equity securities at fair value through other comprehensive
income (equity), because the company intends to hold those investments for the long term in order to gain
insights into innovative production technologies and trends. The designation of certain equity instruments
at fair value through other comprehensive income (equity) is based on a strategic Management decision.
In accordance with IFRS 13, the following tables show the valuation methods used in measuring Level 1,
Level 2, and Level 3 fair values, as well as the significant unobservable inputs used.
During the course of 2021, significant unobservable inputs did not significantly change and there were no
reclassifications between levels.
FINANCIAL INSTRUMENTS LEVEL 1 MEASURED AT FAIR VALUE
(15)
Туре
Significant
unobservable
inputs
Category
Convertible bond
The fair value is based on the market price of the
convertible bond as at December 31, 2021.
Not applicable
Amortized cost
Eurobond
The fair value is based on the market price of the
eurobond as at December 31, 2021.
Not applicable
Amortized cost
278
Valuation method
7,409
9
[1]
(41)
Fair value
Jan. 1, 2020 Additions
Disposals
Gains
Losses
Gains
84
2
2
Losses
Currency
translation
[3]
Fair value
Dec. 31, 2020
2
Investments in other equity
78
3
(2)
79
instruments (FVOCI)
Promissory notes (FVTPL)
182
Earn-out components - assets
(FVTPL)
45
87
0.75%
295.53
as at December 31 (in %)
Derivatives not used in
hedge accounting
Promissory notes
Earn-out components
Other financial assets
Financial assets per level
30
30
30
profit or loss
Amortized cost
91
Amortized cost
0
Fair value through
profit or loss
Fair value through
35
37
37
149
0
n.a.
11
11
11
42
42
42
Derivatives used in hedge
accounting
I
Other non-current financial
assets
Other investments
Derivatives used in hedge
accounting
Derivatives not used in
hedge accounting
Promissory notes
Other investments
Other financial assets
Long-term financial assets
Other equity investments
Other equity investments
other compre-
hensive income
Fair value through
Fair value through
profit or loss
Fair value through
89
89
89
89
89
89
80
60
80
80
80
80
80
80
80
Other investments
Loans
14
14
14
Current accrued liabilities
Amortized cost
2,294
1,006
Current accrued liabilities for
Amortized cost
878
customer discounts
Other current financial
liabilities
Derivatives used in hedge
accounting
Derivatives not used in
hedge accounting
Other financial liabilities
Lease liabilities
Long-term borrowings
276
87
599
605
605
2,390
939
743
n.a.
29
Amortized cost
Amortized cost
Amortized cost
Accounts payable
Eurobond
99
99
99
1
166
166
166
I
I
12
12
Other current financial assets
12
114
1,735
181
2,577
352
profit or loss
Fair value through
profit or loss
Amortized cost
Financial liabilities
Short-term borrowings
Bank borrowings
108
Accounts receivable
Cash equivalents
446
Net increase of cash and cash equivalents
79
66
9
16
Dividends paid to non-controlling interests
during the year¹
17
17
1 Included in net cash used in financing activities.
275
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
28 FINANCIAL INSTRUMENTS
CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS AND THEIR FAIR VALUES INCLUDING HIERARCHY ACCORDING TO IFRS 13 € IN MILLIONS
(15)
(31)
0
(37)
Amortized cost
(28)
(1)
Net assets
403
328
301
249
Net assets attributable to non-controlling
interests according to the consolidated
statement of financial position
318
Category
328
249
Net cash generated from operating activities
Net cash (used in]/generated from investing
activities
117
66
65
51
(1)
(0)
(25)
(20)
Net cash used in financing activities
237
129
December 31, 2021
Carrying
amount
237
163
163
163
Fair value through
36
36
36
32
32
32
profit or loss
Fair value through
12
12
12
6
6
profit or loss
Amortized cost
Amortized cost
71
55
389
237
237
n.a.
1,952
Fair
value
Level 1
Level 2
Level 3
Carrying
amount
Fair
value
Level 1
Level 2
Level 3
Financial assets
Cash and cash equivalents
December 31, 2020
Cash and cash equivalents
2,449
1,762
Fair value through
1,379
1,379
1,379
2,232
2,232
2,232
profit or loss
Amortized cost
2,175
Amortized cost
129
129
258
Agron, Inc.
Legal entity name
SUBSIDIARIES WITH NON-CONTROLLING INTERESTS
For the following subsidiaries with non-controlling interests, the main financial information is presented
combined.
Non-controlling interests are assigned to three subsidiaries both as at December 31, 2021, and as at
December 31, 2020. SEE SHAREHOLDINGS
This line item within equity comprises the non-controlling interests in subsidiaries which are not directly
or indirectly attributable to adidas AG.
27 NON-CONTROLLING INTERESTS
In 2021, this resulted in an expense of € 53 million (2020: € 87 million). The corresponding provision
amounted to € 162 million (2020: € 247 million).
The fair value is based on the closing price of the adidas AG share on December 31, 2021, adjusted for
future dividend payments.
24
36
12
24
12
Average remaining vesting period
as at December 31 (in months)
0.84%
0.82%
0.90%
0.84%
1.02%
0.90%
1.02%
based on the share price as at
December 31 (in %)
adidas Israel Ltd.
Reebok India Company
274
Principal
place of
business
Total
Thereof:
Agron, Inc.
Total
Dec. 31, 2020
Dec. 31, 2021
Non-controlling interests
FINANCIAL INFORMATION ON SUBSIDIARIES WITH NON-CONTROLLING INTERESTS € IN MILLIONS
The following table presents the main financial information on subsidiaries with significant non-controlling
interests before elimination.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Average risk-free interest rate
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
3
2
ANNUAL REPORT 2021
1
adidas
Dec. 31, 2020
100%
15%
6.85%
100%
15%
6.85%
India
USA
Israel
Ownership interests held by
non-controlling interests
(in %)
TO OUR SHAREHOLDERS
Thereof:
Agron, Inc.
(in €)
36,286
2018
2017
Plan year
As at December 31, 2020
CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS WITH EMPLOYEES
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
TO OUR SHAREHOLDERS
1
adidas
273
24
36
12
24
12
Average remaining vesting period
as at December 31 (in months)
2019
2020
4-year
Tranche
212,678
184,315
126,594
214,818
206,427
the share price as at December 31
Number of granted RSUs based on
(in €)
295.53
292.99
296.90
150,136
297.90
297.90
Share price as at December 31
3-year
tranche
4-year
tranche
3-year
tranche
4-year
tranche
3-year
tranche
tranche
4-year
3-year
tranche
tranche
296.90
0.77%
Net sales
424
CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS AND THEIR FAIR VALUES INCLUDING HIERARCHY ACCORDING TO IFRS 13 € IN MILLIONS
December 31, 2021
Bank borrowings
Eurobond
Convertible bond
Non-current accrued
Liabilities
Other non-current financial
liabilities
Derivatives used in hedge
Category
December 31, 2020
Carrying
amount
Fair
value
Carrying
Fair
Level 1
Level 2
Level 3
amount
value
Level 1
Level 2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
258
258
Fair value through
54
profit or loss
54
54
54
24
24
24
Level 3
Amortized cost
164
n.a.
573
563
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
180
651
Amortized cost
103
Total comprehensive income attributable to
(11)
10
79
85
Total comprehensive income
(23)
7
39
30
Other comprehensive income
12
11
40
42
Net income attributable to non-controlling
interests
12
4
40
56
Net income
349
517
81
79
(10)
(11)
Amortized cost 1,890
1,929
1,929
1,888
1,987
1,987
[23]
Non-current liabilities
(53)
(158)
(72)
82
(162)
119
172
111
156
Non-current assets
185
315
290
433
Current assets
non-controlling interests
Current liabilities
Dec. 31, 2021
adidas
re-
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
284
GROUP MANAGEMENT REPORT -
OUR COMPANY
In accordance with IFRS 7, the following table includes further information about set-off possibilities of
derivative financial assets and liabilities. The majority of agreements between financial institutions and
adidas include a mutual right to set off. However, these agreements do not meet the criteria for offsetting
in the statement of financial position, because the right to set off is enforceable only in the event of
counterparty defaults.
adidas furthermore believes that the risk concentration is limited due to the broad distribution of the
investment business of the company with a high number of globally operating banks. At December 31,
2021, no bank accounted for more than 10% of the investments of adidas. Including subsidiaries' short-
term deposits in local banks, the average concentration was 2%. This leads to a maximum exposure of
€ 144 million in the event of default of any single bank. The investment exposure was further diversified by
investing into AAA-rated money market funds.
The Treasury department arranges currency, commodity interest rate, and equity hedges, and invests
cash with major banks of a high credit standing throughout the world. adidas subsidiaries are authorized
to work with banks rated BBB+ or higher. Only in exceptional cases are subsidiaries authorized to work
with banks rated lower than BBB+. To limit risk in these cases, restrictions are clearly stipulated, such as
maximum cash deposit levels. In addition, the credit default swap premiums of the company's partner
banks are monitored on a monthly basis. In the event that the defined threshold is exceeded, credit
balances are shifted to banks compliant with the limit. SEE TREASURY
At the end of 2021, no customer accounted for more than 10% of accounts receivable.
Other activities to mitigate credit risks include retention of title clauses as well as, on a selective basis,
credit insurance, the sale of accounts receivable without recourse, and bank guarantees. Further
quantitative information on the extent to which credit enhancements mitigate the credit risk of accounts
receivable is included in these Notes. ‣ SEE NOTE 05
At the end of 2021, there was no relevant concentration of credit risk by type of customer or geography.
The company's credit risk exposure is mainly influenced by individual customer characteristics. Under the
company's credit policy, new customers are analyzed for creditworthiness before standard payment and
delivery terms and conditions are offered. Tolerance limits for accounts receivable are also established for
each customer. Both creditworthiness and accounts receivable limits are monitored on an ongoing basis.
Customers that fail to meet the company's minimum creditworthiness are, in general, allowed to purchase
products only on a prepayment basis.
A credit risk arises if a customer or other counterparty to a financial instrument fails to meet its
contractual obligations. adidas is exposed to credit risks from its operating activities and from certain
financing activities. Credit risks arise principally from accounts receivable and, to a lesser extent, from
other third-party contractual financial obligations such as other financial assets, short-term bank
deposits, and derivative financial instruments. Without taking into account any collateral or other credit
enhancements, the carrying amount of financial assets and accounts receivable represents the maximum
exposure to credit risk.
CREDIT RISKS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
In addition, in 2021, adidas held derivatives of foreign exchange with a positive fair market value in the
amount of € 265 million. The maximum exposure to any single bank resulting from these assets amounted
to € 79 million and the average concentration was 8%.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Gross amounts of recognized financial liabilities
Liabilities
97
150
Total net amount of financial assets
(212)
(176)
309
326
Net amounts of financial assets presented in the statement of financial position
Set-off possible due to master agreements
Financial instruments which qualify for set-off in the statement of financial
position
309
326
2020
2021
Gross amounts of recognized financial assets
Assets
SET-OFF POSSIBILITIES OF DERIVATIVE FINANCIAL ASSETS AND LIABILITIES € IN MILLIONS
The carrying amounts of recognized derivative financial instruments, which are subject to the agreements
mentioned here, are also presented in the following table:
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
EUR -10%
478
(11)
(2)
3
(41)
105
55
77
(379)
6
EUR +10%
EUR +10%
EUR +10%
EUR +10%
(1)
(99)
(45)
(4)
(135)
1
[5]
440
EUR -10%
EUR -10%
[234]
EUR -10%
(91)
5
3
2
ANNUAL REPORT 2021
TO OUR SHAREHOLDERS
1
adidas
283
The company also largely hedges balance sheet risks. Due to its strong global position, adidas is able to
partly minimize the currency risk by utilizing natural hedges. The company's gross US dollar cash flow
exposure calculated for 2022 was around € 7.3 billion at year-end 2021, which was hedged using forward
exchange contracts, currency options and currency swaps.
The credit risk is not considered as part of this analysis.
Operational issues, such as potential discounts for key accounts, which have high transparency
regarding the impacts of currency on our sourcing activities (due to their own private label sourcing
efforts), are also excluded from this analysis.
The underlying forecast cash flow exposure (which the hedge instrument mainly relates to) is not
required to be revalued in this analysis.
Exchange rates are assumed at a year-end value instead of the more relevant sales-weighted average
figure, which the company utilizes internally to better reflect both the seasonality of its business and
intra-year currency fluctuations.
Interest rates, commodity prices, and all other exchange rates are assumed constant.
However, many other financial and operational variables that could potentially reduce the effect of
currency fluctuations are excluded from the analysis. For instance:
The more negative market values of the US dollar hedges would have decreased shareholders' equity by
€ 351 million. A 10% weaker euro at December 31, 2021, would have led to a € 5 million decrease in net
income. Shareholders' equity would have increased by € 440 million. The impacts of fluctuations of the
euro against the British pound, the Japanese yen and the Chinese renminbi on net income and
shareholders' equity are also included in accordance with IFRS requirements.
7
(4)
(128)
[66]
EUR -10%
(393)
Financial instruments which qualify for set-off in the statement of financial
position
Net amounts of financial liabilities presented in the statement of financial
position
2,294
2,294
Accounts payable
convertible bond
494
494
Equity-neutral
1,989
1,029
412
12
512
Total
More than
5 years
Up to
5 years
Up to
4 years
3 years
Up to
Up to
2 years
Other financial
Up to
1 year
180
liabilities
435
34
535
1,373
7,696
Total
liabilities
5,046
13
4
4
4
846
4,175
Derivative financial
1,008
2
1,006
Accrued liabilities²
180
EUR -10%
FUTURE CASH OUTFLOWS € IN MILLIONS
GROUP MANAGEMENT REPORT -
OUR COMPANY
2
ANNUAL REPORT 2021
1
adidas
285
In line with IFRS 7 requirements, adidas has calculated the impact on net income based on changes in the
company's share price. A 10% increase in the adidas AG share price versus the closing share price at
December 31, 2021, would have led to a € 13 million increase in net income and a € 3 million increase in
shareholders' equity, whereas a 10% decrease in the adidas AG share price versus the closing share price
at December 31, 2021, would have led to a € 13 million decrease in net income and would have decreased
shareholders' equity by € 3 million.
Share price risks arise due to the Long-Term Incentive Plan (LTIP), which is a share-based remuneration
scheme with cash settlement, and the equity-neutral convertible bond with cash settlement. In order to
mitigate share price risks, it is company strategy to use swaps and options to hedge against share price
fluctuations. Swaps are used to hedge the Long-Term Incentive Plan and are classified as cash flow
hedges. The embedded cash option in the convertible bond is fully offset with a call option to mitigate the
cash settlement.
SHARE PRICE RISKS
To reduce interest rate risks and maintain financial flexibility, a core tenet of the company's financial
strategy is to continue to use surplus cash flow from operations to reduce short-term gross borrowings.
Beyond that, adidas may consider adequate hedging strategies through interest rate derivatives in order to
mitigate interest rate risks. SEE TREASURY
Changes in global market interest rates affect future interest payments for variable-interest liabilities. As
adidas does not have material variable-interest liabilities, even a significant increase in interest rates
should have only slight adverse effects on the company's profitability, liquidity, and financial position.
INTEREST RATE RISKS
(181)
(58)
Total net amount of financial liabilities
212
176
Set-off possible due to master agreements
(393)
(234)
3
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
286
This includes payments to settle obligations from borrowings as well as cash outflows from cash-settled
derivatives with negative market values. Financial liabilities that may be settled in advance without penalty
are included on the basis of the earliest date of potential repayment. Cash flows for variable-interest
liabilities are determined with reference to the conditions at the balance sheet date.
Future cash outflows arising from financial liabilities that are recognized in the consolidated statement of
financial position are presented in the table.
€ 4.274 billion) in bilateral credit lines, which are designed to ensure sufficient liquidity at all times. Since,
November 6, 2020 there has been a € 1.5 billion syndicated credit facility in place with our core partner
banks. SEE TREASURY
At December 31, 2021, cash and cash equivalents together with marketable securities amounted to
€ 3.828 billion (2020: € 3.994 billion). Moreover, the company maintains € 4.169 billion (2020:
Liquidity risks arise from not having the necessary resources available to meet maturing liabilities with
regard to timing, volume and currency structure. In addition, the company faces the risk of having to
accept unfavorable financing terms due to liquidity restraints. The Treasury department uses an efficient
cash management system in order to make best use of the operating cash flow. A twelve month rolling
cash flow forecast on a monthly basis is established to manage liquidity risk. In line with the Financial
Policy, adidas aims to maintain a target leverage ratio and a target twelve months liquidity coverage.
Committed and uncommitted credit lines ensure further financial flexibility. The strong external credit
rating allows adidas to access capital markets for further financing possibilities at all times.
FINANCING AND LIQUIDITY RISKS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
1,049
EUR -10%
1
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
1
ANNUAL REPORT 2021
2
3
4
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Net gains or losses on financial assets or financial liabilities classified as fair value through profit or loss
include the effects from fair value measurements of the derivatives that are not part of a hedging
relationship, and changes in the fair value of other financial instruments as well as interest expenses.
Net gains or losses on equity instruments at fair value through profit or loss mainly include fair value
adjustments based on the respective valuation method. SEE TABLE 'FINANCIAL INSTRUMENTS LEVEL 3 MEASURED AT FAIR VALUE'
During 2021, no dividends regarding equity instruments at fair value through other comprehensive income
were recognized. Net gains or losses on financial liabilities measured at amortized cost include effects
from early settlement and reversals of accrued liabilities and refund liabilities.
Net gains or losses on financial liabilities measured at amortized cost include effects from early
settlement and reversals of accrued liabilities and refund liabilities.
NOTIONAL AMOUNTS OF ALL OUTSTANDING CURRENCY HEDGING INSTRUMENTS € IN MILLIONS
GROUP MANAGEMENT REPORT -
OUR COMPANY
secured approximately six months prior to the start of a season. In rare instances, hedges are contracted
beyond the 24-month horizon.
adidas uses a combination of different hedging instruments, such as forward exchange contracts,
currency options, and swaps, to protect itself against unfavorable currency movements. These contracts
are generally designated as cash flow hedges.
Furthermore, translation impacts from the conversion of non-euro-denominated results into the
11
(158)
Balance sheet exposure including
transactions
1,092
602
1,345
(6,127)
Exposure from firm commitments and forecast
As at December 31, 2021
CNY
JPY
GBP
USD
EXPOSURE TO FOREIGN EXCHANGE RISK BASED ON NOTIONAL AMOUNTS € IN MILLIONS
Exposures are presented in the following table:
NOTE 02
Further information about the accounting and hedge accounting treatment is included in these Notes. ▸ SEE
company's functional currency, the euro, might lead to a material negative impact on the company's
financial performance.
Forward exchange contracts
Currency options
Total
FAIR VALUES € IN MILLIONS
(300)
NOTIONAL AMOUNTS OF OUTSTANDING US DOLLAR HEDGING INSTRUMENTS € IN MILLIONS
Forward exchange contracts
Currency options
Total
FINANCIAL RISKS
Dec. 31, 2021
5,017
318
Dec. 31, 2020
4,968
261
5,334
5,229
CURRENCY RISKS
Currency risks for adidas are a direct result of multi-currency cash flows within the company. The vast
majority of the transactional risk arises from product sourcing in US dollars, while sales are typically
denominated in the functional currency of the respective companies. The currencies in which these
transactions are mainly denominated are the US dollar, British pound, Japanese yen, and Chinese
renminbi.
As governed by the company's Treasury Policy, adidas has established a hedging system on a rolling basis
up to 24 months in advance, under which the vast majority of the anticipated seasonal hedging volume is
281
adidas
1
ANNUAL REPORT 2021
2
3
129
[36]
(189)
Total
Dec. 31, 2021
11,282
Dec. 31, 2020
13,142
391
11,673
386
13,528
Dec. 31, 2021
Positive
fair value
Dec. 31, 2020
Negative
fair value
Positive
fair value
Negative
fair value
Forward exchange contracts
Currency options
246
19
(189)
119
(300)
(0)
10
265
208
intercompany exposure
Total gross exposure
Based on this analysis, a 10% increase in the euro versus the US dollar at December 31, 2021, would have
led to a €6 million increase in net income.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
282
In line with IFRS 7 requirements, the company has calculated the impact on net income and shareholders'
equity based on changes in the most important currency exchange rates. The calculated impacts mainly
result from changes in the fair value of the hedging instruments. The analysis does not include effects that
arise from the translation of the company's foreign entities' financial statements into the company's
reporting currency, the euro. The sensitivity analysis is based on the net balance sheet exposure, including
intercompany balances from monetary assets and liabilities denominated in foreign currencies. Moreover,
all outstanding currency derivatives were re-evaluated using hypothetical foreign exchange rates to
determine the effects on net income and equity. The analysis was performed on the same basis for both
2021 and 2020.
The exposure from firm commitments and forecast transactions was calculated on a one-year basis.
656
86
103
(1,061)
SENSITIVITY ANALYSIS OF FOREIGN EXCHANGE RATE CHANGES € IN MILLIONS
Net exposure
As at December 31, 2021
Net income
3
(1)
81
EUR +10%
EUR +10%
37
EUR +10%
110
[351]
6
EUR +10%
CNY
JPY
GBP
USD
Net income
Equity
Net income
Equity
As at December 31, 2020
Net income
Equity
Equity
EUR -10%
(1,645)
(805)
As at December 31, 2020
170
154
125
(1,528)
Net exposure
(1,130)
(372)
(1,198)
4,439
Hedged with forward contracts
(40)
(33)
318
Hedged with currency options
1,300
566
1,356
(6,285)
Exposure from firm commitments and forecast
(542)
(5,897)
731
4,808
Hedged with forward contracts
[66]
(59)
261
Hedged with currency options
2,301
694
967
(6,130)
Total gross exposure
intercompany exposure
388
(37)
41
[233]
Balance sheet exposure including
transactions
1,913
926
11,122
As at
December 31, 2020
ineffec-
reserve
trans-
Amount
from
hedging
in income
statement
which
includes
hedge
Hedge
instru-
Line item
Changes
in the
value of
the
hedging
reserve
gnized in
hedging
reco-
ment
in the
value of
the
hedging
instru-
Changes
hedging
instrument
where the
Line item in
statement of
financial
position
ferred to
invent-
tory
ment ineffec-
reco-
gnized in
or loss
tory
to profit
hedging
reserve
classi-
fied from
Amount
invent-
ferred to
Carrying
amount
reserve
trans-
Amount
During the period 2021
tiveness
gnized
in profit
or loss
reco-
tiveness
reserve
cost of
hedging
from
cost of
hedging
2021
DESIGNATED HEDGE INSTRUMENTS € IN MILLIONS
The amounts relating to items designated as hedging instruments and hedged ineffectiveness were as
follows:
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
1
Balances remaining in
the cash flow hedging
reserve from hedge
relationships for which
hedge accounting is no
longer applied
4
(19)
289
(5)
32
Long-Term Incentive Plans
Equity risk
adidas
Amount
DESIGNATED HEDGED ITEMS AS AT DECEMBER 31, 2020 € IN MILLIONS
Sales
The hedging reserves of € 215 million for net foreign investment risk contains hedges of € 182 million
related to the Chinese renminbi for which by the end of 2021 no outstanding hedging instruments were in
place anymore.
Balances remaining in
the cash flow hedging
reserve from hedge
relationships for which
hedge accounting is no
longer applied
[48]
28
10
127
(163)
(19)
(256)
Foreign currency risk
290
(87)
Cost of hedging reserve
Hedging reserve
Change in value used for
calculating hedge
ineffectiveness
Long-Term Incentive Plans
Equity risk
Net foreign investment risk
Inventory purchases
89
(215)
re-
classi-
cost of
[32]
16 (15)
Long-Term
162
Financial
financial
swap -
Other
return
Total
S
result
Financial
assets/
liabilities
investment
net foreign
(52)
17
Incentive
assets/
liabilities
result
12
12
Eurobond1
111
7
19
18
19
112
19
Bank borrowings
December 31, 2021
As at
Other
operating
expenses
Financial
result
Cost of
sales
290
Plans
29
Other
financial
contracts -
exchange
24
4,028
change
Foreign ex
is included
ities
amount Assets
Liabil-
(107)
Nominal
72
(122)
fication
to profit the reclassi-
or loss
income
statement
affected by
Line item in
reserve
hedging
Cost of
sales
fied from
contracts -
Other
financial
assets/
liabilities
Foreign
purchases
sales
60
(145)
(30)
119
Cost of
sales
Other
financial
assets/
liabilities
(4)
195
contracts - 4,685
exchange
Foreign
Cost of
sales
(134)
138
inventory
52
7
(119)
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
1
ANNUAL REPORT 2021
adidas
287
adidas ended the year 2021 with an adjusted net borrowings of € 2.963 billion (2020: € 3.148 billion).
2 Accrued interest excluded.
1 Including interest payments.
15,168
1,480
34
534
1,025
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
FINANCIAL INSTRUMENTS FOR THE HEDGING OF FOREIGN EXCHANGE RISK
0.856
0.868
Average EUR/GBP forward rate
1.170
1.197
Average EUR/USD forward rate
191
233
1,017
1,206
short-term
Maturity
Net exposure (€ in millions)
Foreign currency risk
As at December 31, 2021
AVERAGE HEDGE RATES
currency:
As at December 31, 2021, adidas held the following instruments to hedge exposure to changes in foreign
long-term
11,078
Total
liabilities
491
Equity-neutral
2,609
1,441
12
512
12
12
491
620
189
27
19
19
19
18
87
Bank borrowings
Eurobond1
Average EUR/JPY forward rate
convertible bond
2,390
8,381
11
3
3
503
983
6,878
Derivative financial
Accounts payable
940
939
Accrued liabilities²
liabilities
168
4
164
Other financial
2,390
1
129.346
Forward exchange contracts
Average EUR/CNY forward rate
122.460
Average EUR/JPY forward rate
0.924
0.872
Average EUR/GBP forward rate
1.229
1.200
Average EUR/USD forward rate
Average USD/CNY forward rate
Option exchange contracts
128.729
Average USD/CNY forward rate
126.640
120.630
Average EUR/JPY forward rate
0.906
0.887
Average EUR/GBP forward rate
8.328
1.216
Equity risk
Total return swap
[83]
(138)
Cost of hedging reserve
Hedging reserve
ineffectiveness
calculating hedge
Change in value used for
Net foreign investment risk
Net exposure (€ in millions)
Inventory purchases
Foreign currency risk
DESIGNATED HEDGED ITEMS AS AT DECEMBER 31, 2021 € IN MILLIONS
The amounts at the reporting date relating to items designated as hedged items were as follows:
298.745
190.630
82
122
Average hedge rate
Sales
1.165
8.085
Forward exchange contracts
288
Average hedge rate
Total return swap
91
71
Net exposure (€ in millions)
Equity risk
Average EUR/USD forward rate
206.392
132.372
0.894
Average EUR/GBP forward rate
1.150
1.212
Average EUR/USD forward rate
Option exchange contracts
7.765
8.033
Average EUR/JPY forward rate
301.402
Average USD/CNY forward rate
1
adidas
614
768
Net exposure (€ in millions)
long-term
short-term
Maturity
Foreign currency risk
As at December 31, 2020
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
AVERAGE HEDGE RATES
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
ANNUAL REPORT 2021
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
3
TO OUR SHAREHOLDERS
adidas
1
ANNUAL REPORT 2021
2
3
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
In the year under review, there were no conflicts of interest among the members of either the Supervisory
Board or the Executive Board. In the opinion of the Supervisory Board, the brand ambassador agreement
between adidas International, Inc., and Supervisory Board member Jackie Joyner-Kersee does not
constitute a conflict of interest with regard to her role on the Supervisory Board.
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Following an in-depth discussion, the current Declaration of Compliance pursuant to § 161 AktG was
resolved upon by the Executive Board and Supervisory Board of adidas AG in December 2021 and was
made permanently available on our website. ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
EXAMINATION OF THE ANNUAL FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENTS
The 2021 Annual General Meeting elected KPMG as auditor and Group auditor for the 2021 financial year
as proposed by the Supervisory Board and recommended by the Audit Committee. Prior to this, KPMG had
confirmed to both the Supervisory Board and Audit Committee that there are no circumstances which
could prejudice its independence as auditor or which could cast doubt on KPMG's independence. In this
respect, KPMG also declared to which extent non-audit services were rendered for the company in the
previous financial year or are contractually agreed upon for the following year.
KPMG audited the 2021 consolidated financial statements prepared by the Executive Board in accordance
with § 315e of the German Commercial Code (Handelsgesetzbuch - HGB) in compliance with the
International Financial Reporting Standards (IFRS), as they are to be applied in the European Union, and
issued an unqualified opinion thereon. This also applies to the 2021 annual financial statements of
adidas AG, prepared in accordance with the requirements of the German Commercial Code, and the
combined Management Report of adidas AG and the adidas Group. Furthermore, at the request of the
Supervisory Board, KPMG audited the non-financial statement. The financial statements, the proposal on
the appropriation of retained earnings, and the auditor's reports of the annual and consolidated financial
statements were distributed by the Executive Board to all Supervisory Board members in a timely manner.
The financial statements were examined in depth, with a particular focus on legality and regularity, in the
presence of the auditor at the Audit Committee meeting held on March 7, 2022, and at the balance sheet
meeting of the Supervisory Board on March 8, 2022, during which the Executive Board explained the
financial statements in detail. At both meetings, the auditor reported on the material results of the audit,
inter alia with regard to the audit focus points agreed as well as the key audit matters, and was available
for questions and the provision of additional information. The auditor did not report any significant
weaknesses with respect to the internal control and risk management system relating to the accounting
process. Prior to the passing of the resolution, the auditor reported on the results of the examination of
the non-financial statement with limited assurance as commissioned by the Audit Committee in
accordance with § 111 section 2 sentence 4 AktG. In addition, the Supervisory Board discussed in depth
and approved the Executive Board's proposal concerning the appropriation of retained earnings for the
2021 financial year.
Based on our own audits of the annual and consolidated financial statements (including the non-financial
statement), we came to the conclusion that there are no objections to be raised. Following the
recommendation of the Audit Committee, the Supervisory Board therefore approved the audit results and
the financial statements prepared by the Executive Board, including the non-financial statement for the
2021 financial year. The annual financial statements were thus adopted. The annual financial statements
are signed by the auditors Haiko Schmidt as the responsible audit partner since the 2017 financial year
and Angelika Huber-Straßer since the 2021 financial year.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
30
Member of the Supervisory Board until the end of the
▶ SEE EXECUTIVE BOARD
Members of the Supervisory Board as at December 31, 2021
INDIVIDUAL MEETING PARTICIPATION OF THE SUPERVISORY BOARD MEMBERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
23
The Supervisory Board also met regularly without the Executive Board members, in particular to discuss
internal affairs of the Supervisory Board as well as personnel and compensation matters relating to the
Executive Board.
In the periods between meetings, the Supervisory Board Chairman and the Audit Committee Chairman
maintained regular contact with the Chief Executive Officer and the Chief Financial Officer, conferring on
matters such as corporate strategy, business planning and development, the risk situation, control and
risk management as well as compliance. A key issue during the year under review was the impact of
external uncertainties arising from, inter alia, the geopolitical situation in China, the factory closures in
Vietnam and Indonesia in particular, the resulting supply chain challenges, and the respective mitigation
measures. In addition, the Supervisory Board Chairman and, as applicable, the entire Supervisory Board,
were informed about events of fundamental importance for evaluating the situation, development, and
management of the company, when necessary also at short notice. The Chairman of the Supervisory Board
regularly reported during meetings on discussions with the Executive Board outside the Supervisory Board
meetings.
The external auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, ('KPMG') attended all meetings of
the Supervisory Board, with the exception of one extraordinary meeting, insofar as no Executive Board
matters or internal matters of the Supervisory Board were dealt with. In addition, KPMG attended all
meetings of the Audit Committee with the exception of individual agenda items concerning the impending
external rotation of the auditor.
In the past financial year, the Supervisory Board primarily exercised its duties in plenary sessions.
Members who were unable to participate in the meetings took part in the resolutions by submitting their
vote in writing. Given the ongoing coronavirus pandemic and in order to protect the safety of all persons
involved, most of our meetings were held virtually, as in the previous year. The latest videoconferencing
technology was used to ensure an open and appropriate discussion between the Executive Board and
Supervisory Board within the virtual meetings. Once again, the Supervisory Board and its committees
achieved a consistently high participation rate at meetings during the year under review, totaling
approximately 98% (2020: approximately 97%).
MEETINGS OF THE SUPERVISORY BOARD AND ITS COMMITTEES
Also for the preparation of our meetings, the Executive Board provided us regularly with comprehensive
written reports. We thus always had the opportunity to critically analyze the Executive Board's reports and
resolution proposals within the committees and within the entire Supervisory Board and to put forward
suggestions before passing resolutions after in-depth examination and extensive consultation. At the
Supervisory Board meetings, the Executive Board was available to discuss and answer our questions. In
the periods between our meetings, the Executive Board also provided us with extensive monthly reports on
the current business situation. We critically examined and challenged the information provided to us by
the Executive Board.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
Thomas Rabe, Chairman
lan Gallienne, Deputy Chairman
Udo Müller, Deputy Chairman
Petra Auerbacher
86%
6
7
100%
12
12
100%
12
12
100%
12
12
rate
CORPORATE GOVERNANCE
1
Participation
Annual General Meeting on May 12, 2021
29
Günter Weigl
Jing Ulrich
Bodo Uebber
Michael Storl
Frank Scheiderer
Nassef Sawiris
Beate Rohrig
Roland Nosko
Kathrin Menges²
Christian Klein
Jackie Joyner-Kersee¹
Roswitha Hermann
Number of
meetings
7
adidas
22
Audit Committee:
Thomas Rabe (Chairman), lan Gallienne, Udo Müller*, Roland Nosko*
General Committee:
Thomas Rabe (Chairman), lan Gallienne, Udo Müller*
Steering Committee:
STANDING COMMITTEES AS OF MAY 12, 2021
Chairman of the Works Council Campus North, adidas AG, Rieste, Germany
Member of the Supervisory Board since January 1, 2022
born on September 12, 1982
residing in Bramsche, Germany
BASTIAN KNOBLOCH*
SUPERVISORY BOARD MEMBER AS OF JANUARY 1, 2022
Independent Management Consultant, Stuttgart, Germany
Member of the Supervisory Board since May 7, 2009
born on April 20, 1951
residing in Stuttgart, Germany
HERBERT KAUFFMANN
SUPERVISORY BOARD MEMBER UNTIL MAY 12, 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
Bodo Uebber (Chairman), Kathrin Menges, Frank Scheiderer*, Günter Weigl*
Nomination Committee:
Thomas Rabe (Chairman), lan Gallienne, Kathrin Menges
Mediation Committee pursuant to § 27 section 3 Co-Determination Act (MitbestG):
Thomas Rabe (Chairman), lan Gallienne, Roswitha Hermann* 10, Udo Müller*
STANDING COMMITTEES UNTIL MAY 12, 2021
The Executive Board informed us extensively and regularly through written and oral reports. This
information covered all relevant aspects of the company's corporate strategy, business planning (including
financial, investment, and personnel planning), the course of business, and the company's financial
position and profitability. We were also kept up to date on matters relating to accounting processes, the
risk situation, and the effectiveness and development of the internal control and risk management
systems and compliance as well as all major decisions and business transactions. In this context, the
focus in the year under review was in particular on the divestiture process of Reebok, which was regularly
and extensively discussed by the Supervisory Board. Furthermore, the Executive Board always explained
immediately and in detail any deviation in the performance of the business from the established plans. In
the year under review, the principal cause of deviation continued to be the unpredictable development of
the coronavirus pandemic. Additional challenges included the geopolitical situation in China and extended
lockdown measures, including factory closures in Vietnam and Indonesia in particular. The Executive
Board reported to us regularly on the measures it had taken to mitigate the negative effects on operational
performance. The Executive Board particularly informed us on the impact of the coronavirus pandemic on
our employees and locations around the world. We supported the Executive Board in an advisory capacity
on all of the measures implemented, each of which was intended to promote the long-term prosperity of
adidas as well as its employees, consumers, and business partners.
In the year under review, we performed all of our tasks laid down by law, the Articles of Association, the
German Corporate Governance Code ('Code'), and the Rules of Procedure carefully and conscientiously, as
in previous years. We regularly advised the Executive Board on the management of the company as well as
diligently and continuously monitored its management activities. The Executive Board involved us directly
and in a timely and comprehensive manner in all of the company's fundamental decisions.
MONITORING AND ADVICE IN DIALOGUE WITH THE EXECUTIVE BOARD
With strong top- and bottom-line improvements, 2021 marked a successful start into adidas' new strategic
cycle. This was achieved despite several severe challenges the company has been facing. While the global
economy started to recover, the coronavirus pandemic continued to impact industries and lives all over the
globe. In addition, the challenging market environment in China had an adverse impact on the company's
business activities. adidas was able to limit the impact from these headwinds as it quickly implemented
effective countermeasures and took advantage of emerging opportunities. In March, the company
launched its new strategy 'Own the Game.' Focusing on the most promising categories, channels, and
markets in the highly attractive global sporting goods industry, 'Own the Game' is designed to significantly
increase sales and profitability, generate substantial free cash flow and create attractive shareholder
returns. In 2021 alone, the company returned € 1.6 billion to its shareholders through dividends and share
buybacks. At the same time, investments into product development, marketing, sponsoring, sustainability,
and digitalization will increase strongly over the next couple of years, laying the foundation for long-term
success. Another important milestone in 2021 was the agreement to sell Reebok as it allows the company
to focus its efforts on further strengthening the leading position of the adidas brand in the global sporting
goods market. Against this background, the company is well positioned to continue generating profitable
and sustainable growth in 2022 and beyond.
DEAR SHAREHOLDERS.
SUPERVISORY BOARD REPORT
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
22
ANNUAL REPORT 2021
adidas
21
* Employee representative.
10 Until December 31, 2021. Replaced by Petra Auerbacher since January 1, 2022.
➤ ADIDAS-GROUP.COM/SUPERVISORY-BOARD
Biographical information on our Supervisory Board members is available online
Mediation Committee pursuant to § 27 section 3 Co-Determination Act (MitbestG):
Thomas Rabe (Chairman), lan Gallienne, Roswitha Hermann*, Udo Müller*
Thomas Rabe (Chairman), lan Gallienne, Kathrin Menges
Bodo Uebber (Chairman), Herbert Kauffmann, Frank Scheiderer*, Günter Weigl*
Nomination Committee:
Audit Committee:
Thomas Rabe (Chairman), lan Gallienne, Udo Müller*, Roland Nosko*
General Committee:
Thomas Rabe (Chairman), lan Gallienne, Udo Müller*
Steering Committee:
1
7
Participation
4
ANNUAL REPORT 2021
1
adidas
27
In addition to the monitoring of the accounting process, the committee's work also focused on the audit of
the annual financial statements and the consolidated financial statements for 2020, including the
combined Management Report and the non-financial statement of adidas AG and the Group, as well as the
proposal regarding the appropriation of retained earnings. Following an in-depth review of the audit
reports with the auditor, the Audit Committee decided to recommend to the Supervisory Board to approve
the 2020 annual financial statements and consolidated financial statements. In addition, the Audit
Committee prepared the audit of the non-financial statement and resolved to commission KPMG to
examine the content of the non-financial statement with limited assurance pursuant to § 111 section 2
sentence 4 AktG. Following in-depth discussions, the Audit Committee also made a recommendation to
the Supervisory Board regarding the proposal to the 2021 Annual General Meeting for the appointment of
the auditor. The Audit Committee declared to the Supervisory Board that the recommendation was free
from undue influence by a third party and that no clause of the kind referred to in Article 16 section 6 of
the (EU) Regulation No. 537/2014 of the European Parliament and of the Council of April 16, 2014, on
specific requirements regarding the statutory audit of public-interest entities was imposed upon it.
The Audit Committee held four meetings during the year under review (2020: five meetings). The Chief
Financial Officer and the auditor were present at all meetings and reported to the committee members in
detail. The auditor was not present, however, during agenda items where we evaluated and agreed on
proposals for the external rotation of the auditor for the annual and consolidated financial statements for
the 2023 financial year.
The General Committee held four meetings during the year under review (2020: nine meetings). The main
task of the General Committee was to prepare resolutions for the entire Supervisory Board on personnel
and compensation matters of the Executive Board. In particular, it provided comprehensive advice on the
reappointment of Martin Shankland and the appointment of Amanda Rajkumar as Labor Director at
adidas AG. In addition, the adjustment of the service contracts of current Executive Board members in line
with the new compensation system approved at the March meeting of the Supervisory Board was
prepared. Regarding Executive Board compensation, the General Committee drafted proposals for
resolutions on the targets, target achievement, and amount of the variable performance-related
compensation, and pre-examined the appropriateness of the Executive Board compensation. Furthermore,
the General Committee discussed in detail the new compensation system and long-term succession
planning for the Executive Board.
The Steering Committee did not meet in the year under review.
In order to perform our tasks in an efficient manner, we have established a total of five standing
Supervisory Board committees as well as a dedicated Reebok ad hoc committee in the year under review.
The committees prepare resolutions and topics for the meetings of the entire Supervisory Board. Within
the legally permissible framework and in appropriate cases, we have furthermore delegated the
Supervisory Board's authority to pass certain resolutions to individual committees. With the exception of
the Audit Committee, the Supervisory Board Chairman also chairs all the standing committees. The
respective committee chairmen report to the Supervisory Board on their work as well as the content and
results of the committee meetings on a regular and comprehensive basis.
TASKS AND TOPICS FOR THE COMMITTEES
Menges as ESG representative on the Supervisory Board. At its December meeting, the Supervisory Board
also received a detailed presentation on adidas' latest innovations and upcoming products.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
100%
4
3
2
ANNUAL REPORT 2021
1
adidas
26
At the December meeting, we discussed the Budget and Investment Plan presented by the Executive
Board for the 2022 financial year, which we approved after detailed consultation, as well as the marketing
and sponsorship agreements concluded in the year under review. In addition, the Executive Board provided
an in-depth report on the implementation of the new corporate strategy, 'Own the Game.' In this
connection, we also discussed the company's digital activities and key sustainability initiatives.
Furthermore, we approved the investment in network expansion at our distribution centers in line with the
strategy. Based on the authorization granted at the Annual General Meeting on May 12, 2021, we approved
the launch of a new share buyback program for the 2022-2025 financial years as a measure requiring
approval. In light of the imminent external rotation of the auditor and on the basis of preparatory work and
reporting by the Audit Committee, the Supervisory Board discussed and agreed in detail the proposals for
a new auditor for the annual and consolidated financial statements for the 2023 financial year. In addition,
we discussed the succession planning for the Executive Board, the assessment of the independence of the
Supervisory Board members, and the Declaration of Compliance with the Code. In view of the departure of
the previous committee member Roswitha Hermann from the Supervisory Board with effect from
December 31, 2021, Petra Auerbacher was elected to the Mediation Committee. Furthermore, it was
decided to maintain the deductible of at least 10% of the claim in connection with the insurance of
Supervisory Board members against risks arising from their professional activities (D&O insurance).
Finally, the Supervisory Board discussed the implementation status of the proposed changes and
improvements from the self-assessment conducted in the 2020 financial year and appointed Kathrin
The October meeting focused primarily on the current business situation and the preliminary results for
Q3 2021. The Executive Board reported on the planned expansion of the 2021 share buyback program
introduced in July 2021, to which we granted our approval. We also approved the proposed cancelation of
shares repurchased under the share buyback program and the resulting capital reduction.
At the August meeting, we discussed the Q2 and half-year results for 2021, the business situation in China,
the factory closures in Vietnam and Indonesia, and the outlook for 2021. We also examined the Reebok
sales process in detail. The Supervisory Board approved the sale of the Reebok business in principle and
formed an ad hoc committee that instead of the Supervisory Board was authorized to issue specific
approvals on all transactions and measures relating to the sale of Reebok, which require approval by the
Supervisory Board. We also consulted extensively and in detail on the people strategy at adidas and on the
subject of tech and data, including planned investments in this area. Additionally, we revised the
competency profile for the Supervisory Board, including targets for its composition, as well as the Rules of
Procedure for the Executive Board and Supervisory Board in light of the new Financial Market Integrity
Strengthening Act (Gesetz zur Stärkung der Finanzmarktintegrität – FISG), which came into force on
July 1, 2021. We also approved the appointment of Harm Ohlmeyer to the Supervisory Board of SV Werder
Bremen GmbH & Co KGaA.
At an extraordinary meeting of the Supervisory Board in June, based on authorization granted by the
Annual General Meeting on May 12, 2021, we approved the introduction of a new share buyback program
for the 2021 financial year as a measure requiring approval.
with the new compensation system approved at the March meeting. After extensive consultation, the
Supervisory Board appointed Martin Shankland as a member of the Executive Board of adidas AG for a
further five years. Furthermore, Amanda Rajkumar was appointed as Labor Director at adidas AG. In
addition, the Supervisory Board appointed Kathrin Menges as member of the Audit Committee after the
previous committee member Herbert Kauffmann departed from the Supervisory Board with effect from
the end of the Annual General Meeting on May 12, 2021. Furthermore, the Supervisory Board approved the
continuation of an existing brand ambassador agreement between adidas International, Inc., and Jackie
Joyner-Kersee following her appointment to the Supervisory Board at the Annual General Meeting on May
12, 2021.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
Effective January 1, 2021, Amanda Rajkumar joined the Executive Board with responsibility for Global
Human Resources, People and Culture. On May 1, 2021, Amanda Rajkumar also assumed the role of Labor
Director from Harm Ohlmeyer, who had held that position since May 2017. In addition, we extended the
mandate of Martin Shankland, responsible for Global Operations, for a further five years until 2027.
CHANGES TO THE EXECUTIVE BOARD
The members of the Supervisory Board are individually responsible for undertaking any necessary training
and further education measures required for their tasks. To assist them in their role, the company offered
Supervisory Board members who joined the Supervisory Board during the year under review, or who
assumed new responsibilities within the Supervisory Board, an introduction to the work of the Supervisory
Board and/or to new areas of responsibility within adidas AG. The Supervisory Board members were given
detailed resources on the business and subject areas that are relevant to their particular tasks. In
addition, the Supervisory Board attended a company presentation that included the latest innovations and
new product launches from adidas and its cooperation partners. Furthermore, the company regularly
informs the Supervisory Board about current legislative changes and external training opportunities, and
provides the Supervisory Board with relevant specialist literature.
In addition, Roswitha Hermann resigned her mandate as employee representative on the Supervisory
Board with effect from December 31, 2021. With effect as of January 1, 2022, and for the period until the
end of the 2024 Annual General Meeting, Bastian Knobloch was appointed as a new employee
representative on the Supervisory Board. This also led to a change in the composition of the Mediation
Committee, with Petra Auerbacher being elected as a new member from January 1, 2022.
With the expiry of Herbert Kauffmann's term of office, it was necessary to amend the composition of the
Audit Committee. Effective from the end of the 2021 Annual General Meeting, the Supervisory Board
elected Kathrin Menges as a new member of the Audit Committee.
The election proposal by the Supervisory Board was preceded by a careful process of selecting suitable
candidates. The selection criteria for candidates were determined using a pre-defined requirements
profile and were based on the objectives set by the Supervisory Board for the composition of the
Supervisory Board, taking into account the competency profile, legal requirements, and applicable
recommendations of the Code.
Herbert Kauffmann, a long-serving member of the Supervisory Board and former Chairman of the Audit
Committee, was elected as a shareholder representative at the Annual General Meeting on May 9, 2019,
until the end of the 2021 Annual General Meeting. With Herbert Kauffmann's term of office set to expire,
the Supervisory Board proposed a new candidate for election to the 2021 Annual General Meeting
following detailed consultation and preparation by the Nomination Committee. The 2021 Annual General
Meeting approved the Supervisory Board's proposal by a large majority and elected Jackie Joyner-Kersee
as a new member of the Supervisory Board from the end of the Annual General Meeting of adidas AG on
May 12, 2021, until the end of the 2024 Annual General Meeting. SEE SUPERVISORY BOARD
ELECTION AND COMPOSITION OF THE SUPERVISORY BOARD
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
5
3
ANNUAL REPORT 2021
1
adidas
28
The Reebok Ad Hoc Committee, which was established in the context for the sale of the Reebok business,
held one meeting during the year under review. The committee examined the divestiture of Reebok based
on the Executive Board's proposal, the details of the proposed transaction and contractual terms as well
as the criteria and reasons for the buyer selection. Ultimately, the committee granted its approval to the
proposed transaction and to all transactions and measures relating to the sale of Reebok that require the
approval of the Supervisory Board.
-
As in previous years, the Mediation Committee to be established in accordance with the German Co-
Determination Act (Mitbestimmungsgesetz — MitbestG) did not have to be convened in the year under
review.
The Nomination Committee did not meet during the year under review (2020: two meetings). Already in the
2020 financial year, the Nomination Committee used a requirements profile based on the Supervisory
Board's own competency profile to assess the suitability of candidates and prepared the Supervisory
Board's proposal to the 2021 Annual General Meeting regarding the election of a shareholder
representative on the Supervisory Board. The Nomination Committee also advised on the suitability and
independence of candidates in relation to the regulatory requirements.
Furthermore, the meetings of the Audit Committee covered topics such as data protection and information
security, business partner due diligence, adidas Global Business Services as well as tax and sustainability
topics (including the Executive Board compensation target 'share of sustainable articles offered') at
adidas. Finally, the Audit Committee discussed the requirements of the new Financial Market Integrity
Strengthening Act (FISG), the new EU Taxonomy Regulation, and the new Supply Chain Act
(Lieferkettengesetz).
In the year under review, the Audit Committee dealt intensively with the continued development and
monitoring of the effectiveness of the risk management system, the internal audit system, the internal
control system, and the compliance management system. Other matters discussed in detail were the
assignment of the audit mandate to the auditor appointed by the Annual General Meeting and the
determination of the audit fees and key audit matters. In addition, the Audit Committee monitored the
independence and qualification of the auditor, while also taking into account the non-audit services
provided by the auditor. With regard to the quality of the audit, the Audit Committee determined on the
basis of the auditor's report on its own quality assurance system, the findings of the German Auditor
Oversight Body (Abschlussprüferaufsichtsstelle - APAS), and its internal quality review, that there were no
indications of quality issues in the 2020 audit. Finally, the Audit Committee discussed the quarterly
financial results and the half-year financial report. In the year under review, the Audit Committee also
dealt intensively with the imminent external rotation of the auditor in 2023, defined the key parameters
regarding the tendering process, and prepared election proposals for the Supervisory Board for
resolution. The selection process was conducted on the basis of written tenders, presentations from, and
direct discussions with the qualified audit firms. The quality, qualifications, and independence of the
auditors were examined and evaluated. The Audit Committee also validated the detailed report on the
selection process, which provides transparent documentation of the tendering and selection procedures.
In addition, the Audit Committee dealt extensively with the audit plan and risk management report during
the year under review. At each committee meeting, the Audit Committee was also informed about the
findings and developments of internal audit as well as in the area of compliance.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
2
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
TO OUR SHAREHOLDERS
100%
7
7
100%
12
12
100%
7
7
100%
11
11
86%
GROUP MANAGEMENT REPORT -
OUR COMPANY
7
100%
7
7
100%
12
12
100%
10
10
100%
7
7
100%
4
12
12
6
Herbert Kauffmann
100%
4
3
2
ANNUAL REPORT 2021
1
adidas
25
At the meeting in May, we focused on current business performance, the business situation in China, and
the planned divestiture of Reebok. The Executive Board presented the Q1 2021 results and the outlook for
the 2021 financial year. We also discussed the development process of the new people strategy. In
addition, another focus of the meeting was on personnel matters relating to the Executive Board and
Supervisory Board. The service contracts of the current Executive Board members were adjusted in line
At the balance sheet meeting in March, the Executive Board reported on the financial results for the past
financial year as well as on the audit of the 2020 annual financial statements and consolidated financial
statements. Before the Supervisory Board passed the resolution, the auditor reported on the material
results of the audit, including the results of the examination of the content of the non-financial statement
commissioned by the Supervisory Board in accordance with § 111 section 2 sentence 4 of the German
Stock Corporation Act (Aktiengesetz - AktG). After in-depth examination of the financial statements and on
the basis of the independent auditor's report and the Audit Committee report on the audit results, the
Supervisory Board approved the annual financial statements and consolidated financial statements as well
as the combined Management Report, including the non-financial statement for adidas AG and the adidas
Group. Thus, the annual financial statements were adopted. In addition, the Executive Board presented the
current business situation of the company, the outlook for the 2021 financial year, the communications
plan for the long-term corporate strategy, and the key points of the new people strategy. Other topics of
discussion included compliance and major legal disputes involving adidas. Additionally, the Supervisory
Board approved adjustments to the budget and investment planning for the 2021 financial year in light of
the ongoing coronavirus pandemic and the planned divestiture of Reebok. Furthermore, we approved the
Supervisory Board Report to the Annual General Meeting as well as the proposed resolutions to be
submitted to the 2021 Annual General Meeting, including the proposal on the appropriation of retained
earnings for the 2020 financial year. Moreover, at the March meeting of the Supervisory Board, we
approved the new compensation system for members of the Executive Board and Supervisory Board based
on preparatory work by the General Committee, and determined the key criteria and targets for the
variable, performance-related compensation of Executive Board members for the 2021 financial year.
Before passing the resolution on the new compensation system for the Executive Board, the level of
Executive Board compensation was also reviewed. In this context, the appropriateness of the Executive
Board compensation was also determined on the basis of an external appropriateness test.
At the February meeting of the Supervisory Board, the Executive Board reported on the company's
situation and preliminary results for the 2020 financial year, the communications plan for the new
corporate strategy, and the dividend and distribution policy of adidas AG. In addition, the Supervisory Board
approved the Executive Board's proposal to examine and implement strategic options for the Reebok
business, including the possibility of sale. Following the completion of the review of strategic alternatives
for Reebok, the Executive Board decided to initiate a formal process aimed at divesting Reebok. We also
examined the upcoming election of a shareholder representative to the Supervisory Board at the 2021
Annual General Meeting. Other topics of discussion included Executive Board compensation and corporate
governance. In this context, we discussed the Declaration on Corporate Governance. In addition, having
determined the degree of target achievement and having discussed in detail the individual performance of
Executive Board members, we set the variable compensation to be paid to the Executive Board members
for the 2020 financial year. We also determined the appropriateness of Executive Board compensation
following an internal appropriateness test.
In accordance with statutory regulations or the Rules of Procedure, certain transactions and measures by
the Executive Board require the prior approval of the Supervisory Board. The Supervisory Board discussed
transactions requiring approval as they arose and gave its approval to resolution items after detailed
reviews, in some cases after preparation by the relevant committees. In addition, the Supervisory Board
regularly discussed personnel and compensation matters with respect to the Executive Board as well as
questions of corporate governance. SEE COMPENSATION REPORT SEE DECLARATION ON CORPORATE GOVERNANCE
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
The Supervisory Board regularly monitors the application and further development of the corporate
governance regulations within the company, in particular the implementation of the recommendations of
the Code. The Supervisory Board and its committees discussed in their meetings the requirements of the
German Stock Corporation Act (Aktiengesetz - AktG) and the Code in regard to corporate governance.
Further detailed information on corporate governance within the company can be found in the Declaration
on Corporate Governance. SEE DECLARATION ON CORPORATE GOVERNANCE
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
5
100%
1 Member of the Supervisory Board from the end of the Annual General Meeting on May 12, 2021.
2 Member of the Audit Committee from the end of the Annual General Meeting on May 12, 2021.
TASKS AND TOPICS FOR THE ENTIRE SUPERVISORY BOARD
In the year under review, there were seven meetings of the entire Supervisory Board (2020: ten meetings).
The following subject areas were presented to us in detail by the Executive Board for regular discussion at
meetings of the entire Supervisory Board: the development of sales, earnings, and employment situation;
the financial position of the company; and the development of the company's individual operations, brands,
and markets. In addition, we examined the impact of the ongoing coronavirus pandemic on the global
economy and the company. As in previous years, our primary concern was the health and safety of our
employees, shareholders, consumers, and partners. Another area of particular focus was the Reebok
divestiture process. We also addressed the geopolitical situation and challenging market conditions in
China as well as the supply chain disruptions across the industry and, together with the Executive Board,
discussed the resulting impacts on the operating business and possible mitigation measures. Additionally,
we examined the development of e-commerce sales, the continued expansion of adidas' direct-to-
consumer business, and the progress of the company's digital transformation. We also discussed the
annual and multi-year planning of the Executive Board. In particular, we examined the implementation of
the new long-term strategy Own the Game' that will run from the 2021 to 2025 financial years. At our
meetings, the Executive Board consulted extensively with the Supervisory Board and gave regular reports
on the implementation progress. Finally, the Executive Board provided regular updates on the
implementation of measures to promote Diversity, Equity, and Inclusion at adidas - measures that are the
basis of our new people strategy.
5
adidas
1
ANNUAL REPORT 2021
2
3
4
24
Carrying
amount
2020
DESIGNATED HEDGE INSTRUMENTS € IN MILLIONS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
3
4
2
ANNUAL REPORT 2021
1
adidas
5
TO OUR SHAREHOLDERS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
ment
Line item in
statement of
financial
position
where the
hedging
instrument
is included
Changes
in the
value of
the
hedging
instru-
reco-
gnized in
hedging
reserve
Changes
in the
value of
the
hedging
instru-
reco-
During the period 2020
gnized in
300
reserve
863
178
102
1,826
1,822
527
735
953
114
44
20
685
830
1,141
992
Deferred tax assets are recognized only to the extent that the realization of the related benefit is probable.
For the assessment of probability, in addition to past performance and the respective prospects for the
foreseeable future, appropriate tax structuring measures are also taken into consideration.
75
345
235
512
1,141
992
Gross company deferred tax assets and liabilities after valuation allowances, but before appropriate
offsetting, are attributable to the items detailed in the table below:
DEFERRED TAXES € IN MILLIONS
Non-current assets
Current assets
Liabilities and provisions
Accumulated tax loss carry-forwards
Deferred tax assets
Non-current assets
Current assets
Liabilities and provisions
Deferred tax liabilities
Deferred tax assets, net
Dec. 31, 2021
Dec. 31, 2020
460
Deferred tax assets for which the realization of the related tax benefits is not probable decreased from
€ 386 million to € 222 million for the year ending December 31, 2021. These amounts mainly relate to tax
losses carried forward and unused tax credits of the US tax group, which begin to expire in 2029. The
remaining unrecognized deferred tax assets relate to subsidiaries operating in markets where the
realization of the related tax benefit is not considered probable.
adidas does not recognize deferred tax liabilities for unremitted earnings of non-German subsidiaries to
the extent that they are expected to be permanently invested in international operations. These earnings,
the amount of which cannot be practicably computed, could become subject to additional tax if they were
remitted as dividends or if the company were to sell its shareholdings in the subsidiaries.
297
adidas
319
(17)
(202)
360
117
The deferred tax income includes tax income of € 5 million in total (2020: € 140 million) related to the
origination and reversal of temporary differences.
The company's applicable tax rate is 27.4% (2020: 27.4%), being the applicable income tax rate of
adidas AG.
The company's effective tax rate differs from the applicable tax rate of 27.4% as follows:
TAX RATE RECONCILIATION
Year ending Dec. 31, 2021
Year ending Dec. 31, 2020
€ in millions
in %
€ in millions
in %
Expected income tax expenses
507
377
(28)
Dec. 31, 2020
Year ending
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TAX EXPENSES
Tax expenses are split as follows:
INCOME TAX EXPENSES € IN MILLIONS
Current tax expenses
Deferred tax income
Income tax expenses
Year ending
Dec. 31, 2021
22
24
(26)
33 HYPERINFLATION
Due to the rapid devaluation of the Argentinian peso, Argentina is considered hyperinflationary and as a
result, the application of IAS 29 was adopted for the first time in the third quarter of 2018. The financial
statements of 2018 for those subsidiaries that have the Argentinian peso as a functional currency had been
restated for the change in the general purchasing power retrospectively since January 1, 2018. The
financial statements are based on a historical cost approach. The prior-year figures are stated in terms of
the measuring unit current at December 31, 2020.
For translation into the presentation currency (euro), all amounts were translated at the closing rate at
December 31, 2021. The net assets in the subsidiary's local financial statements were adjusted for
changes in the price level.
The price index at December 31, 2021, was 7,714.09 (2020: 5,125.55).
34 INCOME TAXES
adidas AG and its German subsidiaries are subject to German corporate and trade taxes. For the years
ending December 31, 2021 and 2020, the statutory corporate income tax rate of 15% plus a surcharge of
5.5% thereon is applied to earnings. The municipal trade tax is approximately 11.4% of taxable income.
For non-German subsidiaries, deferred taxes are calculated based on tax rates that have been enacted or
substantively enacted by the closing date.
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are offset if:
the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same
taxation authority on either:
the same taxable entity; or
different taxable entities which intend either to settle current tax liabilities and assets on a net
basis, or to realize the assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities or assets are expected to be settled or
recovered.
The following deferred tax assets and liabilities, determined after appropriate offsetting, are presented in
the consolidated statement of financial position:
DEFERRED TAX ASSETS/LIABILITIES € IN MILLIONS
Deferred tax assets
Deferred tax liabilities
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Deferred tax assets, net
5
GROUP MANAGEMENT REPORT -
OUR COMPANY
4
3
153
196
Interest income from financial instruments, measured at amortized cost, mainly consists of interest
income from bank deposits and loans calculated using the 'effective interest method'.
Interest income/expense from financial instruments at fair value through profit or loss mainly includes
interest payments from investment funds as well as net interest payments from interest derivatives not
being part of a hedging relationship. Unrealized gains/losses from fair value measurement of such
financial assets are shown in other financial income or expenses.
Interest expense on financial instruments measured at amortized cost mainly includes interest on lease
liabilities as well as interest on borrowings calculated using the effective interest method'. In the prior
year this position included transaction costs of € 9 million that were incurred as part of the revolving
syndicated loan with the participation of Germany's state-owned development bank KfW which were
recognized in the income statement in 2020 due to the early redemption.
Interest expense on other provisions, and non-financial liabilities in particular, include effects from the
measurement of other provisions at present value and interest on non-financial liabilities such as tax
payables.
Information regarding investments, borrowings, and financial instruments is also included in these Notes.
▶ SEE NOTE 13 SEE NOTE 16 SEE NOTE 28
295
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
27.4
296
Dec. 31, 2020
Deferred tax assets, net as at January 1
Deferred tax income
992
813
(112)
176
Reclassification to assets/liabilities classified as held for sale¹
278
Change in deferred taxes attributable to remeasurements of defined benefit plans
recorded in other comprehensive income²
[13]
7
Change in deferred taxes attributable to the change in the effective portion of the
fair value of qualifying hedging instruments recorded in other comprehensive
income³
Currency translation differences
Deferred tax assets, net as at December 31
1 See Note 03.
2 See Note 23.
3 See Note 28.
2020
Dec. 31, 2021
2021
5
1,263
1,233
(122)
(241)
1,141
992
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
The movement of deferred taxes net is as follows:
MOVEMENT OF DEFERRED TAXES € IN MILLIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
158
27.4
Tax rate differentials
194,172,984
195,155,924
451
666
194,172,984
(19)
2,116
195,155,924
194,172,984
195,155,924
432
Weighted assumed conversion of the
convertible bond
Dilutive effect of share-based
payments
5,097
5,805
5,097
5,805
1,450
5,097
Weighted average number of shares
diluted earnings per share
2.31
3.43
(0.10)
194,172,984
10.90
195,155,924
2.21
Net income attributable to
1,450
451
666
[19]
2,116
432
shareholders (€ in millions)
Interest expense on convertible bond,
net of taxes (€ in millions)
Net income used to determine
(€ in millions)
7.47
5,805
194,178,081
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
299
2.21
10.90
(0.10)
3.43
2.31
7.47
cost of
hedging
5
Weighted average number of shares
for diluted earnings per share
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
36 SEGMENTAL INFORMATION
195,161,729
194,178,081
195,161,729
194,178,081
195,161,729
Diluted earnings per share (€)
Segmental assets include accounts receivable as well as inventories. Only these items are reported to the
chief operating decision maker on a regular basis. Depreciation, amortization, impairment losses (except
for goodwill), and reversals of impairment losses as well as capital expenditure for tangible and intangible
assets are part of the segmental reporting, even though segmental assets do not contain tangible and
intangible assets. Depreciation and amortization as well as impairment losses and reversals of
impairment losses not directly attributable to a segment or a group of segments are presented under line
items 'HQ' and 'Consolidation' in the reconciliations.
The results of the operating segments are reported in the line item 'Segmental operating profit.' This is
defined as gross profit minus other operating expenses plus royalty and commission income and other
operating income attributable to the segment or group of segments, without considering headquarter
costs and central expenditure for marketing.
Net sales represent revenue from contracts with customers. There are no intersegment sales between the
reportable segments. Accounting and valuation policies applied for reporting segmental information are
the same as those used for adidas. SEE NOTE 02
The chief operating decision maker for adidas has been defined as the entire Executive Board of
adidas AG.
Other Businesses includes the business activities of the Y-3 label and other subordinated businesses
which are not monitored separately by the chief operating decision maker. Also, certain centralized
corporate functions do not meet the definition of IFRS 8 for an operating segment. This includes, in
particular, functions such as Global Brands and Global Sales (central brand and distribution
management), central treasury, and global sourcing as well as other headquarter functions. Assets,
liabilities, income and expenses relating to these corporate functions are presented in the reconciliations.
Each market comprises all wholesale, retail and e-commerce business activities relating to the
distribution and sale of products of the adidas brand to retail customers and end consumers.
The operating segment Reebok North America which was reported in the internal management reporting
until February 11, 2021, is not monitored anymore due to the intention to sell it. Therefore, the segment
North America only includes the business activities of adidas. Comparative segmental information has
been retrospectively adjusted. The Reebok business activities in the other operating segments have also
been removed in the segment information for 2021 and 2020.
In order to be able to successfully execute our new strategy 'Own the Game' for the period until 2025,
adidas has changed its organizational structure. Since January 1, 2021, adidas manages Greater China as
a separate market and integrated Russia/CIS and Emerging Markets into the European market.
As at December 31, 2021, following the company's internal management reporting by markets and in
accordance with the definition of IFRS 8 'Operating Segments', five operating segments were identified:
EMEA, North America, Greater China, Asia-Pacific, and Latin America.
adidas operates predominantly in one industry segment – the design, distribution, and marketing of
athletic and sports lifestyle products.
-
ADDITIONAL INFORMATION
37
Basic earnings per share (€)
194,172,984
3
0.5
(4)
(0.2)
3
0.5
55
3.0
37
6.3
360
19.4
117
20.2
In 2021, the effective tax rate was 19.4%. The effective tax rate in 2020 was 20.2%.
The line item 'Non-deductible expenses' includes tax expense/benefits as well as expenses/benefits
relating to tax-free income, movements in provisions for uncertain tax positions (including as a result of
the application of a statute of limitations or law with similar impact applying to prior years) and tax
expense relating to prior periods. In 2021, the tax benefit relating to prior periods was € 57 million (2020:
tax income of € 63 million).
For 2021, the line item 'Losses for which benefits were not recognizable and changes in valuation
allowances' mainly relates to the release of valuation allowances in respect of the US, Argentina and
Brazil (€ 54 million) and an increase in the valuation allowance in Hong Kong (€ 14 million). For 2020, this
line item mainly related to changes in valuation allowances for the US, Argentina and Lebanon.
0.1
For 2021, the total tax benefit arising from previously unrecognized tax losses, credits or temporary
differences in prior years that is used to reduce current tax expense was € 15 million, mainly relating to
Argentina and Canada (2020: € 5 million).
2
Withholding tax expenses
(155)
(8.4)
(44)
(7.6)
(7)
(0.4)
11
2.0
Losses for which benefits were not
recognizable and changes in valuation
[38]
(2.0)
(52)
(8.9)
allowances
Changes in tax rates
Other, net
Income tax expenses
195,155,924
298
1
Year ending
Dec. 31, 2020
Net income from continuing
operations (€ in millions)
Net income attributable to non-
controlling interests (€ in millions)
Net income attributable to
shareholders (€ in millions)
1,492
461
42
11
1,450
451
666
(19)
2,116
432
Weighted average number of shares
194,172,984
195,155,924
Year ending
Dec. 31, 2021
adidas
Year ending
Dec. 31, 2020
Year ending
Dec. 31, 2020
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
For 2021, the line item 'Changes in tax rates' mainly reflects the tax rate reductions in Argentina, France,
and Switzerland. For 2020, this line item mainly reflected the reversal of the previously enacted tax rate
reduction in the UK and the tax rate decrease in France.
35 EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net income from continuing operations attributable
to shareholders by the weighted average number of shares outstanding during the year, excluding
ordinary shares purchased by adidas and held as treasury shares.
EARNINGS PER SHARE
Continuing operations
Discontinued operations
Total
Year ending
Dec. 31, 2021
Year ending
Dec. 31, 2021
37
Non-deductible expenses
82
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CHANGES OF RESERVES BY RISK CATEGORY € IN MILLIONS
Cash flow hedges
Changes in fair value:
Foreign currency risk - sales
Foreign currency risk – inventory purchases
Foreign currency risk - net foreign investment
Amount no longer recognized in OCI:
Foreign currency risk
Balance at January 1, 2021
ANNUAL REPORT 2021
1
adidas
swap -
205
77
[9]
Long-Term
Incentive
Other
financial
assets/
liabilities
(127)
Financial
result
112
Other
operating
expenses
Plans
Some of initial planned exposure for purchases and sales in foreign currencies ceased to exist, which led
to certain overhedge positions. In accordance with IFRS 9, hedge accounting was immediately
discontinued for hedging instruments that were no longer covered by a purchase or sales transaction, and,
at the time the over-hedged status was determined, the fair value was transferred from the hedging
reserve to the income statement. In 2021, a loss of € 5 million was reclassified into the income statement.
In addition, hedging instruments not designated as hedge accounting in accordance with IFRS 9 were
canceled to minimize the economic risk.
The following table provides a reconciliation by risk category of components of equity and analysis of OCI
items, net of tax, resulting from cash flow hedge accounting:
291
Contracts during the year
Amount included in the cost of non-financial items:
Foreign currency risk - inventory purchases
Tax on movements of reserves during the year
Hedging
Cost of
hedging
reserve
reserve
(317)
(31)
(304)
99
290
28
(52)
267
(132)
22
15
45
[32]
Balance at December 31, 2020
Total
Amount reclassified to profit or loss
Equity hedges
Equity hedges
Changes in fair value:
Amount reclassified to profit or loss
Balance at December 31, 2021
CHANGES OF RESERVES BY RISK CATEGORY € IN MILLIONS
Balance at January 1, 2020
Cash flow hedges
Changes in fair value:
Foreign currency risk - sales
Foreign currency risk - inventory purchases
Foreign currency risk - net foreign investment
Amount reclassified to profit or loss:
Foreign currency risk
Contracts during the year
Amount no longer recognized in OCI:
Foreign currency risk - inventory purchases
Tax on movements on reserves during the year
Changes in fair value:
ments
Financial
result
result
from
cost of
hedging
reserve
Amount
re-
classi-
fied from
hedging
reserve
Amount
re-
classi-
fied from
cost of
hedging
reserve
to profit
or loss
Line item in
reco-
2
income
statement
affected by
the reclassi-
fication
Nominal
Liabil-
amount Assets
ities
Amount
Foreign ex
or loss
invent-
tory
gnized
in profit
or loss
Hedge
Line item
in income
ment
ineffec-
tiveness
statement
which
includes
Amount
from
hedging
reserve
trans-
trans-
ferred
hedge
ferred to
to
ineffec-
tiveness
invent-
tory
to profit
17
Other
4,436
sales
(41)
43
Cost of
sales
Cost of
sales
inventory
purchases
Foreign
exchange
contracts -
473
6
net foreign
invest-
Other
financial
assets/
liabilities
19
Financial
107
change
31
(290)
112
[23]
financial
87
(134)
contracts -
sales
assets/
liabilities
Cost of
sales
Foreign
Other
exchange
contracts - 5,001
9
(265)
financial
assets/
liabilities
Cost of
29
(64)
return
Hedging
reserve
1,997
Social security contributions
Pension expenses
Personnel expenses
Expense relating to short-term leases
209
216
120
112
2,451
2,325
11
19
Expense relating to leases of low-value assets
Dec. 31, 2020
0
1
2,122
140
Wages and salaries
(34)
Year ending
Dec. 31, 2020
10,421
9,169
Cost of materials
Depreciation and amortization
1,141
1,188
Thereof: included within the cost of sales
79
94
Thereof: included within personnel expenses
11
11
Impairment losses
8
73
Reversals of impairment losses
(5)
132
Further information on expenses by function is provided in these Notes. SEE NOTE 30
294
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
32 FINANCIAL INCOME/FINANCIAL EXPENSES
Financial result consists of the following:
FINANCIAL INCOME € IN MILLIONS
Interest income from financial instruments measured at amortized cost
Interest income from non-financial assets
Other
Financial income
FINANCIAL EXPENSES € IN MILLIONS
Interest expense on financial instruments measured at amortized cost
Thereof: interest expense on lease liabilities
Interest expense on other provisions and non-financial liabilities
Net foreign exchange losses
Other
Financial expenses
Year ending
Year ending
Dec. 31, 2021
23
0
2
7
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
(21)
Year ending
Dec. 31, 2021
4
66
156
109
Year ending
Dec. 31, 2020
Year ending
Dec. 31, 2021
29
19
4
TO OUR SHAREHOLDERS
EXPENSES BY NATURE € IN MILLIONS
Expense relating to variable lease payments
Expenses relating to leases of low-value assets exclude short-term leases of low-value assets.
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
NOTES TO THE CONSOLIDATED INCOME STATEMENT
All figures related to the 2021 and 2020 financial years in the 'Notes to the consolidated income statement'
refer to the company's continuing operations unless otherwise stated. Prior-year figures have been
adjusted due to the reporting of Reebok as a discontinued operation in 2021.
29 OTHER OPERATING INCOME
Other operating income consists of the following:
OTHER OPERATING INCOME € IN MILLIONS
Year ending
292
Year ending
In order to determine the fair values of derivatives that are not publicly traded, adidas uses generally
accepted quantitative financial models based on market conditions prevailing at the balance sheet date.
(250)
Cost of
hedging
reserve
(195)
(6)
90
40
(209)
39
19
10
(150)
[17]
48
67
5
(127)
112
(26)
Dec. 31, 2021
12
Income from release of accrued liabilities and other provisions
ANNUAL REPORT 2021
1
adidas
293
Further information on expenses by nature is provided in these Notes. SEE NOTE 31
Income from government grants is reported as a deduction from the related expenses and amounted to
€ 84 million in 2021 (2020: € 66 million). Income from government grants related to the coronavirus
pandemic amounted to € 5 million in 2021 (2020: € 29 million).
Sundry expenses consist mainly of costs for one-time effects as well as losses from disposal of fixed
assets.
General and administration expenses include the functions IT, Finance, Legal, Human Resources, and
Facilities & Services, as well as General Management.
Marketing and point-of-sale expenses consist of promotion and communication spending such as
promotion contracts, advertising, events, and other communication activities. However, they do not include
marketing overhead expenses, which are presented in distribution and selling expenses.
Other operating expenses presented by functions include marketing and point-of-sale expenses,
distribution and selling expenses, and general and administration expenses, as well as sundry expenses
less any income from government grants, if applicable.
Expenses are presented by function according to the 'cost of sales method' in the income statement with
the exception of impairment losses (net) on accounts receivable and contract assets which are disclosed in
a separate line item as required by IFRS 9 Financial Instruments.
30 OTHER OPERATING EXPENSES
42
21
Other operating income
28
Dec. 31, 2020
2
3
The distribution and selling expenses consist of sales force and sales administration costs, direct and
indirect supply chain costs, and marketing overhead expenses, as well as expenses for research and
development, which amounted to € 130 million in 2021 (2020: € 115 million).
TO OUR SHAREHOLDERS
14
18
4
5
3
Sundry income
10
Personnel expenses are primarily included within other operating expenses unless they are directly
attributable to the production costs, in which case the expenses are included within the cost of sales.
Gains from disposal of fixed assets
Depreciation of tangible and right-of-use assets, amortization of intangible assets, andimpairment losses
and reversals of impairment losses on those assets are primarily included within other operating
expenses unless they are directly attributable to the production costs, in which case the expenses are
included within the cost of sales. Impairment losses on goodwill are presented as a separate line item in
the consolidated income statement.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
GROUP MANAGEMENT REPORT -
OUR COMPANY
31 COST BY NATURE
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Supplementary information on the expenses by nature is detailed below.
Cost of materials represents the amount of inventories recognized as an expense during the period.
2,722
2,482
Lease liabilities
borrowings
780
2,466
(16)
(645)
Long-term
0
29
(147)
21
(679)
686
Short-term
Dec. 31, 2021
Effect of
exchange
rates
Other
42
396
borrowings
25
780
2,836
adidas has other financial commitments for leasing and other rental obligations which mature as follows:
305
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
FINANCIAL COMMITMENTS FOR OTHER CONTRACTS € IN MILLIONS
Within 1 year
Between 1 and 5 years
After 5 years
Total
Dec. 31,2021
84
Dec. 31,2020
73
238
207
Compared to December 31, 2020, no new major signings or prolongations for promotion and advertising
contracts occurred, hence the decrease for the commitments mainly reflects the yearly amortization.
101
Commitments with respect to promotion and advertising contracts maturing after five years have
remaining terms of up to 23 years from December 31, 2021.
5,712
Total
5,890
(1,324)
(147)
30
101
5,331
38 OTHER FINANCIAL COMMITMENTS AND CONTINGENCIES
OTHER FINANCIAL COMMITMENTS
adidas has other financial commitments for promotion and advertising contracts, which mature as follows:
FINANCIAL COMMITMENTS FOR PROMOTION AND ADVERTISING € IN MILLIONS
Within 1 year
Between 1 and 5 years
After 5 years
Total
Dec. 31, 2021
Dec. 31, 2020
1,345
1,202
3,352
3,321
74
1,425
5,948
1,015
18,435
Fair value
adjustments
1,126
1,055
2,193
2,096
762
714
1,446
1,035
4,342
115
21,234
6,479
6,899
GEOGRAPHICAL INFORMATION BY COUNTRY € IN MILLIONS
Net sales (third parties)
continuing operations
Germany, Europe
USA, North America
-
125
4,597
1,507
1,254
GEOGRAPHICAL INFORMATION BY MARKET € IN MILLIONS
EMEA
323
North America
Greater China
Asia-Pacific
Latin America
Total
Net sales (third parties)
Non-current assets
Year ending
Dec. 31, 2021
Year ending
Dec. 31, 2020
Dec. 31, 2021 Dec. 31, 2020
7,887
6,440
3,222
3,497
5,110
4,523
Non-current assets
Year ending
Dec. 31, 2021
Year ending
Dec. 31, 2020
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash generated from discontinued operations
Year ending
Dec. 31, 2021
320
Year ending
Dec. 31, 2020
120
[9]
(11)
[39]
(35)
272
74
In 2021, the following changes in financial liabilities impacted the net cash used in financing activities:
IMPACT OF CHANGE IN FINANCIAL LIABILITIES ON NET CASH USED IN FINANCING ACTIVITIES € IN MILLIONS
Non-cash effects
Net
Jan. 1, 2021
(payments)/
proceeds in
the period
IFRS 16
lease
obligations
NET CASH (USED IN)/GENERATED FROM DISCONTINUED OPERATIONS € IN MILLIONS
Transfer to
liabilties
held for sale
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
TO OUR SHAREHOLDERS
Dec. 31, 2021
Dec. 31, 2020
1,360
4,803
1,158
4,220
1,313
1,169
1,329
1,410
37 ADDITIONAL CASH FLOW INFORMATION
In 2021, net cash generated from operating activities compared to the prior year results was primarily due
to an increase in income before taxes and an increase in operating working capital requirements.
The increase in net cash used in investing activities in 2021 mainly resulted from an increase in spending
on other intangible assets and property, plant, and equipment and from less proceeds from sale of short-
term financial assets which was partly offset by an increase of proceeds from disposal of discontinued
operations that were sold in previous periods.
Net cash used in financing activities mainly related to dividend paid to shareholders of adidas AG,
repurchase of treasury shares, repayments of lease liabilities and the repayment of a eurobond. In the
previous year, the issuance of three eurobonds and the proceeds from short-term borrowings still led to
net cash generated from financing activities.
304
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
The contracts regarding these leases with expiration dates of between one and 21 years partly include
renewal options and price adjustment clauses.
Supervisory Board
adidas has outsourced certain logistics and information technology functions, for which it has entered into
long-term contracts. Financial commitments under these contracts mature as follows:
Total
58,959
58,275
62,329
61,891
ACCOUNTANT SERVICE FEES FOR THE AUDITOR OF THE FINANCIAL STATEMENTS
The expenses for the audit fees comprise the expenses of adidas AG, Herzogenaurach, as well as all
German subsidiaries of adidas AG. In 2021, the expenses for the professional audit service fees for the
auditor KPMG AG Wirtschaftsprüfungsgesellschaft amounted to € 1.6 million (2020: € 1.8 million) thereof
related to the prior year € 0.3 million (2020: € 0.3 million).
Expenses for tax consultancy services provided by the auditor, for other confirmation services provided by
the auditor, and for other services provided by the auditor amounted to € 0.1 million (2020: € 0.1 million),
€ 0.3 million (2020: € 0.2 million) and € 0.3 million (2020: € 0.1 million), respectively.
Expenses for the audit fees of KPMG AG Wirtschaftsprüfungsgesellschaft were mainly related to the audits
of both the consolidated financial statements and the financial statements of adidas AG, as well as the
audit of the financial statements of its subsidiary, adidas CDC Immobilieninvest GmbH.
Other confirmation services consist of confirmations required by law or contractually agreed, such as the
audit of the historical financal information of the Reebok business activities for the financial years 2019
and 2020, the audit of the non-financial statement, the European Market Infrastructure Regulation (EMIR)
audits according to § 20 WpHG, audits according to the German Packaging Law (Verpackungsgesetz -
VerpackG), and other contractually agreed-upon confirmation services.
The tax consultancy services include support services for transfer pricing.
Other services relate in particular to status checks for non-financial key performance indicators.
308
adidas
ANNUAL REPORT 2021
1
2
1,470
3
3,630
3,535
6,147
Central administration
4,917
5,183
5,035
5,310
Production
479
564
479
564
Research and development
954
874
1,050
983
Information technology
1,465
4
5
TO OUR SHAREHOLDERS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
fund in combination with a reinsured pension trust fund. From this, indirect obligations amounting to
€ 47.0 million (prior year: € 48.5 million) arise for which no provisions were created due to financing
through the pension fund and pension trust fund. Provisions for pension entitlements have been created
for two former members of the Executive Board who resigned on or after December 31, 2019 in an amount
of € 3.9 million.
COMPANIES OPTING FOR EXEMPTION UNDER § 264 (3) HGB
The subsidiary adidas CDC Immobilieninvest GmbH, Herzogenaurach, is opting for exemption under
§ 264 (3) HGB.
41 INFORMATION RELATING TO THE GERMAN CORPORATE GOVERNANCE CODE
INFORMATION PURSUANT TO § 161 GERMAN STOCK CORPORATION ACT (AKTIENGESETZ - AKTG)
In December 2021, the Executive Board and Supervisory Board of adidas AG issued an updated Declaration
of Compliance in accordance with § 161 AktG and made it permanently available to the shareholders. The
full text of the Declaration of Compliance is available on the company's corporate website.
310
Net sales (third parties) are shown in the geographic market in which the net sales are realized. Non-
current assets are allocated to the geographic market based on the domicile of the respective subsidiary
independent of the segmental structure and consist of tangible assets, goodwill, trademarks, other
intangible assets, right-of-use assets and other non-current assets.
ANNUAL REPORT 2021
1
adidas
309
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
REMUNERATION OF THE SUPERVISORY BOARD AND THE EXECUTIVE BOARD OF ADIDAS AG
Pursuant to the Articles of Association of adidas AG, the Supervisory Board members' fixed annual
payment amounted to € 2.2 million (2020: € 2.2 million). In addition, the members of the Supervisory
Board received attendance fees of € 0.03 million (2020: € 0.03 million).
Members of the Supervisory Board were not granted any loans or advance payments in 2021.
Executive Board
In 2021, the overall compensation of the members of the Executive Board totaled € 27.3 million
(2020: € 8.3 million), € 13.1 million thereof relates to short-term benefits (2020: € 6.8 million) and
5,133
€ 14.2 million to share-based payment (2020: € 1.5 million). Post-employment benefits (costs for accrued
pension entitlements for members of the Executive Board) totaled € 3.5 million in 2021 (2020:
€ 3.3 million).
Pension obligations relating to former members of the Executive Board and their survivors amounted in
total to € 93.9 million (2020: € 98.3 million).
Current members of the Executive Board were not granted any loans or advance payments in 2021.
Overall compensation oft the members of the Executive Board and Board of Directors §314 (1) i.V.m.
§315e HGB
The overall compensation of the members of the Executive Board in the 2021 financial year amounted to
€ 13.1 million (previous year: € 5.8 million). In addition, a total LTIP Bonus amount of € 14.2 million
(previous year: € 0) was granted to the Executive Board members which must be invested in the
acquisition of adidas AG shares after deduction of applicable taxes and social security contributions. These
shares are subject to a lock-up period which ends in the fourth financial year after the performance year.
The LTIP payout amount is considered earned only after expiry of the lock-up period and only then can the
Executive Board members dispose of the shares at their own discretion. By contrast, the amount deducted
for income tax and social security contributions is already fully earned at the time of payout following the
adoption of the consolidated financial statements by the Supervisory Board. The higher total remuneration
in comparison to the previous year is mainly attributable to the fact that already in April 2020 in light of the
coronavirus pandemic the Executive Board Members waived their LTIP Bonus and their Performance
Bonus for the 2020 financial year as a liquidity management measure. For the 2020 financial year, a
special bonus was granted to the Executive Board members for the first time in the amount of
€ 1.5 million, which had to be invested in the acquisition of adidas AG shares after deduction of applicable
taxes and social security contributions.
Former members of the Executive Board and their surviving dependents received a total of € 4.3 million in
benefits in the 2021 financial year (prior year: € 10.6 million).
Provisions for pension entitlements have been created for the former members of the Executive Board
who resigned on or before December 31, 2005 and their surviving dependents, in an amount of
€ 43.0 million in total as at December 31, 2021 before offsetting with the assets of the "adidas Pension
Trust e.V." (prior year: € 45.8 million). There are pension commitments towards six former Executive
Board members who resigned after December 31, 2005, which are covered by a pension fund or a pension
In 2021, payments including pension payments to former members of the Executive Board and their
survivors amounted in total to € 4.3 million (2020: € 4.4 million). Expenses for benefits on the basis of
termination of employment have not been incurred in 2021 (2020: € 6.3 million).
5,369
4,481
Marketing
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
company, has cooperated and continues to cooperate with the prosecutors, including by conducting an
internal investigation with the assistance of outside counsel. While Management currently believes that
the actions of its former employee will not have any material influence on the assets, liabilities, financial
position and profit or loss of the company, actual results may ultimately differ from the current
Management assessment. Any additional statements about these matters by the company could
compromise the company's position in these proceedings and hence further information is not disclosed.
In 2012, both adidas and Nike launched knitted upper footwear products. Nike's products were labeled
'Flyknit,' adidas' shoes ‘Primeknit.' Since 2012, both companies have initiated various legal proceedings in
Europe and the U.S. relating to the other company's patents in the knitted upper space.
In December 2021, Nike filed a complaint with the US International Trade Commission (ITC) alleging that
certain adidas footwear products infringe six US patents covering Nike's Flyknit technology. Nike
requested in particular that the ITC (i) ban the import of adidas footwear products infringing Nike's six US
Flyknit patents into the US and (ii) issue a permanent cease-and-desist order directing adidas to refrain
from importing, distributing, marketing, offering or selling knitted footwear products in the US that
infringe Nike's six US Flyknit patents.
The ITC has instituted the investigation requested by Nike, which is at an early stage. A decision from the
ITC is expected by May 2023.
In parallel, Nike also filed a complaint for patent infringement against adidas AG, adidas North America,
Inc., and adidas America, Inc. with the US District Court in Portland/Oregon. Nike argues that certain
adidas footwear products using knitted uppers infringe nine of Nike's US Flyknit technology patents. Nike
seeks (i) an injunction from the court preventing adidas from infringing Nike's patents and (ii) monetary
damages from adidas for past sales of Primeknit products in the US. The District Court proceeding was
stayed until the ITC has rendered a decision.
Management believes that our products do not infringe Nike's US Flyknit technology patents and the
claims made by Nike will eventually not result in any outflow of resources. No further statements on this
subject will be disclosed in light of the ongoing proceedings in accordance with IAS 37.92.
39 RELATED PARTY DISCLOSURES
According to the definitions of IAS 24 Related Party Disclosures, the Supervisory Board and the Executive
Board of adidas AG have been identified as related parties who receive remuneration solely in connection
with their function as key management personnel. This Annual Report contains detailed information about
the remuneration of the Supervisory Board and the Executive Board of adidas AG. SEE COMPENSATION REPORT SEE
1
adidas
306
In October 2018, a former employee of the company's US subsidiary was convicted of wire fraud in
connection with unauthorized payments to certain college basketball players or their families during the
former employee's time at the US subsidiary. The company's US subsidiary, with the full support of the
FINANCIAL COMMITMENTS FOR SERVICE ARRANGEMENTS € IN MILLIONS
Within 1 year
Between 1 and 5 years
After 5 years
Total
Dec. 31, 2021
Dec. 31, 2020
276
NOTE 40
235
293
29
666
528
LITIGATION AND OTHER LEGAL RISKS
The company is currently engaged in various lawsuits resulting from the normal course of business,
mainly in connection with distribution agreements as well as intellectual property rights. The risks
regarding these lawsuits are covered by provisions when a reliable estimate of the amount of the
obligation can be made. In the opinion of Management, the ultimate liabilities resulting from such claims
will not materially affect the assets, liabilities, financial position and profit or loss of the Group. ▸ SEE NOTE 18
The company is in dispute with the local revenue authorities in South Africa (SARS) with regard to the
customs value of imported products. In June 2018, SARS issued a ruling claiming a customs payment
including interest and penalties for the years 2007 to 2013 in an amount of ZAR 1,871 million
(€ 104 million). adidas has applied for a suspension of the payment demand and in 2019 instituted legal
action against the decision before the High Court in South Africa. In case the court rules in favor of SARS,
adidas will appeal against the decision to the Supreme Court of South Africa. Based on external legal
opinions, Management currently believes that it is more likely than not that the claim made by SARS will
eventually not result in an outflow of resources. Therefore, a provision was not recognized in the
consolidated statement of financial position.
In connection with the financial irregularities of Reebok India Company in 2012 various legal uncertainties
were identified. At this stage, the respective ultimate risk cannot be determined conclusively. However,
based on opinions obtained from external counsel and internal assessments, Management assumes that
the possibility of any outflow in settlement is remote and therefore, the effects will not have any material
negative influence on the assets, liabilities, financial position and profit of the company.
361
SERVICE ARRANGEMENTS
In addition, adidas Pension Trust e.V., a registered association, is regarded as a related party. Based on a
Contractual Trust Arrangement, adidas Pension Trust e.V. manages the plan assets in the form of an
administrative trust to fund and protect part of the pension obligations of adidas AG. Employees, senior
executives, and members of the Executive Board of adidas AG can be members of the registered
association. adidas AG has the right to claim a refund of pension payments from adidas Pension Trust e.V.
under specific contractually agreed conditions. ▸ SEE NOTE 23
adidas
Dec. 31, 2021
Dec. 31, 2020
Own retail
Sales
Logistics
32,678
32,978
34,929
35,422
3,359
3,524
3,489
3,652
8,558
8,318
8,585
8,343
Year ending
Year ending
Year ending
Dec. 31, 2020
Dec. 31, 2021
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
307
GROUP MANAGEMENT REPORT -
OUR COMPANY
40 OTHER INFORMATION
EMPLOYEES
The average numbers of employees are as follows:
EMPLOYEES
Continued and
Continued operation
discontinued operation
Year ending
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GEOGRAPHICAL INFORMATION
3
5
(24)
36
North
33
36
146
154
[1]
6
America
Greater
127
91
240
259
[1]
19
China
Asia-Pacific
318
36
289
129
4,561
3,083
6,201
6,333
705
695
Depreciation and
Impairment losses and
reversals of
impairment losses¹
Capital expenditure¹
amortization¹
2021
2020
2021
2020
2021
2020
EMEA
50
38
127
132
Total
349
223
858
931
(26)
68
1 Year ending December 31
RECONCILIATIONS
The following tables include reconciliations of segmental information to the aggregate numbers of the
consolidated financial statements, taking into account items which are not directly attributable to a
segment or a group of segments.
301
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
Businesses
3
4
2
1
2
Latin
22
7
54
64
2
America
21,234 18,435
Reportable
221
856
926
(26)
65
segments
Other
2
2
346
TO OUR SHAREHOLDERS
2
43
1 Year ending December 31.
2 At December 31.
SEGMENTAL INFORMATION II € IN MILLIONS
2021
7,760
6,308
1,658
1,003
5,105
4,519
960
506
4,597
4,342
1,194
1,137
2,180
2,083
457
Total
382
Other Businesses
Latin America
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Segmental liabilities only contain accounts payable from operating activities as there are no other liability
items reported regularly to the chief operating decision maker.
Interest income and interest expenses as well as income taxes are not allocated to the reportable
segments and are not reported separately to the chief operating decision maker.
SEGMENTAL INFORMATION I€ IN MILLIONS
EMEA
North America
Greater China
Asia-Pacific
Reportable segments
1,446
1,035
265
1,596
109
182
99
1,535
1,291
214
257
521
665
65
84
481
500
86
71
6,158
6,283
700
693
226
2,231
2,100
1,521
2020
33
21,088
18,286
4,533
3,060
145
149
28
22
5
Net sales
2020
Segmental
operating profit¹
2021
2020
0000
Segmental
assets²
Segmental
liabilities²
2021
2020
2021
(third parties)¹
GROUP MANAGEMENT REPORT -
OUR COMPANY
50
NET SALES (THIRD PARTIES) € IN MILLIONS
Gear
Total
303
Year ending
Dec. 31, 2021
[26]
Year ending
Dec. 31, 2020
65
3
[1]
51
(27)
119
Dec. 31, 2021
6,158
43
Dec. 31, 2020
6,283
50
6,201
6,333
[17]
Apparel
4,574
Footwear
PRODUCT INFORMATION
HQ
Total
ASSETS € IN MILLIONS
Accounts receivable and inventories of reportable segments
Accounts receivable and inventories of Other Businesses
Segmental assets
Non-segmental accounts receivable and inventories
Current financial assets
Other current assets
Non-current assets
Assets classified as held for sale
Total
LIABILITIES € IN MILLIONS
Accounts payable of reportable segments
Accounts payable of Other Businesses
Segmental liabilities
Non-segmental accounts payable
Current financial liabilities
Other current liabilities
Non-current liabilities
Liabilities classified as held for sale
Total
NET SALES (THIRD PARTIES) € IN MILLIONS
4,696
1,153
1,109
Dec. 31, 2021
Year ending
Dec. 31, 2020
11,336
8,711
10,129
7,315
1,187
991
21,234
18,435
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Year ending
14,362
14,300
594
8,193
8,899
2,033
22,137
21,053
Dec. 31, 2021
700
Dec. 31, 2020
693
5
Other Businesses
2
695
1,589
1,695
966
1,695
5,112
4,741
5,334
5,535
705
Reportable segments
17
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Total
Year ending
Dec. 31, 2021
Year ending
Dec. 31, 2020
21,088
18,286
145
21,234
149
HQ
18,435
Year ending
Dec. 31, 2021
Dec. 31, 2020
4,533
3,060
28
22
4,561
3,083
Year ending
(1,716]
Other Businesses
DEPRECIATION AND AMORTIZATION € IN MILLIONS
Reportable segments
Other Businesses
IMPAIRMENT LOSSES AND REVERSALS OF IMPAIRMENT LOSSES € IN MILLIONS
Total
OPERATING PROFIT € IN MILLIONS
Operating profit for reportable segments
Operating profit for Other Businesses
Segmental operating profit
HQ
Reportable segments
Central expenditure for marketing
Operating profit
Financial income
Financial expenses
Income before taxes
CAPITAL EXPENDITURE € IN MILLIONS
Reportable segments
Other Businesses
HQ
Total
Consolidation
(1,435)
302
TO OUR SHAREHOLDERS
Dec. 31, 2021
Year ending
Dec. 31, 2020
856
926
2
4
283
1,141
1,245
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
(814)
GROUP MANAGEMENT REPORT -
OUR COMPANY
Year ending
442
314
219
(821)
(45)
667
(81)
1,986
746
19
29
(196)
1,852
[153]
Year ending
318
578
2
221
2
Year ending
Dec. 31, 2020
Dec. 31, 2021
346
9
90
9
directly
Cairo (Egypt)
adidas Sporting Goods Ltd.
55
0.02
99.98
53
Cairo (Egypt)
adidas Imports & Exports Ltd.
54
100
52
Amman (Jordan)
adidas Levant Limited - Jordan
10
100
55
56
Cape Town (South Africa)
adidas Israel Ltd.
51
100
directly
Casablanca (Morocco)
85
directly
9
Holon (Israel)
0.87
adidas Egypt Ltd.
8
directly
Cairo (Egypt)
The Reebok Worldwide Trading Company, LLC
Reebok Securities Holdings LLC
adidas Holdings LLC
adidas Team, Inc.
adidas America, Inc.
adidas International, Inc.
adidas North America, Inc.
North America
adidas Morocco LLC
adidas (South Africa) (Pty) Ltd.
99.13
Dubai (United Arab Emirates)
adidas Serbia DOO Beograd
52
Athens (Greece)
adidas Hellas A.E.
47
100
9
100
9
100
directly
directly
in %
Share in capital
Zagreb (Croatia)
Belgrade (Serbia)
Almaty (Republic of
Kazakhstan)
adidas Croatia d.o.o.
46
45
100
adidas LLP
held by 1
adidas Levant Limited
100
adidas (Cyprus) Limited
100
9
Dubai (United Arab Emirates)
adidas Emerging Markets FZE
51
49
8
51
indirectly
48
Dubai (United Arab Emirates)
50
100
9
Istanbul (Turkey)
adidas Spor Malzemeleri Satis ve Pazarlama A.S.
49
100
directly
Nicosia (Cyprus)
adidas Emerging Markets L.L.C
Portland, Oregon (USA)
100
100
2
Shanghai (China)
adidas Sports (China) Co., Ltd.
76
100
2
Suzhou (China)
adidas (Suzhou) Co., Ltd.
75
100
100
Hong Kong (China)
Reebok Trading (Far East) Limited
74
100
2
Hong Kong (China)
adidas Hong Kong Limited
73
100
67
10
77
Shanghai (China)
44
Tianjin (China)
adidas Logistics (Tianjin) Co., Ltd.
81
72
Zhuhai (China)
Zhuhai adidas Technical Services Limited
80
100
adidas (China) Ltd.
9
Runtastic Software Technology (Shanghai) Co., Ltd.
79
100
77
Shanghai (China)
adidas Sports Goods (Shanghai) Co., Ltd
78
100
9
Shanghai (China)
Hong Kong (China)
adidas Sourcing Limited
72
Reebok International Ltd., LLC
67
100
60
Wilmington, Delaware (USA)
100
67
Wilmington, Delaware (USA)
100
Wilmington, Delaware (USA)
60
100
60
Des Moines, Iowa (USA)
100
60
Portland, Oregon (USA)
100
60
Portland, Oregon (USA)
Wilmington, Delaware (USA)
64
100
68
Asia
100
9
Woodbridge, Ontario (Canada)
adidas Canada Limited
71
(USA)
100
100
1
」。。
Spartanburg, South Carolina
Spartanburg DC, Inc.
70
Portland, Oregon (USA)
Stone Age Equipment, Inc.
69
99
60
Wilmington, Delaware (USA)
adidas Indy, LLC
9
66
9
65
Zaragoza (Spain)
Lasne (Belgium)
adidas Finance Spain S.A.U.
24
adidas España S.A.U.
23
Five Ten Europe NV
22
100
Zaragoza (Spain)
9
adidas International Re DAC
21
100
9
Dublin (Ireland)
adidas (Ireland) Limited
20
100
17
Dublin (Ireland)
London (Great Britain)
69
directly
9
Moreira da Maia (Portugal)
100
9
Lisbon (Portugal)
adidas Business Services, Lda.
-
adidas Portugal – Artigos de Desporto, S.A.
27
99.95
26
9
Monza (Italy)
adidas Italy S.p.A.
25
100
23
100
2
0.05
100
98
Reebok Pensions Management Limited
100
100
9
Amsterdam (Netherlands)
adidas Infrastructure Holding B.V.
13
100
76
Amsterdam (Netherlands)
adidas International Property Holding B.V.
14
12
9
100
13
Amsterdam (Netherlands)
Lucerne (Switzerland)
adidas International Marketing B.V.
11
10 adidas International Trading AG
6.03
100
19
adidas Benelux B.V.
directly
13
London (Great Britain)
Trafford Park DC Limited
18
100
67
London (Great Britain)
Reebok International Limited
17
Amsterdam (Netherlands)
100
Stockport (Great Britain)
adidas (UK) Limited
16
100
9
Amsterdam (Netherlands)
adidas Ventures B.V.
15
100
9
directly
2
28
100
directly
Bratislava (Slovak Republic)
adidas Slovakia s.r.o.
41
100
9
Riga (Latvia)
adidas Baltics SIA
42
40
9
Bucharest (Romania)
adidas Romania S.R.L.
39
100
37
Warsaw (Poland)
adidas Finance Poland S.A.
38
100
100
adidas Trgovina d.o.o.
directly
Company and domicile
SHAREHOLDINGS OF ADIDAS AG, HERZOGENAURACH, AS AT DECEMBER 31, 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
Ljubljana (Slovenia)
2
1
adidas
312
100
directly
Kiev (Ukraine)
SC adidas-Ukraine'
43
100
ANNUAL REPORT 2021
directly
Warsaw (Poland)
adidas Poland Sp. z o.o.
32
100
9
Helsinki (Finland)
adidas Suomi Oy
31
100
29
Solna (Sweden)
adidas Danmark A/S
adidas Finance Sverige Aktiebolag
100
directly
Solna (Sweden)
adidas Sverige Aktiebolag
29
100
directly
Oslo (Norway)
adidas Norge AS
30
Copenhagen (Denmark)
9
100
37
100
directly
Moscow (Russia)
LLC adidas, Ltd.'
36
100
directly
Sofia (Bulgaria)
adidas Bulgaria EAD
35
100
directly
Budapest (Hungary)
adidas Budapest Kft.
34
100
directly
Prague (Czech Republic)
adidas CR s.r.o.
33
585-858339
100
111
adidas Business Services (Dalian) Limited
ANNUAL REPORT 2021
1
adidas
315
GLOBAL OPERATIONS
MARTIN SHANKLAND
AMANDA RAJKUMAR
GLOBAL HUMAN RESOURCES,
PEOPLE AND CULTURE
CHIEF FINANCIAL OFFICER
HARM OHLMEYER
2
GLOBAL BRANDS
AR
ROLAND AUSCHEL
GLOBAL SALES
Chulal
CHIEF EXECUTIVE OFFICER
KASPER RORSTED
квел
Herzogenaurach, February 21, 2022
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated
financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of
the Group, and the Group Management Report, which has been combined with the Management Report of
adidas AG, includes a fair review of the development and performance of the business and the position of
the Group, together with a description of the material opportunities and risks associated with the expected
development of the Group.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
BRIAN GREVY
5
3
TO OUR SHAREHOLDERS
316
report.
Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated financial statements and the group management
Our audit opinion does not extend to the cross-references and the information to which the cross-
references refer.
the accompanying group management report as a whole provides an appropriate view of the Group's
position. In all material respects, this group management report is consistent with the consolidated
financial statements, complies with German legal requirements and appropriately presents the
opportunities and risks of future development. Our opinion on the group management report does not
cover the content of those components of the group management report specified in the 'Other
Information' section of the auditor's report. The group management report contains cross-references
that are not required by law and which are marked as unaudited.
the accompanying consolidated financial statements comply, in all material respects, with the IFRSS as
adopted by the EU and, in compliance with these requirements, give a true and fair view of the assets,
liabilities, and financial position of the Group as of December 31, 2021, and of its financial performance
for the financial year from January 1 to December 31, 2021, and
-
In our opinion, on the basis of the knowledge obtained in the audit,
The group management report contains cross-references that are not required by law and which are
marked as unaudited. In accordance with German legal requirements, we have not audited the cross-
references and the information to which the cross-references refer.
4
In accordance with German legal requirements, we have not audited the content of those components of
the group management report specified in the 'Other Information' section of our auditor's report.
OPINIONS
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE
GROUP MANAGEMENT REPORT
To adidas AG, Herzogenaurach
REPORT
REPRODUCTION OF THE INDEPENDENT AUDITOR'S
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
We have audited the consolidated financial statements of adidas AG, Herzogenaurach, and its subsidiaries
(the Group), which comprise the consolidated statement of financial position as of December 31, 2021, the
consolidated income statement, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the financial year from
January 1 to December 31, 2021, and notes to the consolidated financial statements, including a summary
of significant accounting policies. In addition, we have audited the combined management report of the
Company and the Group (hereinafter the 'group management report') of adidas AG for the financial year
from January 1 to December 31, 2021.
adidas
RESPONSIBILITY STATEMENT
GROUP MANAGEMENT REPORT -
OUR COMPANY
Caracas (Venezuela)
adidas Corporation de Venezuela, S.A.
117
100
60
San Pedro Sula (Honduras)
adidas Sourcing Honduras, S.A.
116
100
directly
directly
Raelit S.A.
115
100
directly
Montevideo (Uruguay)
Tafibal S.A.
100
directly
Montevideo (Uruguay)
Montevideo (Uruguay)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
100
adisport Corporation
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
314
2 Profit and loss transfer agreement.
118
1 The number refers to the number of the company.
directly
99.95
9
Antiguo Cuscatlán (El Salvador)
adidas Sourcing El Salvador, S.A. de C.V.
119
100
9
San Juan (Puerto Rico)
0.05
3 Stripes S.A.
1
2
1
adidas
319
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and whether the group
management report as a whole provides an appropriate view of the Group's position and, in all material
respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit,
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP
MANAGEMENT REPORT
The Supervisory Board is responsible for overseeing the Group's financial reporting process for the
preparation of the consolidated financial statements and of the group management report.
Furthermore, the Executive Board is responsible for the preparation of a group management report that,
as a whole, provides an appropriate view of the Group's position and is, in all material respects, consistent
with the consolidated financial statements, complies with German legal requirements, and appropriately
presents the opportunities and risks of future development. In addition, the Executive Board is responsible
for such arrangements and measures (systems) as it has considered necessary to enable the preparation
of a group management report that is in accordance with the applicable German legal requirements, and
to be able to provide sufficient appropriate evidence for the assertions in the group management report.
In preparing the consolidated financial statements, the Executive Board is responsible for assessing the
Group's ability to continue as a going concern. They also have the responsibility for disclosing, as
applicable, matters related to going concern. In addition, they are responsible for financial reporting based
on the going concern basis of accounting, unless there is an intention to liquidate the Group or to cease
operations, or there is no realistic alternative but to do so.
The Executive Board is responsible for the preparation of consolidated financial statements that comply, in
all material respects, with IFRSs as adopted by the EU and that the consolidated financial statements, in
compliance with these requirements, give a true and fair view of the assets, liabilities, financial position,
and financial performance of the Group. In addition, the Executive Board is responsible for such internal
control as they have determined necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
ANNUAL REPORT 2021
RESPONSIBILITIES OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD FOR THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE GROUP MANAGEMENT REPORT
is materially inconsistent with the consolidated financial statements, with the group management
report information audited for content or our knowledge obtained in the audit, or
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider
whether the other information
Our opinions on the consolidated financial statements and on the group management report do not cover
the other information, and consequently we do not express an opinion or any other form of assurance
conclusion thereon.
The other information also includes the remaining parts of the annual report. The other information does
not include the consolidated financial statements, the group management report information audited for
content and our auditor's report thereon.
the combined corporate governance statement for the Company and the Group included in the group
management report.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
otherwise appears to be materially misstated.
5
2
4
8
320
Evaluate the consistency of the group management report with the consolidated financial statements,
its conformity with [German] law, and the view of the Group's position it provides.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express opinions on the consolidated financial statements and
on the group management report. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our opinions.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements present the underlying
transactions and events in a manner that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial performance of the Group in compliance
with IFRSS as adopted by the EU.
if such disclosures are inadequate, to modify our respective opinions. Our conclusions are based on
the audit evidence obtained up to the date of our auditor's report. However, future events or conditions
may cause the Group to cease to be able to continue as a going concern.
or,
Conclude on the appropriateness of the Executive Board's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to
the related disclosures in the consolidated financial statements and in the group management report
- Co
3
Evaluate the appropriateness of accounting policies used by the Executive Board and the
reasonableness of estimates made by the Executive Board and related disclosures.
Identify and assess the risks of material misstatement of the consolidated financial statements and of
the group management report, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer
(IDW) will always detect a material misstatement. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements and this group
management report.
complies with the German legal requirements and appropriately presents the opportunities and risks of
future development, as well as to issue an auditor's report that includes our opinions on the consolidated
financial statements and on the group management report.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Obtain an understanding of internal control relevant to the audit of the consolidated financial
statements and of arrangements and measures (systems) relevant to the audit of the group
management report in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of these systems.
ANNUAL REPORT 2021
4
2
1
adidas
317
As of December 31, 2021, adidas presents assets of the Reebok business unit classified as held for sale in
the amount of EUR 2,033 million and related liabilities classified as held for sale in the amount of
EUR 594 million. In the consolidated income statement for financial year 2021, profit from discontinued
operations after tax of EUR 666 million is reported which includes income from the reversal of impairment
losses in the amount of EUR 549 million less the related deferred tax expense in the amount of EUR
143 million.
In Q3 2021, adidas recognized a full reversal of impairment losses recognized in prior financial years on
the Reebok brand, which is allocated to the Reebok operation, in the amount of EUR 549 million, as the fair
value less expected costs to sell exceeds the net carrying amount of assets and liabilities allocated to the
Reebok operation taking into account the reversal of impairment losses. The fair value was derived from
the purchase price components agreed in the purchase agreement and their measurement at the date of
the reversal of the impairment losses.
The Executive Board and the Supervisory Board agreed on February 11, 2021, to begin a formal process to
sell the worldwide Reebok business activities (hereinafter referred to as 'Reebok operation'). As of this
point in time, the Reebok operation was classified as a disposal group or discontinued operation in
accordance with IFRS 5. On August 12, 2021, adidas entered into an agreement for the divestment of the
Reebok operation which, in addition to a fixed purchase price component, includes, among other things,
variable purchase price components, the amount of which depends on the achievement of certain key
performance indicators in the future on the buyer side.
THE FINANCIAL STATEMENT RISK
Please refer to Note 2 in the consolidated financial statements for the accounting policies applied to the
recognition and measurement of assets and liabilities as well as income and expenses of the discontinued
Reebok operation in accordance with IFRS 5. Disclosures on the recognition and measurement of the
discontinued Reebok operation can be found under Note 3.
Presentation and measurement of the discontinued Reebok operation
ANNUAL REPORT 2021
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the financial year from January 1 to December 31, 2021.
These matters were addressed in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.
We conducted our audit of the consolidated financial statements and of the group management report in
accordance with Section 317 HGB and the EU Audit Regulation No 537/2014 (referred to subsequently as
'EU Audit Regulation') and in compliance with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those requirements and principles are further described in the
'Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Group
Management Report' section of our auditor's report. We are independent of the group entities in
accordance with the requirements of European law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we have not
provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group management report.
BASIS FOR THE OPINIONS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
3
2
4
ANNUAL REPORT 2021
1
adidas
318
the components of the integrated combined non-financial statement of the Company and the Group,
which are marked as unaudited, and
The Executive Board and/or the Supervisory Board are responsible for the other information. The other
information comprises the following components of the group management report, whose content was not
audited:
OTHER INFORMATION
The allocation of assets and liabilities as well as expenses and income and thus the presentation of the
Reebok operation as discontinued operation in accordance with IFRS 5 are appropriate. The assumptions
underlying the fair value measurement and the underlying assumptions contained therein, particularly
with respect to the variable purchase price components included in the sale agreement, and consequently
the determination of the amount of the impairment reversal recognized, are appropriate. The disclosures
in the notes to the consolidated financial statements regarding discontinued operations are sufficiently
detailed and appropriate.
OUR OBSERVATIONS
3
We assessed whether the disclosures in the notes to the consolidated financial statements regarding
discontinued operations were sufficiently detailed and appropriate.
We assessed whether the allocation of assets and liabilities as well as income and expenses to the
discontinued operation was correct. To this end, we assessed the appropriateness of the model, which
includes direct allocation as well as assignment based on allocation formulas. In addition, we verified the
allocations made and, where necessary, used a sample approach to compare the data underlying the
allocation formulas with the relevant evidence.
OUR AUDIT APPROACH
There is the risk for the consolidated financial statements that the allocation and thus the presentation of
assets and liabilities as well as expenses and income for the discontinued Reebok operation is not
appropriate. In addition, there is the risk for the consolidated financial statements that the fair value
measurement of the disposal group and, consequently, the amount of the reversals of impairment losses
recognized is not appropriate. In respect of the explanatory notes on the discontinued operation in the
notes to the consolidated financial statements, there is a risk that the presentation is not sufficiently
detailed and appropriate.
The allocation of assets, liabilities, expenses and income of the Reebok operation and thus the
presentation as a disposal group or discontinued operation in accordance with IFRS 5 are complex and
subject to judgment. Fair value measurement is complex and based on a number of assumptions requiring
judgment. These include, among other things, the expected business development over the next ten years
as basis for determining the variable purchase price components included in the sale agreement and the
applied discount rate. The disclosures in the notes to the consolidated financial statements concerning the
discontinued operation are also complex.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
To assess the methodically and mathematically correct implementation of the valuation method used to
determine the fair value, we, with the involvement of our valuation experts, used our own calculations to
verify the valuation performed by the Company. In addition, we assessed the assumptions underlying the
fair value, particularly with respect to the variable purchase price components included in the sale
agreement. In this context, we critically reviewed the assumptions about the future achievement of KPIs
and compared these with market expectations.
113
100
9
0.33
directly
99.67
9
Jakarta (Indonesia)
PT adidas Indonesia
90
93.15
99
91
New Delhi (India)
89
100
72
New Delhi (India)
adidas Technical Services Private Limited
88
0.37
directly
1
Reebok India Company
9
adidas (Malaysia) Sdn. Bhd.
directly
adidas (Thailand) Co., Ltd.
95
100
9
Taipei (Taiwan)
adidas Taiwan Limited
94
100
directly
Petaling Jaya (Malaysia)
Singapore (Singapore)
93
100
directly
Taguig City (Philippines)
adidas Philippines, Inc.
92
40
9
60
adidas Singapore Pte. Ltd.
Bangkok (Thailand)
in %
Share in capital
adidas India Private Limited
86
100
72
Busan (Korea)
adidas Korea Technical Services Limited
85
100
directly
New Delhi (India)
Seoul (Korea)
84
100
9
100
9
Tokyo (Japan)
Dalian (China)
adidas Japan K.K.
83
adidas Korea LLC.
held by 1
directly
9
Company and domicile
SHAREHOLDINGS OF ADIDAS AG, HERZOGENAURACH, AS AT DECEMBER 31, 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
10.67
2
1
adidas
313
98.62
86
New Delhi (India)
adidas India Marketing Private Limited
87
89.33
ANNUAL REPORT 2021
directly
100
96
99.21
directly
Lima (Peru)
100
directly
Bogotá (Colombia)
adidas Perú S.A.C.
107
adidas Colombia Ltda.
105
106
1
99
directly
Santiago de Chile (Chile)
adidas Chile Limitada
105
100
9
São Paulo (Brazil)
1
104 Reebok Produtos Esportivos Brasil Ltda.
0.79
adidas de Mexico, S.A. de C.V.
Panama City (Panama)
Concept Sport, S.A.
112
100
directly
Panama City (Panama)
adidas Latin America, S.A.
100
directly
108
Mexico City (Mexico)
110
100
directly
Mexico City (Mexico)
adidas Industrial, S.A. de C.V.
109
100
directly
Mexico City (Mexico)
Reebok de Mexico, S.A. de C.V.
0.01
directly
99.99
65
99.07
67
Port Louis (Mauritius)
Reebok (Mauritius) Company Limited
99
100
9
Ho Chi Minh City (Vietnam)
0.93
adidas Vietnam Company Limited
100
directly
Auckland (New Zealand)
adidas New Zealand Limited
97
100
9
Mulgrave (Australia)
adidas Australia Pty Limited
98
Latin America
100
adidas Argentina S.A.
102
São Paulo (Brazil)
adidas Franchise Brasil Servicos Ltda.
103
100
2
São Paulo (Brazil)
adidas do Brasil Ltda.
102
3.75
9
96.25
directly
Buenos Aires (Argentina)
Reebok Argentina S.A.
101
23.04
2
76.96
9
Buenos Aires (Argentina)
82
93.97
114
Amsterdam (Netherlands)
GLOBAL BRANDS
лы
HARM OHLMEYER
AR
AMANDA RAJKUMAR
MARTIN SHANKLAND
CHIEF FINANCIAL OFFICER
GLOBAL HUMAN RESOURCES,
PEOPLE AND CULTURE
GLOBAL OPERATIONS
311
adidas
1
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
BRIAN GREVY
SHAREHOLDINGS
ROLAND AUSCHEL
GLOBAL SALES
CHIEF EXECUTIVE OFFICER
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
42 EVENTS AFTER THE BALANCE SHEET DATE
The remaining non-controlling interest of 6.85% of the Reebok India Company acquired as part of the
acquisition of Reebok in 2006 were acquired in January 2022.
With the approval of the Supervisory Board, the Executive Board of adidas AG has decided to launch a new
share buyback program in the first half of 2022. Until the finalization of these consolidated statements on
February 21, 2022, adidas AG purchased a total of 3,151,181 shares for a total price of € 770,208,985.42.
No further company-specific subsequent events are known that might have a material influence on the
assets, liabilities, financial position, and profit or loss of the company.
DATE OF PREPARATION
The Executive Board of adidas AG prepared and approved the consolidated financial statements for
submission to the Supervisory Board on February 21, 2022. It is the Supervisory Board's task to examine
the consolidated financial statements and give their approval and authorization for issue.
Herzogenaurach, February 21, 2022
The Executive Board of adidas AG
Kampen
KASPER RORSTED
Chulal
SHAREHOLDINGS OF ADIDAS AG, HERZOGENAURACH, AS AT DECEMBER 31, 2021
directly
Germany
adidas sport gmbh
Lucerne (Switzerland)
directly
100
6
adidas Austria GmbH
Klagenfurt (Austria)
directly
100
runtastic GmbH
Pasching (Austria)
9
100
8
adidas France S.a.r.l.
Strasbourg (France)
directly
100
9
adidas International B.V.
Company and domicile
5
Europe (incl. Middle East and Africa)
7
directly
100
held by 1
in %
1
adidas Insurance & Risk Consultants GmbH2
Herzogenaurach (Germany)
100
2
adidas Beteiligungsgesellschaft mbH²
Herzogenaurach (Germany)
directly
Share in capital
directly
Reebok Marketing GmbH
4
100
12
Herzogenaurach (Germany)
adidas CDC Immobilieninvest GmbH
3
100
Herzogenaurach (Germany)
(21)
2,378
2,558
578
1,852
Income before taxes 3,4,5,7,8,9,10
[69]
[68]
[48]
[46]
1,582
10
(102)
(167)
(133)
Net financial result3,4,5
1,185
1,233
961
1,094
2,023
(47)
1,536
6
913
6
2,070
2
3
3
2
11
42
Net income attributable to
327
1,073
340
353
454
668
669
640
117
360
Income taxes 3,4,5,11
1,116
1,165
271
2,368
8,580
746
37
8
119
17
48
56
42
28
Other operating income 3,4,5,6
income 3,4,5
12
105
102
119
105
115
129
154
61
86
Royalty and commission
7,103
103
2,660
15
8,892
1,986
Operating profit 3,4,5,7,8,9,10
1,445
1,496
1,283
1,475
1,953
2,511
2,882
3,845
Other operating expenses 3,4,5,6
1,967
EBITDA 3,4,5
6,038
5,883
6,102
7,201
7,741
8,766
9,172
9,843
3
3,066
(2)
47.7%
Net income attributable to
shareholders7,8,9,10,11,12
13,521
10,129
11,336
Footwear3,4,5
(€ in millions)
Net Sales by Product Category
sales 5,7,8,9,10,11,12
5.3%
5.9%
3.9%
12,783
4.0%
5.5%
7.8%
8.4%
2.3%
10.0%
shareholders in % of net
Net income attributable to
29.3%
29.2%
29.7%
5.5%
32.9%
12,427
8,360
1,585
999
1,044
910
1,156
991
1,187
Accessories and gear3,4,5
6,290
5,811
10,132
6,279
7,352
7,747
8,223
8,963
7,315
8,710
Apparel 3,4,5
6,922
6,587
6,658
6,970
non-controlling interests
29.6%
28.1%
7,001
49.3%
47.6%
48.3%
49.2%
50.4%
51.8%
52.0%
50.0%
50.7%
Operating margin 3,4,5,7,8,9,10
Gross margin 3,4,5
791
839
568
668
1,017
1,173
1,702
1,976
432
2,116
Income Statement Ratios
29.3%
9.4%
11.3%
25.0%
20.2%
19.4%
Effective tax rate 3,4,5,7,8,9,10,11
14.6
24.0
19.3
23.8
32.7
55.6
4.0%
131.6
5.4
19.7
Interest coverage3,4,5
8.0%
8.7%
6.6%
6.5%
8.6%
9.8%
10.8%
24.3
6,924
2013
9,100
2
ANNUAL REPORT 2021
1
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323
[German Public Auditor]
Wirtschaftsprüfer
[German Public Auditor]
Wirtschaftsprüferin
[Signature] Schmidt
3
[Signature] Huber-Straßer
Munich, February 25, 2022
The German Public Auditor responsible for the engagement is Haiko Schmidt.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE ENGAGEMENT
Our auditor's report must always be read together with the audited consolidated financial statements and
the audited group management report as well as the examined ESEF documents. The consolidated
financial statements and group management report converted to the ESEF format – including the versions
to be published in the German Federal Gazette [Bundesanzeiger] - are merely electronic renderings of the
audited consolidated financial statements and the audited group management report and do not take their
place. In particular, the ESEF report and our assurance opinion contained therein are to be used solely
together with the examined ESEF documents made available in electronic form.
-
OTHER MATTER - USE OF THE AUDITOR'S REPORT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
KPMG AG Wirtschaftsprüfungsgesellschaft
TO OUR SHAREHOLDERS
4
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
1
adidas
324
27 Our engagement applied to the German version of the combined non-financial statement 2021. This text is a translation of the Independent Assurance Report issued in German, whereas
the German text is authoritative.
We conducted our work in the form of a limited assurance engagement in accordance with the
International Standard on Assurance Engagements (ISAE) 3000 (Revised): 'Assurance Engagements other
than Audits or Reviews of Historical Financial Information,' published by IAASB.
It is our responsibility to express a conclusion on the combined non-financial statement based on our work
performed within a limited assurance engagement.
5
PRACTITIONER'S RESPONSIBILITY
This responsibility of the legal representatives includes the selection and application of appropriate
methods to prepare the combined non-financial statement and the use of assumptions and estimates for
individual disclosures which are reasonable under the given circumstances. Furthermore, the legal
representatives are responsible for the internal controls they deem necessary for the preparation of the
combined non-financial statement that is free of intended or unintended - material misstatements.
The legal representatives of the Company are responsible for the preparation of the combined non-
financial statement in accordance with §§ 315b, 315c in conjunction with 289b to 289e HGB and with
Article 8 of REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18
June 2020 on the establishment of a framework to facilitate sustainable investment, and amending
Regulation (EU) 2019/2088 (further 'EU Taxonomy Regulation') and the supplementing Delegated Acts as
well as the interpretation of the wordings and terms contained in the EU Taxonomy Regulation and in the
supplementing Delegated Acts by the Company as disclosed in Section 'Sustainable Finance - EU
Taxonomy' of the combined non-financial statement.
MANAGEMENT'S RESPONSIBILITY
As described in the section 'Working conditions in our supply chain' in the combined non-financial
statement, 1,176 social compliance and environmental audits at suppliers were performed by inhouse
technical staff as well as external third-party monitors commissioned by adidas business entities and
licensees. The reasonableness and accuracy of the conclusions from the performed audit work were not
part of our limited assurance engagement.
We have performed an independent limited assurance engagement on the non-financial statement of
adidas AG (further 'Company' or 'adidas'), that is combined with the non-financial statement of the parent
company (further 'combined non-financial statement'), for the period from January 1 to December 31,
2021.
To the Supervisory Board of adidas AG, Herzogenaurach
LIMITED ASSURANCE REPORT OF THE INDEPENDENT AUDITOR REGARDING THE
COMBINED NON-FINANCIAL STATEMENT27
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
The EU Taxonomy Regulation and the supplementing Delegated Acts contain wordings and terms that are
still subject to substantial uncertainties regarding their interpretation and for which not all clarifications
have been published yet. Therefore, the legal representatives have included a description of their
interpretation in Section 'Sustainable Finance - EU Taxonomy' of the combined non-financial statement.
They are responsible for its tenability. Due to the innate risk of diverging interpretations of vague legal
concepts, the legal conformity of these interpretations is subject to uncertainty.
5
4
2
1
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321
We conducted our assurance work on the rendering of the consolidated financial statements and the
group management report contained in the file made available and identified above in accordance with
Section 317 (3a) HGB and the IDW Assurance Standard: Assurance Work on the Electronic Rendering of
Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with
Section 317 (3a) HGB (IDW ASS 410 (10.2021)) and the International Standard on Assurance Engagements
3000 (Revised). Our responsibility in accordance therewith is further described below. Our audit firm
In our opinion, the rendering of the consolidated financial statements and the group management report
contained in the electronic file made available, identified above and prepared for publication purposes
complies in all material respects with the requirements of Section 328 (1) HGB for the electronic reporting
format. Beyond this assurance opinion and our audit opinion on the accompanying consolidated financial
statements and the accompanying group management report for the financial year from January 1 to
December 31, 2021, contained in the 'Report on the Audit of the Consolidated Financial Statements and the
Group Management Report' above, we do not express any assurance opinion on the information contained
within these renderings or on the other information contained in the file identified above.
We have performed assurance work in accordance with Section 317 (3a) HGB to obtain reasonable
assurance about whether the rendering of the consolidated financial statements and the group
management report (hereinafter the 'ESEF documents') contained in the electronic file,adidasAG-2021-
12-31-en.zip (SHA256-hash value: 49cc7f96f5434689149aced2338c63c313727785a03126b0bd3431d5d7
f6b360), made available and prepared for publication purposes complies in all material respects with the
requirements of Section 328 (1) HGB for the electronic reporting format ('ESEF format'). In accordance
with German legal requirements, this assurance work extends only to the conversion of the information
contained in the consolidated financial statements and the group management report into the ESEF
format and therefore relates neither to the information contained in these renderings nor to any other
information contained in the file identified above.
Report on the Assurance on the Electronic Rendering of the Consolidated Financial Statements and the
Group Management Report Prepared for Publication Purposes in Accordance with Section 317 (3a) HGB
OTHER LEGAL AND REGULATORY REQUIREMENTS
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter.
We also provide those charged with governance with a statement that we have complied with the relevant
independence requirements, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, the related safeguards.
ANNUAL REPORT 2021
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
4
3
2
ANNUAL REPORT 2021
1
Perform audit procedures on the prospective information presented by the Executive Board in the
group management report. On the basis of sufficient appropriate audit evidence we evaluate, in
particular, the significant assumptions used by the Executive Board as a basis for the prospective
information, and evaluate the proper derivation of the prospective information from these
assumptions. We do not express a separate opinion on the prospective information and on the
assumptions used as a basis. There is a substantial unavoidable risk that future events will differ
materially from the prospective information.
3
2
4
ANNUAL REPORT 2021
1
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322
We declare that the opinions expressed in this auditor's report are consistent with the additional report to
the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
We were elected as group auditor at the Annual General Meeting on May 12, 2021. We were engaged by the
Supervisory Board on August 4, 2021. We have been the group auditor of adidas AG without interruption
since financial year 1995.
FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION
Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in
accordance with the requirements of Articles 4 and 6 of the Delegated Regulation (EU) 2019/815, as
amended as of the reporting date, enables an appropriate and complete machine-readable XBRL copy
of the XHTML rendering.
Evaluate whether the ESEF documents provide an XHTML rendering with content equivalent to the
audited consolidated financial statements and the audited group management report.
Evaluate the technical validity of the ESEF documents, i.e. whether the file made available containing
the ESEF documents meets the requirements of the Delegated Regulation (EU) 2019/815, as amended
as of the reporting date, on the technical specification for this electronic file.
3
Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order
to design assurance procedures that are appropriate in the circumstances, but not for the purpose
of
expressing an assurance opinion on the effectiveness of these controls.
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from
material intentional or unintentional non-compliance with the requirements of Section 328 (1) HGB. We
exercise professional judgment and maintain professional skepticism throughout the assurance work. We
also:
The Supervisory Board is responsible for overseeing the process of preparing the ESEF documents as part
of the financial reporting process.
In addition, the Company's Executive Board is responsible for such internal control that they have
considered necessary to enable the preparation of ESEF documents that are free from material intentional
or unintentional non-compliance with the requirements of Section 328 (1) HGB for the electronic reporting
format.
The Company's Executive Board is responsible for the preparation of the ESEF documents including the
electronic rendering of the consolidated financial statements and the group management report in
accordance with Section 328 (1) sentence 4 item 1 HGB and for the tagging of the consolidated financial
statements in accordance with Section 328 (1) sentence 4 item 2 HGB.
applies the IDW Standard on Quality Management 1: Requirements for Quality Management in Audit Firms
(IDW QS 1).
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
Identify and assess the risks of material intentional or unintentional non-compliance with the
requirements of Section 328 (1) HGB, design and perform assurance procedures responsive to those
risks, and obtain assurance evidence that is sufficient and appropriate to provide a basis for our
assurance opinion.
8,168
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
2019
2020
2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
TEN-YEAR OVERVIEW
TEN-YEAR OVERVIEW
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
20181
4
2
ANNUAL REPORT 2021
1
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338
337
333
330
328
327
3
CONTACT
20172
2015
10,703
11,363
12,293
9,222
10,765
Gross profit 3,4,5
14,883
14,203
14,534
16,915
2016
18,483
21,915
23,640
18,435
21,234
Net sales 3,4,5
(€ in millions)
Income Statement Data
2012
1,597
2014
21,218
GROUP MANAGEMENT REPORT -
OUR COMPANY
FINANCIAL CALENDAR
GLOSSARY
2
ANNUAL REPORT 2021
1
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325
The legal representatives have to interpret vague legal concepts in order to be able to compile the relevant
disclosures according to Article 8 of the EU Taxonomy Regulation. Due to the innate risk of diverging
interpretations of vague legal concepts, the legal conformity of these interpretations and, correspondingly,
our assurance thereof are subject to uncertainty.
Evaluation of the process for the identification of taxonomy-eligible economic activities and the
corresponding disclosures in the combined non-financial statement
Assessment of the overall presentation of the disclosures
-
Evaluation of local data collection, validation and reporting processes as well as the reliability of
reported data based on a sample of the sites in Herzogenaurach, Germany and Indianapolis, United
States
3
Analytical procedures for the evaluation of data and of the trends of quantitative disclosures as
reported at group level by all sites
Inquiries of group-level personnel who are responsible for determining disclosures on concepts, due
diligence processes, results and risks, performing internal control functions and consolidating
disclosures
Evaluation of the design and the implementation of systems and processes for the collection,
processing and monitoring of disclosures, including data consolidation, on environmental, employee
and social matters, respect for human rights, and combating corruption and bribery
Reviewing the suitability of internally developed Reporting Criteria
A risk analysis, including media research, to identify relevant information on adidas AG's sustainability
performance in the reporting period
-
Inquiries of group-level personnel who are responsible for the materiality analysis in order to
understand the processes for determining material topics and respective reporting boundaries for
adidas AG
-
Within the scope of our engagement we performed, amongst others, the following procedures:
Accordingly, we have to plan and perform the assurance engagement in such a way that we obtain limited
assurance as to whether any matters have come to our attention that cause us to believe that the
combined non-financial statement of the Company for the period from January 1 to December 31, 2021
has not been prepared, in all material respects, in accordance with §§ 315b and 315c in conjunction with
289b to 289e HGB and with the EU Taxonomy Regulation and the supplementing Delegated Acts as well as
the interpretation of the wordings and terms contained in the EU Taxonomy Regulation and in the
supplementing Delegated Acts by the legal representatives as disclosed in Section 'Sustainable Finance
EU Taxonomy of the combined non-financial statement. We do not, however, issue a separate conclusion
for each disclosure. As the assurance procedures performed in a limited assurance engagement are less
comprehensive than in a reasonable assurance engagement, the level of assurance obtained is
substantially lower. The choice of assurance procedures is subject to the auditor's own judgement.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Inspection of selected internal and external documents
DECLARATION OF SUPPORT
4
TO OUR SHAREHOLDERS
TEN-YEAR OVERVIEW
ADDITIONAL
INFORMATION
5
ANNUAL REPORT 2021
adidas
326
ppa. Edelmann
Gnändiger
KPMG AG Wirtschaftsprüfungsgesellschaft
Munich, February 25, 2022
5
[https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf). By reading and using the information
contained in this assurance report, each recipient confirms notice of the provisions contained therein
including the limitation of our liability as stipulated in No. 9 and accepts the validity of the General
Engagement Terms with respect to us.
This assurance report is issued for purposes of the Supervisory Board of adidas AG, Herzogenaurach, only.
We assume no responsibility with regard to any third parties.
RESTRICTION OF USE/GENERAL ENGAGEMENT TERMS
Based on the procedures performed and the evidence obtained, nothing has come to our attention that
causes us to believe that the combined non-financial statement of adidas AG for the period from January 1
to December 31, 2021 has not been prepared, in all material respects, in accordance with §§ 315b and
315c in conjunction with 289b to 289e HGB and with the EU Taxonomy Regulation and the supplementing
Delegated Acts as well as the interpretation disclosed in Section ‘Sustainable Finance – EU Taxonomy' of
the combined non-financial statement.
CONCLUSION
In performing this engagement, we applied the legal provisions and professional pronouncements
regarding independence and quality assurance, in particular the Professional Code for German Public
Auditors and Chartered Accountants (in Germany) and the quality assurance standard of the German
Institute of Public Auditors (Institut der Wirtschaftsprüfer, IDW) regarding quality assurance requirements
in audit practice (IDW QS 1).
INDEPENDENCE AND QUALITY ASSURANCE ON THE PART OF THE AUDITING FIRM
In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the assurance
engagement.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
Our assignment for the Supervisory Board of adidas AG, Herzogenaurach, and professional liability as
descriped above was governed by the General Engagement Terms for Wirtschafts-prüfer and
Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedingungen für Wirtschaftsprüfer und
Wirtschaftsprüfungsgesellschaften) in the version dated January 1, 2017
1,806
2,486
Balance Sheet Data (€ in millions)
3.93
3.05
3.54
5.29
7.00
8.45
9.70
2.31
7.47
(in €) 3,4,5,7,8,9,10,11
Diluted earnings
3.78
3.93
3.05
3.54
5.39
7.05
8.46
9.70
2.31
7.47
3.78
Price/earnings ratio at
year-end 3,4,5,7,8,9,10,11
33.9
Net cash generated from
operating activities (in €) 5,16
14,087
19,382
11,773
18,000
30,254
34,075
36,329
56,792
58,110
Basic earnings (in €) 3,4,5,7,8,9,10,11
48,512
Market capitalization at
17.8
23.6
18.9
25.4
27.8
23.7
21.6
29.9
128.9
year-end (€ in millions)
67.33
92.64
57.62
18.2%
26.7%
29.1%
6.7%
28.1%
Return on equity12,15
5.9
6.7
4.9
7.9
15.7%
8.7
7.4
10.8
5.5
4.3
Working capital turnover 3,4,5,13
139.7%
128.3%
140.7%
121.8%
110.6%
9.0
14.79
11.2%
14.3%
89.91
150.15
167.15
182.40
289.80
297.90
253.20
Share price at year-end (in €)
Data per Share
capital employed 5,12,13
8.7%
19.3%
13.8%
16.5%
24.2%
41.2%
45.1%
45.4%
7.4%
19.3%
Return on
9.9%
23.6%
7.00
14.26
13.31
1
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329
19 Number of employees for 2021 excluding Reebok due to the expected divestiture of the Reebok business.
18 2019 figure restated due to inclusion of temporary contracts of up to six months (2019 headcounts excluding temporary contracts of up to six months: 59,333]. Prior year figures are not
restated.
17 Subject to Annual General Meeting approval.
16 Since 2018 figures reflect presentation of interest paid within cash flows from financing activities. Prior year figures are not restated.
15 Based on shareholders' equity.
14 First-time application of adjusted net borrowings as of 2020. Only figure for 2019 restated.
13 2021 figures reflect the reclassification of the Reebok business to assets or liabilities held for sale.
ANNUAL REPORT 2021
12 Includes continuing and discontinued operations.
10 2012 excluding goodwill impairment of € 265 million.
9 2013 excluding goodwill impairment of € 52 million.
8 2014 excluding goodwill impairment of € 78 million.
7 2015 excluding goodwill impairment of € 34 million.
6 Figures reflect the adjusted consolidated income statement structure introduced in 2018.
5 2021 and 2020 figures reflect continuing operations as a result of the reclassification of the Reebok business to discontinued operations.
3 2019, 2018, 2017 and 2016 figures reflect continuing operations as a result of the divestiture of the Rockport, TaylorMade, Adams Golf, Ashworth and CCM Hockey businesses.
4 2015, 2014 and 2013 figures reflect continuing operations as a result of the divestiture of the Rockport business.
2 2017 restated according to IAS 8 in the 2018 consolidated financial statements.
1 Application of IFRS 16 as of January 1, 2019. Prior year figures are not restated.
1,872
11 2017 excluding negative one-time tax impact of € 76 million.
1,833
2
4
CONTROLLED SPACE
'Creators Club' is a membership program that helps us deepen the relationship with our consumers.
Linking all adidas apps, events, communities and channels into one single profile, the program rewards
members with points for interacting with the brand, e.g., when making a purchase or using the 'adidas
Running' or 'adidas Training' apps. Depending on the number of points, exclusive benefits are unlocked,
including access to hype sneaker and apparel drops or invitations to special events.
CREATORS CLUB
Carbon dioxide equivalent emissions (CO2e) is the universal unit of measurement to indicate the global
warming potential (GWP) of each of the six GHGs, expressed in terms of the GWP of one unit of carbon
dioxide (definition according to the 'Greenhouse Gas Protocol Corporate Standard').
CO₂E
Climate neutrality refers to a concept of a state in which human activities result in no net effect on the
climate system. Achieving such a state requires balancing residual emissions with emission removals as
well as accounting for regional or local bio-geophysical effects of human activities that, for example, affect
surface albedo (i.e., solar radiation reflected by a surface) or local climate (definition according to
'Intergovernmental Panel on Climate Change (IPCC) Glossary').
CLIMATE NEUTRALITY
A cash management technique for physical concentration of cash. Cash pooling allows adidas to combine
credit and debit positions from various accounts and several subsidiaries into one central account. This
technique supports our in-house bank concept where advantage is taken of any surplus funds of
subsidiaries to cover cash requirements of other subsidiaries, thus reducing external financing needs and
optimizing our net interest expenses.
CASH POOLS/CASH POOLING
/C
3
The term is composed of the words athletic and leisure. It describes a fashion trend of sportswear no
longer being just meant for training but increasingly shaping everyday clothing.
A product category which comprises equipment that is used rather than worn by the consumer, such as
bags, balls, sun glasses or fitness equipment
ACCESSORIES AND GEAR
ΤΑ
GLOSSARY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
ATHLEISURE
121.0%
1,842
2,373
199,171
195,969
195,066
191,595
Number of shares outstanding
at year-end (in thousands)
1.35
1.50
1.50
1.60
2.00
203,861
2.60
0.00
3.00
3.3017
Dividend (in €)
4.50
3.03
3.36
5.41
6.73
8.14
3.35
2,184
201,489
204,327
2,549
2,481
2,720
2,483
2,451
(€ in millions)]3,4,5
Personnel expenses
46,306
49,808
53,731
200,197
55,555
56,888
57,016
65,194
62,285
61,401
year-end 3,4,18,19
Number of employees at
Employees
209,216
209,216
58,902
124.4%
105.3%
117.2%
(0.3)
EBITDA 3,4,5,13,14
1.1
1.6
1.0
Adjusted net borrowings/
Balance Sheet Ratios
5,304
5,489
5,624
(0.2)
5,666
6,032
6,377
6,796
6,454
7,519
Shareholders' equity
448
295
(185)
(460)
6,472
(103)
0.1
0.1
30.7%
34.0%
Equity ratio 15
(8.0%)
61.4% (15.0%)
48.8%
39.4%
Financial leverage 13,14,15
capital in % of net sales 3,4,5,13
20.0%
0.3
21.3%
20.5%
21.1%
20.4%
19.0%
18.1%
25.3%
20.0%
Average operating working
(0.3)
(0.2)
22.4%
32.9%
484
(4,173)
Receivables and other
2,634
2,526
3,113
3,763
3,692
3,445
4,085
4,397
4,009
current assets 13
Inventories13
11,599
12,417
13,343
15,176
14,019
15,612
20,680
21,053
22,137
Total assets
11,651
959
4,072
4,338
(3,148)
(2,963)
adidas
(Adjusted net borrowings)/
2,504
2,125
2,970
2,133
2,121
2,354
3,763
2,979
3,328
4,978
Working capital 13
2,444
2,583
2,861
3,003
3,607
3,277
3,734
2,179
1,671
40.8%
1.6%
42.6%
59.1%
59.2%
56.2%
58.6%
61.7%
62.9%
52.9%
57.7%
63.0%
Current asset intensity of
59.0%
investments 13
40.9%
40.8%
43.8%
41.4%
38.3%
37.1%
47.1%
42.3%
37.0%
Fixed asset intensity of
41.0%
2012
investments13
42.7%
111.7%
Liquidity III13
82.9%
72.6%
83.0%
63.7%
54.9%
62.3%
73.9%
58.7%
Liquidity 113
67.4%
Liquidity || 13
44.3%
34.4%
38.6%
25.5%
22.4%
25.5%
38.6%
28.7%
45.3%
67.0%
43.0%
2013
2015
102.9%
134.0% 136.8%
83.8% 89.3%
144.1%
85.4%
95.1%
151.6%
156.9% 134.7% 119.7%
105.3% 90.2% 84.3%
Asset coverage ||13,15
Asset coverage |13,15
112.2%
110.0%
69.7%
96.9%
72.5%
91.8%
Equity-to-fixed-assets
45.5%
47.3%
45.3%
42.5%
(8.5%)
(5.4%)
3.3%
8.1%
ratio 13,15
2014
110.9%
115.8%
145.0% 152.7%
93.2%
2016
2017²
20181
2019
2020
2021
TEN-YEAR OVERVIEW
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
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158.7%
105.9%
TO OUR SHAREHOLDERS
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
ANNUAL REPORT 2021
1
adidas
328
100.4%
111.1%
4
adjusted net cash 13,14
330
Includes own-retail business, mono-branded franchise stores, shop-in-shops, joint ventures with retail
partners and co-branded stores. Controlled space offers a high level of brand control and ensures optimal
product offering and presentation according to brand requirements.
GERMANY
2
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adidas
331
'Parley for the Oceans' is an environmental organization and global collaboration network. Founded in
2012, the initiative aims to raise awareness for the beauty and fragility of the oceans, and to inspire and
empower diverse groups such as pacesetting companies, brands, organizations, governments, artists,
PARLEY FOR THE OCEANS
/P
Expenses which are not directly attributable to the products or services sold, such as distribution and
selling as well as general and administration costs, but not including marketing and point-of-sale
expenses.
OPERATING OVERHEAD COSTS
10
For adidas, more sustainable cotton' means certified organic cotton or any other form of sustainably
produced cotton that is currently available or may be available in the future, as well as 'Better Cotton.'
MORE SUSTAINABLE COTTON
Expenditure that relates to point-of-sale and marketing investments. While point-of-sale investments
include expenses for advertising and promotion initiatives at the point of sale as well as store fittings and
furniture, marketing investments relate to sponsorship contracts with teams and individual athletes as
well as to advertising, events and other communication activities. Marketing overhead expenses are not
included in marketing expenditure.
MARKETING EXPENDITURE
IM
Under the 'Lifestyle' category, we subsume all footwear, apparel, and 'accessories and gear' products that
are born from sport and worn for style. 'adidas Originals,' which is inspired by sport and worn on the
street, is at the heart of the 'Lifestyle' category.
LIFESTYLE
Performance: We build the best teams that play to win, recognizing and rewarding both individual and
team performances.
Betterment: We believe in a mindset of continuous learning and improvement and are committed to
providing relevant learning opportunities to upskill and reskill for the future.
Leadership: We will develop leaders to own the game and act as role models empowering all people to
realize their possibilities.
Leadership, Betterment, and performance are the three pillars of our people strategy:
LEADERSHIP, BETTERMENT, AND PERFORMANCE
IL
We outsource almost 100% of production to independent manufacturing partners. They are defined on a
supplier group level, which means one independent manufacturing partner might produce in several
manufacturing facilities. The majority of our independent manufacturing partners are located in Asia.
3
4
5
TO OUR SHAREHOLDERS
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3
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ANNUAL REPORT 2021
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adidas
332
Wet processes are defined as water-intense processes, such as dyeing and finishing of materials.
WET PROCESSES
TW
Supply chain activities limited to one specific supplier. Due to the dependency on only one supplier, a
company can face disadvantages during the sourcing process.
SINGLE-SOURCING MODEL
INDEPENDENT MANUFACTURING PARTNERS
IS
POLYBAGS (LDPE)
IR
Partnerships with events, associations, leagues, clubs and individual athletes. In exchange for the services
of promoting the company's brands, the party is provided with products and/or cash and/or promotional
materials.
PROMOTION PARTNERSHIPS
Under the 'Performance' category, we subsume all footwear, apparel and 'accessories and gear' products
which are of a more technical nature, built for sport and worn for sport. These are, among others,
products from our most important sport categories: Football, Training, Running, and Outdoor.
PERFORMANCE
'Parley Ocean Plastic' is a material created from upcycled plastic waste that was intercepted from
beaches and coastal communities before reaching the ocean. The organization 'Parley for the Oceans'
works with its partners to collect, sort and transport the recovered raw material (mainly PET bottles) to
our supplier who produces the yarn, which is legally trademarked. It is used as a replacement for virgin
plastic in the making of adidas x Parley products.
PARLEY OCEAN PLASTIC
designers, scientists, innovators and environmentalists in the exploration of new ways of creating, thinking
and living on our finite, blue planet.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
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A type of product transport packaging made of recycled low-density polyethylene ('LDPE') that offers a
more sustainable option to virgin plastic polybags, as they have a lower environmental footprint than
conventional bags and most alternatives. Recycled LDPE polybags meet our quality and performance
standards to effectively protect our products during shipping and handling, are available globally and can
be recycled via existing waste streams.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
FINANCIAL CALENDAR
MAY 6, 2022
First quarter results
MAY 12, 2022
Annual General Meeting
AUGUST 4, 2022
First half results
NOVEMBER 9, 2022
Nine months results
337
CONTACT
ADI-DASSLER-STR. 1
91074 HERZOGENAURACH
Tel +49 (0) 91 32 84 - 0
➤ ADIDAS-GROUP.COM
adidas is a member of DIRK
(German Investor Relations Association)
INVESTOR RELATIONS
investor.relations@adidas.com
➤ ADIDAS-GROUP.COM/S/INVESTORS
nexxar, Vienna
DESIGN AND REALIZATION
TO OUR SHAREHOLDERS
5
4
3
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OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
ANNUAL REPORT 2021
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adidas
adisport Corporation, San Juan, Puerto Rico
Concept Sport, S.A., Panama City, Panama
LLC adidas, Ltd.,' Moscow, Russia
PT adidas Indonesia, Jakarta, Indonesia
TO OUR SHAREHOLDERS
Reebok India Company, New Delhi, India
Reebok International Ltd., Boston, Massachusetts, USA
SC adidas-Ukraine,' Kiev, Ukraine
Spartanburg DC, Inc., Spartanburg, South Carolina, USA
Tafibal S.A., Montevideo, Uruguay
Trafford Park DC Limited, London, Great Britain
336
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
1
ANNUAL REPORT 2021
2
Reebok International Limited, London, Great Britain
adidas Vietnam Company Limited, Ho Chi Minh City, Vietnam
adidas Ventures B.V., Amsterdam, Netherlands
adidas Trgovina d.o.o., Ljubljana, Slovenia
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas CR s.r.o., Prague, Czech Republic
adidas Croatia d.o.o., Zagreb, Croatia
adidas Danmark A/S, Copenhagen, Denmark
adidas de Mexico, S.A. de C.V., Mexico City, Mexico
adidas do Brasil Ltda., São Paulo, Brazil
adidas Emerging Markets FZE, Dubai, United Arab Emirates
adidas Emerging Markets L.L.C, Dubai, United Arab Emirates
adidas España S.A.U., Zaragoza, Spain
adidas France S.a.r.l., Strasbourg, France
adidas Hellas A.E., Athens, Greece
adidas Holdings LLC, Wilmington, Delaware, USA
adidas Hong Kong Limited, Hong Kong, China
adidas Imports & Exports Ltd., Cairo, Egypt
adidas India Marketing Private Limited, New Delhi, India
adidas Industrial, S.A. de C.V., Mexico City, Mexico
adidas
333
adidas Colombia Ltda., Bogotá, Colombia
adidas Chile Limitada, Santiago de Chile, Chile
GROUP MANAGEMENT REPORT -
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GROUP MANAGEMENT REPORT -
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DECLARATION OF SUPPORT
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas AG declares support, except in the case of political risk, that the companies listed below are able to
meet their contractual liabilities. This declaration replaces the declaration dated February 25, 2021, which
is no longer valid. The declaration of support automatically ceases from the time that a company is no
longer a subsidiary of adidas AG.
adidas (China) Ltd., Shanghai, China
adidas (Cyprus) Limited, Nicosia, Cyprus
adidas (Ireland) Limited, Dublin, Ireland
adidas (Malaysia) Sdn. Bhd., Petaling Jaya, Malaysia
adidas (South Africa) (Pty) Ltd., Cape Town, South Africa
adidas (Suzhou) Co. Ltd., Suzhou, China
adidas Indy, LLC, Wilmington, Delaware, USA
adidas (Thailand) Co., Ltd., Bangkok, Thailand
adidas America, Inc., Portland, Oregon, USA
adidas Argentina S.A., Buenos Aires, Argentina
adidas Australia Pty Limited, Mulgrave, Australia
adidas Austria GmbH, Klagenfurt, Austria
adidas Baltics SIA, Riga, Latvia
adidas Benelux B.V., Amsterdam, Netherlands
adidas Budapest Kft., Budapest, Hungary
adidas Bulgaria EAD, Sofia, Bulgaria
adidas Business Services (Dalian) Limited, Dalian, China
adidas Business Services Lda., Morea de Maia, Portugal
adidas Canada Limited, Woodbridge, Ontario, Canada
adidas CDC Immobilieninvest GmbH, Herzogenaurach, Germany
adidas (UK) Limited, Stockport, Great Britain
nexxar, Vienna
adidas Insurance & Risk Consultants GmbH, Herzogenaurach, Germany
adidas International Marketing B.V., Amsterdam, Netherlands
adidas Portugal - Artigos de Desporto, S.A., Lisbon, Portugal
adidas Romania S.R.L., Bucharest, Romania
adidas Serbia d.o.o., Belgrade, Serbia
adidas Singapore Pte. Ltd., Singapore, Singapore
adidas Slovakia s.r.o., Bratislava, Slovak Republic
adidas Sourcing El Salvador, S.A. de C.V., Antiguo Cuscatlán, El Salvador
adidas Sourcing Limited, Hong Kong, China
adidas Spor Malzemeleri Satis ve Pazarlama A.S., Istanbul, Turkey
adidas sport gmbh, Cham, Switzerland
adidas Sporting Goods Ltd., Cairo, Egypt
adidas Sports Goods (Shanghai) Co., Ltd, Shanghai, China
adidas Sports (China) Co. Ltd., Suzhou, China
adidas Suomi Oy, Helsinki, Finland
adidas Sverige AB, Solna, Sweden
adidas Taiwan Limited, Taipei, Taiwan
335
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
adidas Poland Sp. z o.o., Warsaw, Poland
adidas Philippines Inc., Pasig City, Philippines
adidas Perú S.A.C., Lima, Peru
adidas North America, Inc., Portland, Oregon, USA
adidas International Property Holding B.V., Amsterdam, Netherlands
adidas International Re DAC, Dublin, Ireland
adidas International Trading AG, Lucerne, Switzerland
adidas International, Inc., Portland, Oregon, USA
adidas Israel Ltd., Holon, Israel
adidas Italy S.p.A., Monza, Italy
adidas Japan K.K., Tokyo, Japan
334
adidas
1
ANNUAL REPORT 2021
2
adidas International B.V., Amsterdam, Netherlands
3
5
TO OUR SHAREHOLDERS
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OUR COMPANY
GROUP MANAGEMENT REPORT -
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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adidas Korea LLC., Seoul, South Korea
adidas Latin America, S.A., Panama City, Panama
adidas LLP, Almaty, Republic of Kazakhstan
adidas Logistics (Tianjin) Co., Ltd., Tianjin, China
adidas Morocco LLC, Casablanca, Morocco
adidas New Zealand Limited, Auckland, New Zealand
adidas Norge AS, Oslo, Norway
4
O ADIDAS 2022
CONCEPT
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
e-commerce and retail sector. Moreover, the Supervisory Board is expected to possess knowledge and
experience in the markets relevant to adidas, in particular the Asian and US markets, and in the
management of a large international company. Furthermore, the Supervisory Board as a whole should
possess knowledge and experience in the areas of business strategy development and implementation,
human resources planning and management, accounting and financial reporting, controlling/risk
management, governance/compliance, corporate social responsibility, and sustainability. At least one
member of the Supervisory Board must have expertise in the field of accounting, and at least one further
member of the Supervisory Board must have expertise in the field of auditing. All Supervisory Board
members are expected to be familiar with the sporting goods industry. ADIDAS-GROUP.COM/S/BODIES
Regarding the independence of its members, the Supervisory Board considers the following provisions to
be appropriate: More than half of the Supervisory Board members should be independent within the
meaning of the Code, whereby it is assumed that the independence of employee representatives is not
impaired either by their role as employee representatives or their status as adidas employees. If we
consider shareholder representatives and employee representatives separately, more than half of the
Supervisory Board members in each of these groups should be independent. From the company's view and
following the regulations of the German Corporate Governance Code, Supervisory Board members are to
be considered independent if they have no personal or business relationship with the company or its
Executive Board that may cause a substantial, and not merely temporary, conflict of interest.
More than two-thirds of the shareholder representatives should be free of any potential conflicts of
interest. This applies in particular to potential conflicts of interest that may arise as a result of an advisory
or board role among customers, suppliers, lenders, or other third parties. As a rule, members of the
Supervisory Board should not have a board-level or advisory role with any key competitor and should not
have a personal relationship with any key competitor.
Furthermore, the Supervisory Board is committed to a diverse composition in terms of age, gender,
cultural origin, nationality, educational background, professional qualifications, and experience. An
adequate number of the shareholder representatives should have long-standing international experience.
In addition, each Supervisory Board member must ensure that they have sufficient time to properly
perform the tasks associated with the mandate. In general, the age limit for the Supervisory Board should
be 72 years at the time of their appointment. As a rule, the length of membership in the Supervisory Board
should not exceed 15 years or three terms of office.
In the Supervisory Board's assessment, the Supervisory Board as a whole in its current composition
fulfills the objectives stated and the competency profile. With Bodo Uebber, Chairman of the Audit
Committee, and Thomas Rabe, Chairman of the Supervisory Board, at least two members of the
Supervisory Board have proven expertise in the fields of accounting or auditing. In the opinion of the
Supervisory Board, all shareholder representatives qualified as independent in the year under review.
The names of the independent shareholder representatives are set out in the overview of all Supervisory
Board members in this Annual Report. ▶ SEE SUPERVISORY BOARD
The Supervisory Board's election proposals to the Annual General Meeting are always prepared by the
Nomination Committee. They take into account the objectives regarding the Supervisory Board's
composition resolved upon by the Supervisory Board and are aimed at fulfilling the competency profile
developed by the Supervisory Board for the Board as a whole. The Supervisory Board pays attention to a
balanced composition to ensure that the required know-how is represented on as broad of a scale as
possible. Moreover, the Supervisory Board ascertains that each proposed candidate has sufficient time to
perform their mandates.
36
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
Supervisory Board committees (composition and tasks)
Rules of Procedure of the Audit Committee
Rules of Procedure of the Supervisory Board
Rules of Procedure of the Executive Board
Articles of Association
More information on topics covered in this report can be found on our website, including:
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
FURTHER INFORMATION ON CORPORATE GOVERNANCE
Furthermore, the Supervisory Board determines the Executive Board compensation system, regularly
examines it, and decides on the individual overall compensation of each Executive Board member. The
Supervisory Board, together with the Executive Board, annualy a clear and comprehensible report on the
compensation granted and due in the previous financial year in accordance with § 162 AktG. Further
information on Executive Board compensation, the current compensation system, the compensation
report, and the auditor's report in accordance with § 162 AktG can be found on the company's website.
The Supervisory Board is also responsible for the appointment and dismissal of the Executive Board
members, as well as for the allocation of their areas of responsibility. The respective proposals are
prepared by the General Committee. When appointing new Executive Board members, the Supervisory
Board provides for the best possible, diverse and mutually complementary Executive Board composition
for the company and, together with the Executive Board, ensures long-term succession planning. The
Supervisory Board takes a structural approach in its succession planning for the Executive Board. This is
based on multiple planning horizons. Accordingly, the company has established a number of management
groups (Core Leadership Group [CLG], Extended Leadership Group [ELG], and High Potentials). This
ensures a sustainable approach to identifying and evaluating successor candidates for Executive Board
positions, while also accommodating the company's diversity concept. The Supervisory Board discusses
succession planning on a regular basis.
The Supervisory Board monitors and advises the Executive Board on questions relating to the
management of the company. The Executive Board regularly, expeditiously, and comprehensively reports
on business development and planning as well as on the company's risk situation including compliance
and coordinates the strategy of the company and its implementation with the Supervisory Board. The
Supervisory Board examines and approves the annual financial statements and consolidated financial
statements as well as the combined Management Report of adidas AG and the Group, taking into
consideration the auditor's reports, and resolves upon the proposal of the Executive Board on the
appropriation of retained earnings. Additionally, it resolves on the Supervisory Board's resolution
proposals to be presented to the Annual General Meeting. Moreover, the Supervisory Board examines the
combined non-financial statement for the company and the Group and/or any separate non-financial
reports. Certain business transactions and measures of the Executive Board with fundamental
significance are subject to prior approval by the Supervisory Board or by a Supervisory Board committee.
The respective details are set out in § 9 of the Rules of Procedure of the Supervisory Board of adidas AG.
Furthermore, the requirement of prior Supervisory Board approval is stipulated in some resolutions by the
Annual General Meeting.
TASKS OF THE SUPERVISORY BOARD
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
➤ ADIDAS-GROUP.COM/S/COMPENSATION
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
Kathrin Menges
lan Gallienne
Thomas Rabe (Chairman)
Günter Weigl
Frank Scheiderer
Kathrin Menges (as of May 12, 2021)
Thomas Rabe (Chairman)
Herbert Kauffmann (until May 12, 2021)
lan Gallienne
Udo Müller
Roland Nosko
Thomas Rabe (Chairman)
Udo Müller
lan Gallienne
Thomas Rabe (Chairman)
Members
Bodo Uebber (Chairman)
CVs of Executive Board members and Supervisory Board members
lan Gallienne
The tasks, responsibilities, and work processes of the committees are in line with the requirements of the
AktG and the Code. The Chairmen of the committees report to the Supervisory Board on the results of the
committee work on a regular basis.
5
4
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ANNUAL REPORT 2021
1
Roswitha Hermann (until December 31, 2021]
Petra Auerbacher (as of January 1, 2022)
Udo Müller
5
35
In August 2021, the Supervisory Board reviewed the objectives for its composition (including the
competency profile for the entire Supervisory Board), taking into account the recommendations of the
Code and aligned them with the requirements of the new Financial Market Integrity Strengthening Act.
These objectives are published on our website. According to these objectives, the Supervisory Board
should be composed in such a way that qualified monitoring of and advice to the Executive Board are
ensured. Its members as a whole are expected to have the knowledge, skills, and professional experience
required to properly perform the tasks of a supervisory board in a capital market-oriented international
company in the sporting goods industry. To this end, it is ensured that the Supervisory Board as a whole
possesses the competencies considered essential in view of adidas' activities. This includes, in particular,
in-depth knowledge and experience in the sporting goods and sports- and leisurewear industry, in the
business of fast-moving consumer-oriented goods and in the areas of digital transformation and
information technology (including IT security), production, marketing, and sales, in particular in the
OBJECTIVES FOR THE COMPOSITION OF THE SUPERVISORY BOARD
➤ ADIDAS-GROUP.COM/S/SUPERVISORY-BOARD-COMMITTEES
Further information on the committees can be found on the company's website.
In the 2021 financial year, the Supervisory Board aligned the Rules of Procedure of both the Supervisory
Board and the Audit Committee with the requirements of the new Financial Market Integrity Strengthening
Act (Gesetz zur Stärkung der Finanzmarktintegrität - FISG). This ensures that every member of the Audit
Committee can obtain information through the Chairman of the Audit Committee, Bodo Uebber, directly
from the heads of those corporate departments of the company which are responsible within the company
for the tasks relating to the Audit Committee pursuant to § 107 section 3 sentence 2 AktG. The Chairman
of the Audit Committee has to communicate any information obtained to all members of the Audit
Committee. If information is obtained in this way, the Executive Board shall be informed thereof without
delay.
35
Objectives of the Supervisory Board regarding its composition (including competency profile for the full
Supervisory Board)
ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
37
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ANNUAL REPORT 2021
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adidas
TO OUR SHAREHOLDERS
39
The members of the Executive Board and Supervisory Board are obligated to disclose any conflicts of
interest to the Supervisory Board without delay. Substantial transactions between the company and
members of the Executive Board or related parties of the Executive Board require Supervisory Board
approval. Contracts between the company and members of the Supervisory Board also require
Supervisory Board approval. The Supervisory Board reports any conflicts of interest, as well as the
handling thereof, to the Annual General Meeting. In the year under review, the members of the Executive
Board and the members of the Supervisory Board did not face any conflicts of interest. In connection with
the election of Jackie Joyner-Kersee as a member of the Supervisory Board by the Annual General
Meeting on May 12, 2021, the Supervisory Board approved the continuation of the adidas brand
ambassador agreement with Jackie Joyner-Kersee until June 30, 2023. The Supervisory Board is of the
opinion that this does not constitute a conflict of interest. In particular, the brand ambassador agreement
does not represent a material business relationship for either adidas or Jackie Joyner-Kersee. The
resolution was passed unanimously and without the participation of Jackie Joyner-Kersee. SEE SUPERVISORY
AVOIDING CONFLICTS OF INTEREST
Within the framework of the new employee strategy launched in 2021, the company will continue to
intensify its efforts for Diversity, Equity, and Inclusion in order to remain an attractive employer in the
future. There will be a particular focus on a long-term approach to equity in leadership positions - both
through hiring and through appropriate succession planning. SEE OUR PEOPLE
women.
In accordance with § 96 section 2 sentence 1 AktG, at least 30% of the members of the Supervisory Board
must be female and at least 30% must be male. As the Supervisory Board had not objected to an overall
fulfillment of the aforementioned quota pursuant to § 96 section 2 sentence 3 AktG, the minimum quota
must be fulfilled by the Supervisory Board overall, with the numbers of male and female members
rounded up or down to full numbers (§ 96 section 2 sentences 2 and 4 AktG). Thus, the Supervisory Board
of adidas AG must be composed of at least five women and five men. These minimum quotas were
achieved. As at December 31, 2021, six of the company's 16 Supervisory Board mandates were held by
The target figure for the first management level below the Executive Board is 39% and 31% for the second
management level below the Executive Board. The implementation period for both targets expires on
December 31, 2023.
BOARD REPORT
The Executive Board has once again determined target figures and implementation deadlines for the
percentage of female representation on the first and second management levels below the Executive
Board. These target figures are as follows:
GROUP MANAGEMENT REPORT -
OUR COMPANY
5
40
In addition, we provide all documents and information on our Annual General Meeting on our website. This
year's Annual General Meeting on May 12, 2021, was held in a virtual format due to uncertainties
surrounding the coronavirus pandemic, the continuing ban on large meetings, and our responsibility to
protect the health of our shareholders, employees, and other participants. We were determined to allow
for our shareholders to participate in the virtual event as comprehensively as possible within the legal
framework and the pandemic-related restrictions. As in previous years, coverage of the Annual General
Meeting was available to adidas AG shareholders via our shareholder portal and to the general public via
It is our goal to inform all institutional investors, private shareholders, financial analysts, business
partners, employees, and the interested public about the company's situation, at the same time and to an
equal extent, through regular, transparent, and up-to-date communication. We publish all essential
information, such as ad hoc announcements, press releases, and voting rights notifications as well as all
presentations from roadshows and conferences, all financial reports, and the financial calendar on our
website. With our Investor Relations activities, we maintain close and continuous contact with our current
and potential shareholders. SEE OUR SHARE ADIDAS-GROUP.COM/S/INVESTORS
TRANSPARENCY AND PROTECTION OF SHAREHOLDERS' INTERESTS
Compliance with laws, internal and external provisions, and responsible risk management are part of
corporate governance at adidas. Our compliance management system is linked to the company's risk and
opportunity management system. As part of our global ‘Fair Play' concept, the compliance management
system establishes the organizational framework for companywide awareness of our internal rules and
guidelines and for the legally compliant conduct of our business. It underscores our strong commitment to
ethical and fair behavior in our own organization and also sets the parameters for how we deal with
others. The principles of our compliance management system are set out in the Risk and Opportunity
Report. The risk and opportunity management system ensures risk-aware, opportunity-oriented, and
informed actions in a dynamic business environment in order to guarantee the competitiveness and
sustainable success of adidas. SEE RISK AND OPPORTUNITY REPORT
COMPLIANCE AND RISK MANAGEMENT
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
Further information on company-specific practices, which are applied in addition to statutory
requirements, such as our Code of Conduct ('Fair Play'), on compliance with working and social standards
within our supply chain, environmentally friendly resource management in our manufacturing processes,
and our social commitment, is available in this Annual Report and on our website. SEE OUR PEOPLE
▶ SEE SUSTAINABILITY ADIDAS-GROUP.COM/S/SUSTAINABILITY
Our business activities are aligned with the legal systems of the various countries and markets in which
we operate. We are also aware of our considerable social and environmental responsibility.
RELEVANT MANAGEMENT PRACTICES
ADIDAS-GROUP.COM/S/MANAGERS-TRANSACTIONS
An overview of the transactions of the Executive Board and the Supervisory Board pursuant to Article 19 of
the Regulation (EU) No 596/2014 (Market Abuse Regulation) notified to adidas AG in 2021 is published on
our website.
SHARE TRANSACTIONS CONDUCTED BY THE EXECUTIVE BOARD AND SUPERVISORY BOARD
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
As a central part of the new adidas strategy 'Own the Game,' we will significantly increase our
commitment to sustainability in the years ahead. In addition to the continued digital transformation of the
company, we are working closely with our partners in the global supply chain to reduce energy
consumption and to increase the proportion of green energy we use. By 2025, nine out of every ten adidas
articles should be made from more sustainable materials, while the carbon footprint per product should
be reduced by 15%. adidas aims at operating climate neutral (CO2e) at its locations by 2025 and at reaching
complete climate neutrality by 2050.
(§27 paragraph 3 Mit BestG]
On the second management level below the Executive Board, female representation amounted to 31% by
the deadline of December 31, 2021. The target was thus also exceeded. The proportion of women in
leadership positions worldwide on the balance sheet date was 37%. Thus, the target of 35.5% was again
clearly exceeded.
5
Act.
The members of the Supervisory Board are individually responsible for undertaking any necessary training
and professional development measures required for their tasks and are supported by adidas AG in this
regard. The company informs the Supervisory Board regularly about current legislative changes as well as
opportunities for external training, and provides the Supervisory Board with relevant specialist literature.
In this regard, the Supervisory Board has also examined in detail the latest developments in corporate
governance, including, in particular, the requirements of the new Financial Market Integrity Strengthening
Apart from the individual skills of the members, the Rules of Procedure of the Supervisory Board and of
the Audit Committee also set out the tasks and responsibilities as well as the procedure for meetings and
passing resolutions. These Rules of Procedure are available on our website. The Supervisory Board Report
provides information on the activities of the Supervisory Board and its committees in the year under
review. SEE SUPERVISORY BOARD REPORT
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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In addition, the Supervisory Board as well as the Audit Committee, General Committee, and Nomination
Committee regularly review the efficiency of their work. After an external review was conducted in 2018
already, the Supervisory Board and the aforementioned committees again conducted an internal self-
assessment review in 2020. They found the work of the Supervisory Board as a whole and of the individual
committees to be efficient and agreed specific measures aimed at improving the organization of the
Supervisory Board's work. In December 2021, the members of the Supervisory Board evaluated the
implementation status of measures aimed at improving the efficiency of the Supervisory Board's work and
found that these measures had been successfully implemented. In 2022, the Supervisory Board will again
conduct an efficiency review.
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TO OUR SHAREHOLDERS
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
The compensation of the Supervisory Board members is set out in the Compensation Report. ▸ SEE
COMPENSATION REPORT
➤ SEE OUR PEOPLE
GROUP MANAGEMENT REPORT -
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TO OUR SHAREHOLDERS
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COMMITMENT TO THE PROMOTION OF EQUAL PARTICIPATION OF WOMEN AND MEN IN LEADERSHIP POSITIONS
When filling leadership positions in the company, the Executive Board takes diversity into account and
aims for the appropriate participation of women in particular. The Supervisory Board is also confident that
an increase in the number of women in leadership positions within the company is necessary to ensure
that, in the future, a larger number of suitable female candidates are available for Executive Board
positions. The Executive Board and Supervisory Board therefore recognize the enormous importance of
the company's initiatives to foster diversity and inclusion and to promote women to leadership positions.
ANNUAL REPORT 2021
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On the first management level below the Executive Board, the proportion of women by the deadline of
December 31, 2021, was 38%. Thus, the target figure was significantly exceeded even despite the special
circumstances and challenges posed by the coronavirus pandemic.
In addition, the Executive Board has set targets and deadlines for female representation in the first two
management levels of adidas AG. The targets are 24.2% for the first management level below the
Executive Board and 30% for the second management level. Both targets were met before the deadline
of December 31, 2021:
In August 2017, the Supervisory Board set a target for female representation on the Executive Board of 1/7
(14.29%), with a deadline of June 30, 2022. That target is already met as a result of Amanda Rajkumar
joining the Executive Board. This appointment also fulfills § 76 section 3a AktG introduced with the Second
Leadership Positions Act (Führungspositionengesetz - FüPoG II), which requires that at least one woman
and at least one man be appointed as members of the Executive Board.
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DECLARATION ON CORPORATE GOVERNANCE
Corporate Governance stands for responsible and transparent management and corporate control
oriented toward a sustainable increase in value. We are convinced that good corporate governance is an
essential foundation for sustainable corporate success and enhances the confidence placed in our
company by our shareholders, business partners, and employees, as well as the financial markets.
DECLARATION OF THE ADIDAS AG EXECUTIVE BOARD AND SUPERVISORY BOARD ON THE GERMAN CORPORATE
GOVERNANCE CODE PURSUANT TO § 161 GERMAN STOCK CORPORATION ACT (AKTIENGESETZ-AKTG)
In December 2020, the adidas AG Executive Board and Supervisory Board issued the last Declaration of
Compliance with the German Corporate Governance Code in the versions as of February 7, 2017, and
December 16, 2019, pursuant to § 161 AktG. The following declaration solely refers to the
recommendations of the 'Government Commission on the German Corporate Governance Code' in the
version as of December 16, 2019, as published in the Federal Gazette on May 20, 2020 ('Code').
The adidas AG Executive Board and Supervisory Board declare that since the last Declaration of
Compliance, the recommendations of the Code have been and are met with the following exceptions:
Recommendation C.5 Alternative 1
One member of the Supervisory Board, lan Gallienne, holds more than three mandates in supervisory
bodies of non-Group companies which are listed at a stock exchange or have similar requirements. Ian
Gallienne is Chief Executive Officer of Groupe Bruxelles Lambert ('GBL'). GBL is a holding company that is
regularly represented in the supervisory bodies of portfolio companies as an institutional investor, inter
alia, by its Chief Executive Officer. All companies (apart from adidas AG) in which lan Gallienne is a
member of the supervisory body are portfolio companies or subsidiaries of GBL or are under joint control
of GBL and therefore belong to the same group of companies. They have to be attributed to his main
occupation as Chief Executive Officer of GBL.
We are of the opinion that in accordance with its rationale, recommendation C.5 alternative 1 is thus not
applicable to lan Gallienne. For precautionary reasons, however, a deviation is declared. The Supervisory
Board has also assured itself that lan Gallienne has sufficient time to duly perform his duties as a member
of the Supervisory Board of adidas AG.
Recommendation C.5 Alternative 2
The Chairman of the Supervisory Board, Thomas Rabe, also is Chief Executive Officer of the listed
company RTL Group S.A., Luxembourg. In this respect, the company deviates from recommendation
C.5 alternative 2. However, the Supervisory Board is convinced that the mandate of Thomas Rabe at RTL
Group S.A. does not affect the due performance of his duties as Chairman of the Supervisory Board. In
particular, the Supervisory Board has assured itself that Thomas Rabe has sufficient time to perform his
duties.
Herzogenaurach, December 2021
For the Executive Board
KASPER RORSTED
Chief Executive Officer
For the Supervisory Board
THOMAS RABE
Chairman of the Supervisory Board
The aforementioned Declaration of Compliance has been published on and can be downloaded from our
website. ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
KPMG has been acting as auditor and Group auditor for adidas AG since the 1995 financial year. On the
basis of the transitional periods of Article 41 Regulation (EU) No. 537/2014, KPMG may not be reappointed
as auditor after June 17, 2023. In the 2021 financial year, the Audit Committee already conducted a
tendering and selection process for a new auditor for the 2023 financial year in accordance with the
requirements of Article 16 section 3 of the EU Audit Regulation. Based on the proposal submitted by the
Audit Committee, the entire Supervisory Board agreed to propose to the 2022 Annual General Meeting that
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft be appointed as the auditor and Group
auditor for the 2023 financial year. KPMG will again be proposed as auditor of the annual financial
statements and consolidated financial statements for the 2022 financial year at the 2022 Annual General
Meeting.
On behalf of the entire Supervisory Board, I would like to thank Herbert Kauffmann, long-serving member
and former Chairman of the Audit Committee who departed during the year under review, for his
enormous commitment to the company and exceptional achievements on the Supervisory Board.
Furthermore, I wish to thank our former Supervisory Board member Roswitha Hermann, who stepped
down on December 31, 2021, as well as the current Executive Board and all our employees around the
world for their great personal dedication and ongoing commitment. I would also like to express my thanks
for the enduring trust and cooperation between the employee and shareholder representatives on the
Supervisory Board.
For the Supervisory Board
Ca
THOMAS RABE
CHAIRMAN OF THE SUPERVISORY BOARD
March 2022
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EXPRESSION OF THANKS
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The General Committee of the Supervisory Board already accounts for diversity when selecting candidates
for Executive Board positions. Every decision by the Supervisory Board on the composition of the Executive
Board is made in the best interests of the company and with due consideration of all circumstances in
each individual case. In the opinion of the Supervisory Board, the current composition of the Executive
Board meets the diversity concept outlined above.
No member of the Executive Board has accepted a Supervisory Board chair or more than two Supervisory
Board mandates in non-group listed companies or in supervisory bodies of non-group companies with
comparable requirements. SEE EXECUTIVE BOARD
COMPOSITION AND WORKING METHODS OF THE SUPERVISORY BOARD
Our Supervisory Board consists of 16 members. It comprises eight shareholder representatives and eight
employee representatives in accordance with the German Co-Determination Act (Mitbestimmungsgesetz –
MitbestG). The shareholder representatives are elected by the shareholders at the Annual General
Meeting and the employee representatives by the employees. SEE SUPERVISORY BOARD
The last regular elections to the Supervisory Board were held in the 2019 financial year. In the 2020
financial year,
Christian Klein was appointed as successor to Igor Landau in a by-election. This by-election
became necessary as the term of office of Igor Landau, the former Chairman of the Supervisory Board,
expired with the end of the 2020 Annual General Meeting. The departure of Igor Landau also necessitated
a new Chairman of the Supervisory Board. The Supervisory Board elected Thomas Rabe to this role with
effect from the end of the 2020 Annual General Meeting. In addition, Jackie Joyner-Kersee was elected to
the Supervisory Board as a new shareholder representative in the 2021 financial year. She replaces
Herbert Kauffmann, whose 12-year term as Supervisory Board member expired with the end of the 2021
Annual General Meeting in accordance with the recommendations of the Code regarding independence.
Eventually, Roswitha Hermann resigned from the Supervisory Board as employee representative with
effect from December 31, 2021, and Bastian Knobloch was appointed by court to succeed her. The terms of
office of the current members of the Supervisory Board expire at the end of the 2024 Annual General
Meeting.
In order to increase the efficiency of its work and to deal with complex topics, the Supervisory Board has
formed five permanent committees from within its members, which, inter alia, prepare its resolutions and,
in certain cases, pass resolutions on its behalf. At present, these committees are as follows:
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Committee
Steering Committee
General Committee
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TO OUR SHAREHOLDERS
As a globally operating public listed company with its registered seat in Herzogenaurach, Germany, adidas
AG is subject to, inter alia, the provisions of German stock corporation law. A dual board system, which
assigns the management of the company to the Executive Board and advice and monitoring of the
Executive Board to the Supervisory Board, is one of the fundamental principles of German stock
corporation law. These two boards are strictly separated both in terms of members and competencies.
However, both boards cooperate closely in the interest of the company.
3
COMPOSITION AND WORKING METHODS OF THE EXECUTIVE BOARD
The composition of our Executive Board, which consists of six members, reflects the international
structure of our company. The Executive Board is responsible for independently managing the company
with the aim of sustainable value creation in the interests of the company, determining the Group's
strategic orientation, agreeing the strategy with the Supervisory Board, and ensuring its implementation.
Further, it defines business targets, company policy, and the organization of the Group. The Executive
Board is in charge of preparing the quarterly statements, the half-year report, and the annual financial
statements and consolidated financial statements, as well as the combined Management Report of adidas
AG and the Group. Moreover, it prepares a combined non-financial statement for the company and the
Group. Additionally, the Executive Board ensures responsible management of business resources as well
as compliance with and observance of statutory regulations and internal guidelines by the Group entities.
In addition to a compliance management system based on transparent principles, the Executive Board is
responsible for implementing an internal control and risk management system that is suitable,
appropriate, and effective with regard to the scope of business activities and the company's risk situation.
The Executive Board also provides employees with the opportunity to report, in an appropriate and
protected manner, suspected breaches of the law within the company. It is bound to the company's
interest and obligated to strive for a sustained increase in company value.
Notwithstanding the Executive Board's joint responsibility for managing the company, the Executive Board
members are individually responsible for managing their respective operations in accordance with the
Business Allocation Plan for the Executive Board. There are no Executive Board committees. The Chief
Executive Officer represents the Executive Board and the company, and is responsible for lead
management and development of the company, including cooperation with the Supervisory Board and
coordination and monitoring of the Executive Board functions, operations, brands, and markets. The
Executive Board members continuously report to the CEO and to each other about all significant
developments in their respective business divisions and coordinate with each other on all cross-functional
measures. Collaboration within the Executive Board is further governed by the Rules of Procedure of the
Executive Board and the Business Allocation Plan. These documents specifically stipulate requirements
for meetings and resolutions as well as for cooperation with the Supervisory Board.
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The Executive Board and Supervisory Board cooperate closely and trustfully for the benefit of the
company. The Executive Board reports to the Supervisory Board regularly, extensively, and in a timely
manner on all matters relevant to the company's strategy, planning, business development, financial
position, and compliance, as well as on material business risks. Fundamental questions related to the
corporate strategy and its implementation are thoroughly discussed and agreed with the Supervisory
Board.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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The Executive Board is appointed by the Supervisory Board. The Supervisory Board is committed to
promoting a culture of diversity and inclusion at adidas. Diversity is understood in the broadest sense,
including age, gender, cultural origin, nationality, educational background, professional qualifications, and
experience. Greater diversity on the Executive Board will help secure the long-term success of adidas by
taking diverse perspectives into account. For this reason, the Supervisory Board has adopted a diversity
concept. In addition, an age limit of 65 years applies for Executive Board members.
adidas
The implementation of the 'Own the Game' strategy, which applies from the 2021 financial year onward,
will be supported by the selection of appropriate performance targets directly derived from the strategy
for the variable performance-related compensation. The variable performance-related compensation is
therefore directly linked to the externally communicated operating, financial, and strategic short- and
long-term targets. Thus, the compensation system for the Executive Board members is directly geared
toward providing an incentive for successful, sustainable, and long-term corporate management and
development and is in line with the interests of shareholders, employees, consumers, and other
stakeholders. In order to achieve a continuous, sustainable increase in company value, the long-term
variable compensation also depends on the development of the share price (capital market performance of
adidas AG). This results in a harmonization of the interests of the shareholders and the Executive Board.
PRINCIPLES OF THE COMPENSATION SYSTEM
The compensation system for members of the Executive Board is geared toward creating an incentive for
successful, sustainable, and long-term corporate management and development, whereby the
compensation is structured with an appropriate balance of fixed non-performance-related components
and variable performance-related components. The variable performance-related compensation is
measured based on the achievement of ambitious, pre-agreed targets; subsequent changes to
performance targets or parameters are not permitted. By applying a consistent 'Pay-for-Performance'
approach, the compensation system aims at appropriately remunerating exceptional performance, while
diminishing the variable performance-related compensation when targets are not met. Moreover, the
incentive to achieve the long-term targets that determine the multi-year variable performance-related
compensation component is higher than the incentive to achieve the targets that determine the one-year
variable performance-related compensation component.
Another important aspect is the high level of consistency between the Executive Board compensation
system and the compensation system of the senior management levels beneath the Executive Board. This
ensures that all decision-makers pursue the same targets in order to secure the sustainable long-term
success of the Company.
When designing the compensation system, the Supervisory Board has particularly taken into account the
following guidelines:
Promoting the implementation of the long-term strategy, including sustainability targets
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Strong Pay-for-Performance approach and long-term orientation
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Strong focus on shareholder and other stakeholder interests
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The Supervisory Board considers the compensation of Executive Board members to be appropriate, also in
light of the horizontal and vertical comparisons that were conducted.
The Supervisory Board also takes into account the Company's internal compensation structure and levels
when determining the Executive Board compensation. Every year, the Executive Board compensation is
compared to that of senior management and employees overall in Germany (employees covered by
collective agreements as well as employees not covered by collective agreements), also with regard to
their development over time.
Vertical (internal) comparison
When determining the compensation of the Executive Board, the Supervisory Board takes into account
current market compensation levels, especially among the DAX companies as well as comparable other
German companies. In addition, the adidas Executive Board compensation is compared with the
compensation of selected national and international companies within the sporting goods and textile
industry. When selecting these companies, the Supervisory Board also takes into consideration the
comparability of the market position and company size. The Supervisory Board conducts regular horizontal
comparisons to ascertain the appropriateness and competitiveness of the Executive Board compensation
in relation to the economic situation of the Company. The most recent appropriateness test, conducted in
the 2020 financial year, compared the compensation of companies listed in the German Stock Index (DAX)
as well as the following national and international companies in particular: Nike, Under Armour, VF,
Puma, Lululemon, Skechers, Anta, H&M, and Inditex.
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Horizontal (external) comparison
In accordance with § 87a section 1 AktG, the Supervisory Board resolves upon a compensation system for
the Executive Board members. Based on the compensation system, the Supervisory Board determines the
specific overall target compensation for the individual Executive Board members. In doing so, the
Supervisory Board takes into account the size and global orientation, the economic situation, the success,
and the outlook of the Company. Compared with competitors, the compensation should be attractive,
offering incentives to attract qualified members to the Executive Board and retain them on a long-term
basis within the Company. In addition, when determining the compensation, the complexity and
significance of the tasks of the respective Executive Board member, their experience (especially for new
appointments) and their contribution to the Company's success are taken into consideration. The
Supervisory Board regularly reviews the appropriateness of the Executive Board compensation. For this
purpose, it uses a horizontal as well as a vertical comparison.
PROCEDURE FOR ESTABLISHING, REVIEW, AND IMPLEMENTATION OF THE COMPENSATION SYSTEM
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
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Further development of the market-standard elements of the compensation system for the Executive
Board (e.g., malus and clawback provisions as well as Share Ownership Guidelines)
Conformity with applicable regulatory requirements (Stock Corporation Act and German Corporate
Governance Code)
High level of consistency with the compensation system of the senior management levels
Intuitive, clearly comprehensible compensation system and transparent disclosure of performance
criteria
42
4
For details on the 2021 financial year target achievement and compensation payout: SEE SECTION 'EXECUTIVE BOARD
COMPENSATION 2021'
Information and documents on the Annual General Meeting
Risk and opportunity management and compliance
Social commitment
Sustainability
Code of Conduct
More information on topics covered in this report can be found on our website, including:
FURTHER INFORMATION ON THE PRINCIPLES OF OUR MANAGEMENT
➤ ADIDAS-GROUP.COM/AGM
our website. The Executive Board and Supervisory Board provided detailed answers to pre-submitted
questions. The content of the CEO's speech was published prior to the Annual General Meeting. Finally,
this year's Annual General Meeting was the first in which it was possible to share video messages with all
adidas shareholders via the shareholder portal. The measures undertaken were intended to align our
shareholders' justified interests in a broadest possible participation in the Annual General Meeting on the
one side and the company's responsibility to protect the health of all participants on the other.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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Managers' transactions
Regarding the targets for the variable performance-related compensation components of the 2022
financial year: SEE SECTION 'OUTLOOK 2022'
Compensation
Accounting and annual audit
The aim of this Compensation Report is to ensure consistent reporting and to disclose clearly and
transparently the correlation between the compensation paid for a particular financial year and the
achievement of targets set for that financial year, regardless of when the payment is made, in accordance
with our 'Pay-for-Performance' approach. Against this background, the achievement of the targets set for
the 2021 financial year for the variable performance-related compensation based on the current
compensation system is reported in a detailed and transparent manner. The compensation of Executive
Board members is presented in accordance with the market-standard based on the compensation tables
of the German Corporate Governance Code from February 7, 2017.
► ADIDAS-GROUP.COM/S/COMPENSATION
The current compensation system for the Executive Board was approved by shareholders at the Annual
General Meeting on May 12, 2021, in accordance with § 120a section 4 AktG and applies to all Executive
Board service contracts concluded from January 1, 2021. It furthermore generally applies to all previously
concluded Executive Board service contracts. The Executive Board compensation system is clear, easy to
understand, and uses transparent performance criteria. It meets all requirements of the German Stock
Corporation Act and is designed in line with the recommendations of the German Corporate Governance
Code. The current compensation system is permanently available on the company's website.
COMPENSATION OF THE EXECUTIVE BOARD MEMBERS
For adidas, clear, transparent, and comprehensible reporting on the compensation of the Executive
Board and Supervisory Board is an essential element of good corporate governance. This Compensation
Report was prepared in accordance with § 162 of the German Stock Corporation Act (AktG) and outlines
in accordance with statutory requirements the amount and structure of the compensation granted and
due to Executive Board members and Supervisory Board members in and for the 2021 financial year.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
TO OUR SHAREHOLDERS
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KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, was appointed as auditor for the 2021 annual financial
statements and consolidated financial statements by the Annual General Meeting. The Supervisory Board
had previously assured itself of the auditor's independence. SEE REPRODUCTION OF INDEPENDENT AUDITOR'S REPORT
adidas AG prepares the annual financial statements in accordance with the provisions of the German
Commercial Code (Handelsgesetzbuch - HGB) and the AktG. The annual consolidated financial statements
are prepared in accordance with the principles of the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU).
ACCOUNTING AND ANNUAL AUDIT
Employees of adidas AG and its affiliated companies are able to participate in an employee stock purchase
plan, under which they can acquire adidas AG shares with a discount and benefit, on a prorated basis, from
free matching shares. SEE NOTE 26
A long-term incentive plan, which is part of the remuneration for senior executives of adidas, applies.
Based on this plan, the plan participants receive virtual shares (Restricted Stock Units). As
per their
contracts, each Executive Board member is entitled to participate in the Long-Term Incentive Plan (LTIP)
established for Executive Board members. The adidas shares purchased are subject to a multi-year lock-
up period. SEE NOTE 28 SEE OUR PEOPLE SEE COMPENSATION REPORT
SHARE-BASED PROGRAMS FOR SENIOR EXECUTIVES
▸ ADIDAS-GROUP.COM/S/CORPORATE-GOVERNANCE
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Determination of criteria and targets
Determination of degrees
of target achievement
Criterion
Determination of bonus amount
Weighting
Target/actual comparison¹
Multiplication of the target amount with
the overall degree of target achievement²
Sales growth
30%
Actual target achievement
Increase in
30%
Actual target achievement
operating margin
Individual criterion 1
20%
Actual target achievement
Individual criterion 2
20%
X
Actual target achievement
Performance
Bonus target
amount
Performance
Bonus amount
1 Comparison of target values determined at the beginning of the financial year with values achieved in the financial year.
2 The individual target amount in case of 100% target achievement is determined in accordance with the applicable compensation structure for each Executive
Board member. The overall degree of target achievement is the sum of all degrees of target achievement.
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At the end of the financial year
At the beginning of the financial year
Performance Bonus
DETERMINATION OF TARGET ACHIEVEMENT AND BONUS AMOUNT WITHIN THE FRAMEWORK OF PERFORMANCE BONUS
Sales growth in business segments/sales channels
Product development and innovation
Success of strategic projects
Brand Heat
Efficiency increase
Consumer satisfaction
Diversity, Equity, and Inclusion
Sustainability
Business development
Gaining market share
Attracting new members
Cost management
Cash-flow generation
Employee satisfaction
Digitalization
2
Succession planning
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Determination of target achievement and bonus amount
At the end of the financial year, the actual target achievement of each Executive Board member, which is
based on a comparison of the predefined target values with the values achieved in the year under review,
is assessed by the Supervisory Board ('target/actual comparison'). If the target achievement lies between
the predefined threshold values, the degree of target achievement is determined based on a sliding scale.
Taking into account the predefined weightings, the Supervisory Board determines the factor by which the
Performance Bonus target amount is multiplied by adding up these degrees of target achievement
('overall degree of target achievement'). The result is the individual amount of the Performance Bonus to
be paid ('Performance Bonus Amount'). The payout of the Performance Bonus Amount is due following
approval of the consolidated financial statements of the past financial year.
The overall degree of target achievement (sum of all degrees of target achievement) for the Performance
Bonus is capped at a maximum of 150% of the individual Performance Bonus target amount. All criteria
are designed in such a way that individual target achievement may also be zero. If the overall degree of
target achievement lies at or below 50%, the Executive Board member is not entitled to the Performance
Bonus. Therefore, the Performance Bonus may be omitted entirely if targets are clearly not met.
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2025
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Performance year
Lock-up period
1 Performance year: Determination of LTIP target amount in case of 100% target achievement.
2 Determination of the degrees of target achievement, LTIP Payout Amount payable following approval of the consolidated financial statements for the past
performance year and investment in adidas AG shares. Start of lock-up period.
3 Lock-up period.
4 Lock-up period.
5 End of lock-up period effective 31.12.
In case of 100% target achievement, the LTIP target amount for the respective LTIP tranche corresponds
to 45% of the target direct compensation of the respective Executive Board member. The amount of the
LTIP Bonus is determined based on the achievement of two uniform criteria for all Executive Board
members, which are directly linked to the long-term strategy of adidas.
Criteria, weighting, and cap
For the LTIP 2021/2025, the Supervisory Board has defined the following financial or ESG-related
performance criteria linked to the strategic objectives for each of the five performance years (2021 to
2025):
Financial criterion: Increase in net income from continuing operations compared to the previous year
(weighting: 80%)
ESG criterion: Share of sustainable articles offered (weighting: 20%)
On the one hand, this reflects the strategic target of sustainably increasing net income from continuing
operations and thus creating the basis for an attractive return for our shareholders. On the other hand, the
key strategic focus for adidas to further drive change in the field of sustainability and to move from stand-
alone initiatives to a scaled and comprehensive sustainability program is integrated into the Executive
Board compensation. The target values for the annual LTIP tranches follow directly from the externally
published long-term net income growth targets of the Company and from the sustainability target for the
share of sustainable articles offered.
Increase in net income from continuing operations compared to the previous year
The financial targets of the strategy until 2025 are determined based on the results for the 2021 financial
year. In this connection, the aim is to increase net income from continuing operations by an average of
16% to 18% per annum until 2025. For the LTIP 2021/2025, this specifically means that for the
2021 performance year, a target was set based on the externally communicated annual guidance for the
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Long-Term Incentive Plan 2021/2025 ('LTIP 2021/2025')
The LTIP 2021/2025 aims to link the long-term performance-related variable compensation of the
Executive Board to the Company's performance and thus to the interests of the shareholders. Therefore,
the LTIP 2021/2025 is share-based. It consists of five annual tranches (2021 to 2025), each with a term of
five years. Each of the five annual LTIP tranches consists of a performance year and a subsequent lock-up
period of four years.
LTIP 2021/2025: ANNUAL LTIP TRANCHES
LTIP tranche 2021
2022
2023
2024
2025
2026
2027
4
2028
2021
1
2
3
4
5
2022
1
2
3
4
5
2023
1
2029
2
-
The other two criteria are defined individually for the respective Executive Board member and are overall
weighted at 40% ('individual criteria'). These individual criteria allow for a further differentiation depending
on the specific operating and strategic challenges of each individual Executive Board function. For the two
individual targets, financial as well as non-financial performance criteria may be applied. These are
directly related to the corporate strategy and its financial goals of sustainable growth, profitability, and
cash flow generation, which are based on the strategic focus on credibility, consumer experience, and
sustainability. Furthermore, these criteria are directly related to the defined success factors for the
implementation of the strategy: the employees of the Company, a mindset of innovation across all
dimensions of our business as well as using the speed and agility of Digital throughout the entire value
chain.
Overall target
achievement
capped at 150%
If the overall target
achievement is < 50%,
no payout is made.
Financial criterion:
increase in net income
Weighting: 80%
ESG criterion:
share of sustainable
articles
Weighting: 20%
Five annual tranches, each tranche with a period of
five years
Criteria and target values for the total duration of
LTIP 2021/2025 are determined in advance and
transparent and, in case of 100% target achievement,
in line with the long-term growth and sustainability
targets externally communicated.
In case of failure to achieve the target values deter -
mined for a performance year, the target values are
increased accordingly for the following performance
years, which ensures that the Executive Board is
sufficiently incentivized to achieve the ambitious
long-term growth targets.
Overall target
achievement
capped at 150%
If the overall target
achievement is < 50%,
no payout is made.
Share Ownership Guidelines²
Malus/clawback for variable components
1 Target direct compensation consisting of fixed compensation, the annual Performance Bonus as well as the share-based LTIP Bonus (in case of 100% target
achievement).
2 Target value for the CEO amounts to 300%, for the ordinary Executive Board members to 200% of the annual fixed compensation taking into account a build-
up phase of four years.
45
Maximum total annual compensation
adidas
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Two individual criteria allow for a differentiation
depending on the specific strategic
and operational challenges.
Two shared criteria are directly linked to
the annual guidance externally communicated.
One-year performance period
Weighting in total 40%
(20% each)
4
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
COMPENSATION COMPONENTS: OVERVIEW AND STRUCTURE
With effect from January 1, 2021, the Executive Board compensation system contains the following
components:
COMPENSATION SYSTEM FOR THE EXECUTIVE BOARD MEMBERS
Compensation components
Design
Сар
Fixed components
Shares
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Variable components
Fixed compensation
Other benefits
Pension benefit
Performance
Bonus
LTIP
2021/2025
Payment in twelve equal monthly installments
Non-cash benefits granted on a regular
and occasion-related basis
Pension allowance
Two shared criteria:
financial
Two individual criteria:
financial and
non-financial
100%
up to 3% of the target
direct compensation¹
maximum of 50% of
the fixed compensation
Weighting in total 60%
(30% each)
Cash
Examples of possible individual criteria deriving thereof are:
The compensation of the Executive Board members is made up of non-performance related (fixed) and
performance-related (variable) compensation components and consists of a fixed compensation, an
annual cash bonus ('Performance Bonus'), a long-term share-based bonus (Long-Term Incentive Plan -
'LTIP Bonus'), as well as other benefits and pension benefits.
30% fixed compensation,
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adequate income for the Executive Board members and thus avoids the assumption of inadequate risks for
the Company. In principle, the fixed compensation is paid in twelve equal monthly installments and
generally remains unchanged during the term of the service contract. The fixed compensation constitutes
30% of the target direct compensation of the respective Executive Board member.
Other benefits
The other benefits regularly granted to the Executive Board members serve to offset the costs and
economic disadvantages directly connected with the Executive Board mandate. They include payment for,
or providing the monetary value of, non-cash benefits such as premiums or contributions to insurance
schemes in line with market practice, the provision of a company car or the payment of a car allowance,
reimbursement of costs for a regular health check, reimbursement of work-related moving costs,
necessary security installations and services and the costs for a tax consultant selected by adidas.
Pension benefits
Pension benefits serve to provide contributions for adequate private retirement pensions. Executive Board
members appointed after January 1, 2021, are not granted benefits under a company pension scheme.
Instead, they receive a so-called pension allowance in the form of an adequate lump-sum amount, which
is directly paid out to the Executive Board members annually. The pension allowance equals a maximum
amount of 50% of the individual fixed compensation.
The current members of the Executive Board have defined contribution pension commitments. Each year
as part of the pension commitments, the virtual pension account of each Executive Board member is
credited with an amount that equals a percentage determined by the Supervisory Board and is related to
the Executive Board member's annual fixed compensation. The appropriateness of the percentage is
regularly assessed by the Supervisory Board. The percentage most recently determined by the
Supervisory Board amounts to 50%. The pension assets on the virtual pension account at the beginning of
the respective calendar year yield a fixed interest rate of 3% p.a., however for no longer than until the
pension benefits first become due. Entitlements to the pension benefits become vested immediately.
Entitlements to pension benefits comprise pensions to be received upon reaching the age of 65, or, on
application, early retirement pensions to be received upon reaching the age of 62, or disability and
survivors' benefits.
VARIABLE PERFORMANCE-RELATED COMPONENTS
The variable performance-related compensation is designed to provide the right incentives for the
Executive Board to act in the interest of the corporate strategy, the shareholders, and other stakeholders,
as well as to ensure a successful, sustainable, and long-term corporate management and development.
The level of the variable performance-related compensation is primarily determined by the economic
development of adidas and takes into account the performance of the Executive Board members. In this
respect, the Supervisory Board follows a consistent 'Pay-for-Performance' approach. In selecting the
performance criteria, the Supervisory Board ensures that they are transparent, clearly measurable, and
directly promote the implementation of the strategy, also in terms of sustainability. The variable
performance-related compensation is therefore directly linked to the externally communicated operating,
financial, and strategic short- and long-term targets. This brings the compensation of the Executive Board
members directly in line with the interests of shareholders, employees, consumers, and other
stakeholders.
The variable performance-related compensation consists of the Performance Bonus and the share-based
LTIP Bonus.
47
adidas
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3
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STATEMENTS
Performance Bonus
As the annual variable performance-related component, the Performance Bonus serves as compensation
for the Executive Board's performance in the past financial year in line with the short-term development of
the Company. It incentivizes operational success accompanied by profitable growth within the established
strategic framework. At the beginning of the financial year, the Supervisory Board establishes the
respective weighted performance criteria. In case of 100% target achievement, the target amount of the
Performance Bonus corresponds to 25% of the target direct compensation of the respective Executive
Board member.
Criteria, weighting, and cap
The amount of the Performance Bonus is determined based on the achievement of, generally, four
weighted criteria. Two of these criteria are the same for all Executive Board members and are overall
weighted at 60% ('shared criteria'). In line with the strategic focus on sustainable growth and profitability,
the Supervisory Board has generally established the following financial performance criteria for the two
shared criteria:
Currency-neutral sales growth (weighting: 30%)
Increase in the operating margin (weighting: 30%)
Both criteria are directly linked to the annual guidance externally communicated and, at the same time,
follow directly from the - also externally communicated - long-term growth targets of adidas.
5
In case of 100% target achievement, the target direct compensation (total annual compensation without
other benefits and pension benefits) is composed of
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25% Performance Bonus, and
45% LTIP Bonus.
TOTAL ANNUAL COMPENSATION AND MAXIMUM COMPENSATION
The notional maximum total annual compensation of an individual Executive Board member can be derived
from the fixed compensation, the capped variable performance-related compensation components, the
other benefits, and the pension benefits. The percentage of the fixed compensation components (fixed
compensation, other benefits, 11 and pension benefits) amounts to approximately 41% of the target total
annual compensation. Based on a 100% target achievement, the percentage of the Performance Bonus
amounts to approximately 21% and the percentage of the LTIP Bonus amounts to approximately 38% of
the target total annual compensation.
In addition, in accordance with § 87a section 1, sentence 2, no. 1 AktG, the Supervisory Board has
determined an absolute amount (in euros) for the annual maximum compensation. The annual maximum
compensation amounts to € 11,500,000 for the Chief Executive Officer and € 5,150,000 for each of the
ordinary Executive Board members per financial year. The maximum compensation includes all fixed and
variable compensation components.
COMPOSITION OF TARGET DIRECT COMPENSATION AND ANNUAL TOTAL TARGET COMPENSATION
30%
Target Direct Compensation
25%
45%
Performance-related compensation components
Fixed
compensation
Performance
Bonus
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LTIP Bonus
Pension benefit
4
3
2
ANNUAL REPORT 2021
1
Annual Total Target Compensation
adidas
11 The amounts of other benefits may vary in the individual financial years. In general, a target amount of up to 3% of the target direct compensation is
considered. The actual amount may be higher or lower.
The fixed compensation consists of an annual fixed salary, which is based on the responsibilities and the
experience of the individual Executive Board member as well as on market conditions. It ensures an
Fixed compensation
The fixed non-performance-related compensation consists of the fixed compensation, other benefits, and
pension benefits.
FIXED NON-PERFORMANCE-RELATED COMPONENTS
Other benefits
46
COMPENSATION REPORT
60
Based on the actual target achievements, this results in the maximum achievable degree of overall target
achievement of 150% (2020: 0%) for each Executive Board member for the performance year 2021. The
Executive Board members have to invest the full Grant Amount after deducting applicable taxes and social
security contributions ('LTIP Payout Amount') into the acquisition of adidas AG shares. The LTIP bonus for
the 2021 LTIP tranche will be paid out to Executive Board members following approval of the consolidated
financial statements and invested into the acquisition of adidas AG shares on April 1, 2022. The shares
purchased are subject to a lock-up period that ends on December 31, 2025. The Executive Board members
may only dispose of the shares after expiration of the lock-up period.
adidas
1,800,000
4,180,097
1,200,000
38%
0
1,800,000
3,156,126
100%
1,289,459
4,089,460
1 Other benefits may vary in amount in the individual financial years. In general, a target amount of up to 3% of the target direct compensation is considered. The actual amount may be higher
or lower.
2 Based on existing commitments, the current members of the Executive Board who were appointed before January 1, 2021, are granted pension benefits in the form of a defined contribution
pension plan. The virtual pension account of the respective Executive Board member is credited annually with an amount equal to a percentage set by the Supervisory Board (2021: 50%) based
on the individual annual fixed compensation. The pension expenses for the pension benefits are calculated using actuarial calculations and therefore vary individually for each member of the
Executive Board.
3 Based on the new compensation system for the members of the Executive Board, the compensation structure and thus the target total annual compensation of the members of the Executive
Board was adjusted as of January 1, 2021. Furthermore, a new target direct compensation was set for Kasper Rorsted in connection with his reappointment as member of the Executive Board
and Chairman of the Executive Board effective August 1, 2021. The target direct compensation of Martin Shankland was furthermore adjusted as of January 1, 2021, in order to align the
compensation levels of the ordinary members of the Executive Board of the adidas AG.
2021 PERFORMANCE BONUS
In accordance with the current compensation system, the Supervisory Board has determined the following
performance criteria for the 2021 financial year:
currency-neutral sales growth,
an increase in the operating margin, and
1,380,096
100%
3,246,763
Target total compensation³
1,289,459
1,289,459
800,000
80,000
800,000
80,000
409,459
409,459
two criteria relating to the respective Executive Board functions and individual performance of the
Executive Board members.
0
0
1,000,001
LTIP 2021/2025
1,200,000
37%
0
(2021 tranche)
2,800,001
The financial targets set for the Performance Bonus were based on the company guidance communicated
at the beginning of the 2021 financial year and are therefore in line with the strategic focus on sustainable
growth and profitability.
In the 2021 financial year, the individual criteria relating to the respective Executive Board functions
focused on, in particular, the commercial success of key sales channels, the increase in market shares
and members, Diversity, Equity, and Inclusion, cash flow generation, and operational efficiency. These
were thus directly related to the strategy and its financial goals of sustainable growth, profitability, and
cash flow generation, which are based on the strategic focus on credibility, consumer experience, and
sustainability. Furthermore, these criteria were directly in line with the defined success factors for the
implementation of the strategy: the employees of the Company, a mindset of innovation across all
dimensions of our business, as well as using the speed and agility of digitalization throughout the entire
value chain.
150%
+15.1%
100%
+11.1%
50%
+7.1%
0%
+19.1%
Increase in the operating margin to¹
10.1%
200%
9.6%
150%
9.1%
100%
8.6%
Degree of target achievement
*****
200%
Degree of target achievement
57
57
adidas
1
ANNUAL REPORT 2021
2
3
+23.1%
4
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
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For the 2021 financial year, the following threshold values were defined for the determination of target
achievement in respect of currency-neutral sales growth and increasing the operating margin:
PERFORMANCE BONUS: CALCULATION OF THE DEGREE OF TARGET ACHIEVEMENT FOR THE 2021 FINANCIAL YEAR
Currency-neutral sales growth¹
TO OUR SHAREHOLDERS
666,667
1,000,001
0
4
TO OUR SHAREHOLDERS
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TARGET TOTAL ANNUAL COMPENSATION 2021 IN €
Amanda Rajkumar
Global Human Resources, People and Culture
3
in % of the
target total
Martin Shankland
Global Operations
in % of the
target total
compen-
sation
2021
compen-
in €
2021
sation
2
5
Target total compensation³ 3,227,746
100%
1,361,079
1,800,000
4,161,080
1,350,000
3,631,271
37%
0
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2,025,000
1,531,271
4,681,271
56
56
adidas
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ANNUAL REPORT 2021
100%
50%
min.
in €
80,000
500,096
15%
500,096
500,096
409,459
Variable performance-
800,000
related compensation
57%
0
2,800,001
1,866,667
Performance Bonus 2021
666,667
21%
1,866,667
max.
800,000
80,000
2%
min.
max.
Fixed non-performance-
related compensation
1,380,096
43%
1,380,096
80,000
1,289,459
800,000
25%
800,000
Other benefits¹
Pension benefits
(pension expenses)²
80,000
Fixed compensation
8.1%
0%
1 Continuing operations.
absolute increase in net income from continuing operations compared to respective previous year and
share of sustainable articles offered.
The targets set for the 2021 LTIP tranche were based on the long-term growth targets announced at the
beginning of the 2021 financial year as part of the new strategy, 'Own the Game.' On the one hand, this
reflected the strategic target of sustainably increasing net income from continuing operations and thus
creating the basis for an attractive return for our shareholders. On the other hand, the key strategic focus
for adidas to further drive change in the field of sustainability and to move from stand-alone initiatives to a
scaled and comprehensive sustainability program has been integrated into the Executive Board
compensation.
adidas
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2
3
-
4
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STATEMENTS
For the 2021 financial year, the following threshold values were defined for the determination of target
achievement of the increase in net income from continuing operations and the share of sustainable
articles offered:
LTIP 2021/2025: CALCULATION OF THE DEGREE OF TARGET ACHIEVEMENT FOR THE 2021 FINANCIAL YEAR
Increase in net income from continuing operations
5
compared to the previous year
As part of the compensation system for Executive Board members, the Supervisory Board has defined the
following performance criteria for each of the five performance years (2021 to 2025) of the LTIP 2021/2025:
138%
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Based on the targets actually achieved, this results in an overall degree of target achievement between
93% and 138% for the individual Executive Board members for the year under review (2020: 40%-75%).
The Performance Bonus Amount for 2021 will be paid after approval of the consolidated financial
statements in March 2022.
2021 PERFORMANCE BONUS: INDIVIDUAL OVERALL DEGREES OF TARGET ACHIEVEMENT
Kasper Rorsted
Roland Auschel
LTIP 2021/2025:2021 LTIP TRANCHE
Brian Grevy
Amanda Rajkumar
Martin Shankland
126%
114%
93%
138%
134%
Harm Ohlmeyer
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+€ 1,071 million
+€ 831 million
1 Percentage point increase in the share of sustainable articles (by count) offered at the points-of-sale compared with respective previous season (comparison of
Spring/Summer 2021 with Spring/Summer 2022). The percentage of sustainable articles (by count) offered at the points-of-sale in Spring/Summer 2021
amounted to 60.6%. The definition of sustainable articles is based on the proportion of environmentally preferred material content. For apparel and
accessories/gear, the environmentally preferred material content is based on article weight (at least 25% recycled content or 50% sustainable cotton; excluding
trims), for footwear (only upper part) it is based on material components (at least 25% of the components used contain 50% or more recycled content) or article
weight (at least 25%). Only articles with verified environmentally preferred material contents are included. Licensed articles are excluded. Without Reebok.
The strategic targets set for Executive Board members in the 2021 financial year were achieved as follows:
LTIP 2021/2025: TARGET ACHIEVEMENT IN THE PERFORMANCE YEAR 2021
Performance criterion
100% target value
Actual value 2021
Degree of target
achievement
+4pp
+Opp
Increase in net income from
+€ 831 million
+€ 1,031 million
183%
Share of sustainable articles offered
+8pp
+8.2pp
103%
continuing operations compared to
the previous year
+€ 951 million
0%
100%
+€ 711 million
+€ 591 million
Degree of target
achievement
200%
150%
100%
50%
50%
0%
+16pp
+12pp
+8pp
Degree of target
achievement
200%
150%
Share of sustainable articles offered¹
(2021 tranche)
TO OUR SHAREHOLDERS
3
130%
The individual targets set for Executive Board members in the 2021 financial year were achieved as
follows:
2021 PERFORMANCE BONUS: INDIVIDUAL CRITERIA - TARGET ACHIEVEMENT
Degree of target
Weighting
Performance criterion
achievement
9.4%
20%
Average target achievement of
Success of the direct-to-consumer business and Cash
flow
100%
20%
20%
Average target achievement of Brand Heat,
Diversity, Equity, and Inclusion, and logistics efficiency
Success of the direct-to-consumer business
163%
0%
Kasper Rorsted
Roland Auschel
9.1%
30%
The shared targets set for Executive Board members in the 2021 financial year were achieved as follows:
2021 PERFORMANCE BONUS: SHARED CRITERIA - TARGET ACHIEVEMENT
Performance criterion
Currency-neutral
sales growth¹
Increase in operating
margin to¹
Increase to
1 Continuing operations.
30%
Increase by
100% target value
+15.1%
2021 actual value
Degree of target
achievement
+16.3%
115%
Weighting
4
20%
200%
108%
20%
Logistics efficiency
200%
Martin Shankland
20%
Cost management in the supply chain
Succession planning
120%
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adidas
1
59
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ANNUAL REPORT 2021
2
58
Attracting new members
20%
195%
20%
Brand heat
95%
Brian Grevy
20%
Sales growth of the Women's business
0%
Amanda Rajkumar
20%
200%
Harm Ohlmeyer
20%
Cost management
120%
20%
Diversity, Equity, and Inclusion
Cash flow
0
1,380,096
1,200,000
LTIP
target
amount
Share of
20%
Actual target achievement
sustainable articles
Grant Amount, which
is to be invested into
acquisition of adidas AG
shares after deducting
applicable taxes and social
security contributions
Actual target achievement
1 Comparison of target values determined at the beginning of the financial year with values achieved in the financial year.
2 The individual target amount in case of 100% target achievement is determined in accordance with the applicable compensation structure for each Executive
Board member. The overall degree of target achievement is the sum of all degrees of target achievement.
MALUS AND CLAWBACK PROVISIONS
In order to ensure sustainable management and development of the Company, the terms and conditions of
the Performance Bonus and of the LTIP 2021/2025 contain malus and clawback provisions which allow the
Supervisory Board at its equitable discretion, under defined circumstances, to partially or completely
reduce the variable compensation, or partially or completely reclaim variable compensation already paid.
Such circumstances are material misstatements in the financial reports, serious compliance violations
and violations of duty as well as breaches of the company-internal rules of conduct by the Executive Board
member, which would lead to an unjustified bonus payment in the context of the Performance Bonus or
the LTIP 2021/2025. Moreover, in the event of violations of duty by Executive Board members, claims for
damages arise under stock corporation law.
SHARE OWNERSHIP GUIDELINES
In order to further align the interests of the Executive Board with those of the shareholders, Share
Ownership Guidelines are in place which require the Executive Board members to build substantial
positions in adidas AG shares during their appointment and after a four-years build-up phase. The target
for the Chief Executive Officer is a total value of 300% and for the other Executive Board members a total
value of 200% of the individually granted annual fixed compensation.
COMMITMENTS UPON COMMENCEMENT OR TERMINATION OF THE EXECUTIVE BOARD MANDATE
Commencement of Executive Board mandate
In exceptional cases, the Supervisory Board is entitled to make payments (in cash or in the form of an
additional one-off commitment of a variable compensation, which can be subject to a lock-up period if
shares are granted) to newly appointed Executive Board members in order to reimburse them for lost
compensation from a previous employment or to cover the costs of relocating, whereby any such
payments are limited to the actually incurred compensation losses or costs for relocation. Any such
compensation payments granted are disclosed transparently and in detail in the annual Compensation
Report.
54
37%
adidas
80%
Multiplication of the target amount with
the overall degree of target achievement²
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DETERMINATION OF TARGET ACHIEVEMENT AND BONUS AMOUNT WITHIN THE FRAMEWORK OF LTIP BONUS
Increase in net income
At the beginning of the financial year
LTIP 2021/2025
Determination of criteria and targets
Criterion
Determination of degrees
of target achievement
Weighting
Target/actual comparison'
Determination of bonus amount
At the end of the financial year
3
1
2
2
3
4
5
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ANNUAL TOTAL TARGET COMPENSATION
The following table shows the individual compensation components for each individual Executive Board
member under the current compensation system with 100% target achievement of the performance-
related compensation. It also includes the maximum and minimum achievable compensation.
TARGET TOTAL ANNUAL COMPENSATION 2021 IN €
Kasper Rorsted
Chief Executive Officer
in % of the
target total
compen-
2021
EXECUTIVE BOARD COMPENSATION 2021
ANNUAL REPORT 2021
1
55
3
4
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adidas
Termination of Executive Board mandate
In case of premature termination of tenure in the absence of good cause, the Executive Board service
contracts cap potential severance payments at a maximum of twice the total annual compensation, not
exceeding payment claims for the remaining period of the service contract ('Severance Payment Cap'). The
Executive Board member does not receive a severance payment if they terminate tenure prematurely at
their own request, or if there is good cause for the Company to terminate the employment relationship.
Furthermore, in line with an earlier compensation system, the company has agreed that Executive Board
member Roland Auschel will receive a follow-up bonus of 75% of the Performance Bonus granted to him
for the last full financial year in the event of termination of his service contract. This follow-up bonus is
payable in two tranches, twelve and 24 months following the end of the contract.
Commitments to Executive Board members upon premature termination of tenure due to a change of
control are not agreed.
Post-contractual competition prohibition
In principle, Executive Board members are subject to a post-contractual competition prohibition of two
years. As consideration, for the duration of the competition prohibition, the Executive Board members
generally receive a monthly compensation amount totaling 50% of the monthly fixed compensation last
received, subject to offsetting (e.g., of income from other occupations). Taking into account the time limits
stipulated in the service contract, the company may waive the post-contractual competition prohibition for
the former Executive Board member. If the departed Executive Board member receives pension payments
from the Company (based on existing old commitments), this compensation is offset against any pension
benefits owed by the Company during the period of the competition prohibition. The compensation for
periods of competition prohibition possibly paid on a monthly basis to departing Executive Board members
is offset against any severance payments potentially to be paid by adidas.
SIDELINE ACTIVITIES OF EXECUTIVE BOARD MEMBERS
Executive Board members may only take on sideline activities with or without remuneration, in particular
supervisory board mandates in group-external companies, with the prior approval of the Supervisory
Board. Group-internal mandates are deemed covered by the contractually agreed Executive Board
compensation. The Supervisory Board decides whether compensation for group-external mandates is
credited to the Executive Board compensation.
Unless otherwise agreed in the individual case, if the service contract ends upon the Executive Board
member reaching the age of 65 or upon non-renewal of the service contract, the Executive Board member
is entitled to receive an annual fixed compensation on a pro rata basis as well as a potential prorated
Performance Bonus and a potential prorated LTIP Bonus.
Roland Auschel
Global Sales
2
1
+€ 225 million to +€ 425 million
+€ 225 million to +€ 425 million
+€ 225 million to +€ 425 million
+€ 225 million to +€ 425 million
At the beginning of each financial year, the Supervisory Board sets a target value for a 100% target
achievement within the framework of the predetermined target value corridors, taking into account the
circumstances of the respective financial year. In this way, it can be ensured that the Executive Board is
appropriately incentivized to achieve the ambitious financial target of increasing net income from
continuing operations by 2025. SEE SECTION 'OUTLOOK FOR 2022'
In case the target set by the Supervisory Board for increasing net income from continuing operations is not
met in one of the performance years 2022 to 2025, both the lower and upper limit of the target value
corridor will automatically increase by 50% of the amount of the shortfall of the specified target value
proportionally over the term of the remaining, subsequent performance years of the LTIP 2021/2025. If the
increase in net income from continuing operations in a performance year is above the set target value,
both the lower and upper limit of the target value corridor will automatically decrease by 50% of the
amount exceeding the set target value proportionally over the term of the remaining, subsequent
performance years of the LTIP 2021/2025. This mechanism ensures that in each performance year the
Executive Board is adequately incentivized to achieve the ambitious long-term 2025 net income target.
For illustration: If, for example, the increase in net income in the performance year 2022 is € 90 million
below the set target for a 100% target achievement, the existing lower and upper limits of the target value
corridors for the remaining three performance years will be increased by € 15 million each (50% of the
€ 90 million shortfall, proportionally allocated over three years). If the increase in net income in the
performance year 2023, for example, exceeds the set target for a 100% target achievement by € 40 million,
the existing lower and upper limits of the target value corridors for the remaining two performance years
will be reduced by € 10 million each (50% of the € 40 million excess, proportionally allocated over two
years).
51
adidas
1
Increase in net income from continuing operations
+€ 831 million
ANNUAL REPORT 2021
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
Share of sustainable articles offered
2025 (compared to 2024)
2023 (compared to 2022)
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
2024 (compared to 2023)
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
increase in net income from continuing operations compared to the previous year of € 831 million (100%
target achievement). At the beginning of the 2022 financial year, based on the actual results for the
2021 financial year, the Supervisory Board set a target value corridor for the increase in net income from
continuing operations for each of the performance years of the four-year period 2022 to 2025, in line with
the planned growth target to increase net income from continuing operations by an average of 16% to 18%
per annum until 2025. When determining the target corridor, an increase in net income from continuing
operations by an average of 17% per annum (midpoint of the growth target of an average of 16% to 18%
per annum until 2025) was taken as a basis. This corresponds to a total amount of € 1.3 billion over the
four-year period and thus to an amount of € 325 million per year. In addition, a spread of ± € 100 million
was set around the midpoint in order to be able to take into account the circumstances of the respective
financial year. This results in a target corridor of +€ 225 million to +€ 425 million per year for the four-
year period from 2022 to 2025.
For the period 2021 to 2025, the Supervisory Board has therefore set the following target value corridors
for the increase in net income from continuing operations:
LTIP 2021/2025: FINANCIAL CRITERION
Performance year
2021 (compared to 2020)
2022 (compared to 2021)
5
ANNUAL REPORT 2021
As part of 'Own the Game,' we aim to move to a comprehensive sustainable offering at scale. Our ambition
is that 90% of our articles will be sustainable by 2025. We define articles as sustainable when they show
environmental benefits versus conventional articles due to the materials used, meaning that they are - to
a significant degree - made with environmentally preferred materials. The majority of the environmentally
preferred materials currently used are recycled materials and more sustainable cotton. Additionally,
innovative materials like biobased synthetics and more sustainably grown natural materials are used in a
small scale already and will become increasingly relevant in the future. To qualify as a sustainable article,
environmentally preferred materials have to exceed a certain pre-defined percentage of the article weight.
The applied criteria for environmentally preferred materials and the percentage of the article weight are
defined based on standards reflecting latest developments in our industry, competitor benchmarks, and
expert opinions.
For the 2021 financial year, the Supervisory Board has set a target value of 8 percentage points (100%
target achievement) for the increase of the share of sustainable articles offered. The target values for each
of the performance years of the four-year period 2022 to 2025 were set by the Supervisory Board at the
beginning of the 2022 financial year. From the 2022 financial year, an absolute percentage value will be set
as the target value for 100% target achievement. Furthermore, the underlying definition of sustainable
articles for the performance years 2022 to 2025 has been adjusted to reflect the latest developments in
our industry, competitive benchmarks, and expert opinions. The percentages of the required proportion of
environmentally preferred materials of the article weight have been increased significantly, which
corresponds to our ambition to significantly expand our commitment to sustainability in the years to come.
In this context, we have also decided to define the required proportion of environmentally preferred
materials in footwear based on the total shoe weight.
20252
Share of sustainable articles offered
+8pp
70%
78%
84%
90%
20242
1 Percentage point increase in the share of sustainable articles (by count) offered at the points-of-sale compared with respective previous season (comparison of
Spring/Summer 2021 with Spring/Summer 2022). The percentage of sustainable articles (by count) offered at the points-of-sale in Spring/Summer 2021
amounted to 60.6%. The definition of sustainable articles is based on the proportion of environmentally preferred material content. For apparel and
accessories/gear, the environmentally preferred material content is based on article weight (at least 25% recycled content or 50% sustainable cotton; excluding
trims), for footwear (only upper part) it is based on material components (at least 25% of the components used contain 50% or more recycled content) or article
weight (at least 25%). Only articles with verified environmentally preferred material contents are included. Licensed articles are excluded. Without Reebok.
2 Percentage of sustainable articles (by count) offered at the points-of-sale (average of Fall/Winter season of the current financial year and Spring/Summer
season of the following financial year). The definition of sustainable articles is based on the proportion of environmentally preferred material of the article
weight. For apparel (excluding trims), the environmentally preferred material content is required to amount to at least 70%, for accessories/gear (excluding
trims) at least 50% and for footwear (full shoe) at least 20% of the article weight. Only articles with verified environmentally preferred material contents are
included. Licensed articles are excluded. Without Reebok.
met.
Determination of target achievement and bonus amount
At the end of the performance year, the actual target achievement of each Executive Board member, which
is based on a comparison of the predefined target values with the values achieved in the performance
year, is assessed by the Supervisory Board ('target/actual comparison').
If the actual increase in net income from continuing operations compared to the previous year or the share
of sustainable articles offered lies between the predefined threshold values, the degree of target
achievement is determined based on a sliding scale. Taking into account the predefined weightings, the
Supervisory Board determines the factor by which the LTIP target amount is multiplied by adding up these
degrees of target achievement ('overall degree of target achievement'). In this way, the bonus amount of
the annual LTIP tranche ('Grant Amount') is determined, which is paid out to the Executive Board member
for the respective annual LTIP tranche for the performance year following the approval of the consolidated
financial statements of adidas. The Executive Board members have to invest the full Grant Amount after
deducting applicable taxes and social security contributions ('LTIP Payout Amount') into the acquisition of
adidas AG shares. The shares purchased are subject to a lock-up period. This lock-up period expires at the
end of the fourth financial year following the performance year. The Executive Board members may only
dispose of the shares after expiration of the lock-up period.
53
53
adidas
The overall degree of target achievement (sum of all degrees of target achievement) for the LTIP Bonus is
capped at a maximum of 150% of the individual LTIP Bonus target amount. Both criteria are designed in
such a way that the degree of target achievement may also be zero. If the overall degree of target
achievement lies at or below 50%, the Executive Board member is not entitled to the LTIP Bonus.
Consequently, the Bonus for the annual LTIP tranche may be omitted entirely if targets are clearly not
When determining the target achievement of the share of sustainable articles offered, only articles for
which the material composition could be verified are taken into account. This non-financial performance
criterion is part of the combined non-financial statement, which is subject to an audit in accordance with
ISAE 3000 by an external auditor. For the 2021 financial year, this audit was commissioned and carried out
with limited assurance.
20232
20211
52
52
adidas
1
ANNUAL REPORT 2021
2
3
20222
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
For the period from 2021 to 2025, the Supervisory Board has therefore set the following target values for
the share of sustainable articles in our offering:
LTIP 2021/2025: ESG CRITERION
Performance year
TO OUR SHAREHOLDERS
2021
Due to this mechanism, the compensation which the Executive Board members eventually receive from
each of the LTIP 2021/2025 tranches is also directly dependent on the share price development during the
respective four-year lock-up period and is thus dependent on the long-term performance of the Company.
The Executive Board members are entitled to any dividends distributed in connection with these shares
during the lock-up period.
compen-
min.
max.
Fixed non-performance-
related compensation
1,361,079
42%
1,361,079
compen-
sation
1,361,079
Fixed compensation
800,000
25%
Other benefits
Pension benefits
(pension expenses)²
80,000
1,531,271
2%
in €
min.
3,637,485
100%
1,490,818
4,710,819
TARGET TOTAL ANNUAL COMPENSATION 2021 IN €
Brian Grevy
Global Brands
2021
max.
Harm Ohlmeyer
2021
in % of the
target total
in % of the
target total
compen-
in €
sation
Chief Financial Officer
10,686,460
800,000
80,000
15%
0
2,800,001
2,100,000
58%
0
3,150,000
Performance Bonus 2021
58%
666,667
0
1,000,001
750,000
21%
0
1,125,000
LTIP 2021/2025
21%
481,079
1,866,667
Variable performance-
481,079
800,000
80,000
481,079
900,000
90,000
684
42%
1,531,271
related compensation
in % of the
target total
2%
900,000
90,000
900,000
90,000
541,271
15%
541,271
541,271
25%
3,394,794
1,531,271
8,255,905
25%
2,083,333
2,083,333
920,000
25%
920,000
920,000
2,083,333
Other benefits1
3%
208,333
208,333
92,000
3%
92,000
92,000
208,333
Pension benefits
Fixed compensation
1,490,818
100%
in €
sation
min.
max.
in €
sation
1,490,818
min.
Fixed non-performance-
related compensation
3,394,794
41%
3,394,794
3,394,794
41%
max.
(pension expenses)²
1,490,818
13%
2,604,167
766,667
21%
0
1,150,001
LTIP 2021/2025
3,125,000
0
0
1,380,000
38%
0
2,070,000
(2021 tranche)
1,103,127
Target total compensation³
4,687,500
21%
38%
Performance Bonus 2021
1,103,127
1,736,111
478,818
13%
478,818
478,818
1,103,127
4,861,111
Variable performance-
0
7,291,667
2,146,667
59%
0
59%
related compensation
3,220,001
99%
193,038
1%
2,000
1% 243,000
80,000 111,038
160,000
3,000
99%
Jing Ulrich
80,000
100%
0%
80,000
Günter Weigl
80,000
98%
3,000
163,000
80,000
2%
80,000
Bodo Uebber
163,000
1%
Frank Scheiderer
80,000
80,000
80,000
80,000
98%
3,000
2%
80,000
80,000
98%
81,000
4,000
164,000
Michael Storl
80,000
98%
2,000
2%
82,000
80,000
99%
1,000
2%
100%
99%
80,000
1%
2,231,000
146,885
48,962
99%
2,000
1%
197,847
1,600,000
600,000
31,000
28,000
1 Chairman of the Supervisory Board from the end of the Annual General Meeting on August 11, 2020. Deputy Chairman until the end of the Annual General Meeting on August 11, 2020.
2 Deputy Chairman from the end of the Annual General Meeting on August 11, 2020.
3 Member of the Supervisory Board from the end of the Annual General Meeting on May 12, 2021.
4 Member of the Supervisory Board from the end of the Annual General Meeting on August 11, 2020.
5 Member of the Audit Committee from the end of the Annual General Meeting on May 12, 2021.
6 Chairman of the Audit Committee from the end of the Annual General Meeting on August 11, 2020.
7 Chairman of the Audit Committee until the end of the Annual General Meeting on August 11, 2020.
MISCELLANEOUS
The Supervisory Board members have not received any loans or advance payments from adidas AG.
70
81,000
1% 2,228,000
80,000
99%
1,600,000
98%
4,000
2%
164,000
Supervisory Board member until the end of the Annual General Meeting on May 12, 2021
Herbert
Kauffmann?
28,932
28,932
100%
600,000
0%
80,000 128,962
99%
3,000
1%
211,962
Supervisory Board member until the end of the Annual General Meeting on August 11, 2020
Igor Landau,
Chairman of the
Supervisory Board
Total
57,863
1%
GROUP MANAGEMENT REPORT -
OUR COMPANY
99%
Total compensation
4,845,185
(incl. service cost)
Maximum compensation
5,150,000
in acc. with § 87a AktG
409,459
405,281
3,959,313
1,322,190
5,150,000
1 The Grant Amount that remains for the respective annual LTIP tranche after deduction of applicable taxes and social security contributions ('LTIP Payout Amount') has to be invested into the
acquisition of adidas AG shares. These shares are subject to a lock-up period.
2 As a liquidity management measure, against the background of the coronavirus pandemic, the Executive Board had decided in April 2020 to waive the Performance Bonus and LTIP Bonus for
the 2020 financial year. For the 2020 financial year, a special bonus was granted to the members of the Executive Board incumbent as at December 31, 2020, for their outstanding performance
in leading the company in times of the coronavirus pandemic. The special bonus amounted to 25% of the LTIP target amount determined for the 2020 financial year for each Executive Board
member. The special bonus was granted share-based and invested into the acquisition of adidas AG shares after deducting applicable taxes and social security contributions in line with the
conditions of the LTIP 2018/2020. The shares purchased are subject to a lock-up period which ends upon expiry of the month in which the Annual General Meeting of adidas AG for the 2024
financial year takes place. The current compensation system adopted in 2021 no longer permits the granting of special bonuses.
3 Additional disclosure. Neither compensation granted nor due in accordance with § 162 AktG.
4 Contractually agreed Performance Bonus target amount 2020 and LTIP bonus target amount 2018/2020 (2020 tranche) due to intra-year appointment of Brian Grevy (with effect from
February 1, 2020) to the Executive Board. Service costs 2020 stated pro rata temporis. Brian Grevy additionally received a compensation on a like-for-like basis for a bonus forfeited at his
former employer in the amount of € 1,000,000.
5 Appointment of Amanda Rajkumar to the Executive Board with effect from January 1, 2021. For a bonus forfeited at her former employer, Amanda Rajkumar received a compensation on a
like-for-like basis in the amount of € 688,311.
The total annual compensation of the Executive Board for the 2021 financial year amounts to
€ 31.513 million. This represents an increase of approximately 177% on the previous year
(2020: € 11.376 million). Of this total annual compensation, € 6.530 million was attributable to one-year
performance-related compensation (2020: € 0) and € 14.183 million to multi-year performance-related
compensation (2020: € 1.482 million). No further one-year or multi-year performance-related
compensation was paid to the Executive Board members. The increase in total compensation compared to
the previous year is due to the Executive Board's decision in the 2020 financial year to waive the
Performance Bonus and LTIP bonus for the 2020 financial year as a liquidity management measure in
response to the coronavirus pandemic.
(service cost)³
500,096
Pension benefits
in acc. with § 162 AktG
Performance Bonus 2020
LTIP 2021/2025
1,800,000
(2021 tranche)1
1,800,000
LTIP 2018/2020
(2020 tranche)1
Special Bonus 20202
0
65
196,350
688,311
16%
Total compensation
4,345,089
100%
3,549,854
100%
916,909
100%
Other
adidas
1
ANNUAL REPORT 2021
Roland Auschel
Brian Grevy¹
Harm Ohlmeyer
Amanda Rajkumar²
478,818
472,699
3,810,788
4,950,191
3,399,789
481,079
6,191,418
386,686
468,855
541,271
500,435
2,511,708
2,109,847
500,096
484,639
Martin Shankland
409,459
895,932
920,000
1,111,383
Kasper Rorsted
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
MAXIMUM COMPENSATION
In the year under review, the company adhered to the maximum compensation specified in the
compensation system for Executive Board members (€ 11,500,000 for the Chief Executive Officer and
€ 5,150,000 for each ordinary Executive Board member per financial year). This adherence to the
maximum compensation is shown in the table above.
1,103,127
PENSION BENEFITS
PENSION COMMITMENTS IN THE 2021 FINANCIAL YEAR IN €
Service costs
Defined benefit obligation
Executive Board members incumbent as at
December 31, 2021
2021
2020
2021
2020
The service costs and defined benefit obligation for pension commitments that were granted to individual
Executive Board members appointed before January 1, 2021, are shown in the following.
893,333
Performance Bonus 2021
related components
386,686
541,271
500,435
(service cost)³
Total compensation
3,718,944
2,436,043
4,528,958
1,616,872
481,079
(incl. service cost)
5,150,000
5,150,000
in acc. with § 87a AktG
64
adidas
1
ANNUAL REPORT 2021
2
3
Maximum compensation
4
Pension benefits
100%
1,800,000
2,025,000
LTIP 2018/2020
(2020 tranche)1
0
0
Special Bonus 20202
209,524
241,945
in acc. with § 162 AktG
Other
49%
Total compensation
3,237,865
100%
2,049,357
100%
3,987,687
100%
1,116,437
1,000,000
405,281
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
720,559
related components
Fixed compensation
800,000
800,000
Other benefits
Pension allowance
163,445
29,854
23%
687,225
33,334
in % of the
total com-
pensation
79%
Variable performance-
2,693,333
62%
2,720,000
77%
196,350
21%
2020
GROUP MANAGEMENT REPORT -
OUR COMPANY
829,854
963,445
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
COMPENSATION GRANTED AND DUE FOR THE EXECUTIVE BOARD MEMBERS IN THE 2021 FINANCIAL YEAR IN €
Amanda Rajkumar5
Global Human Resources, People and Culture
Martin Shankland
Global Operations
2021
2020
2021
22%
in % of the
in €
pensation
in €
in % of the
total com-
pensation
in % of the
total com-
in €
pensation
in €
Fixed non-performance-
total com-
(2021 tranche)¹
1,380,109
Total
The compensation paid for a committee chairmanship shall also cover the membership in such
committee. The members of the Steering Committee, the Mediation Committee, the Nomination
Committee, and committees that are established on an ad hoc basis do not receive additional
compensation. If a Supervisory Board member is a member of more than one committee, the member
only receives compensation for their task in the committee with the highest compensation.
MATURITY AND PRO-RATED GRANTING
The compensation is due after the end of the Company's financial year. The granting of the compensation
depends on the duration of the appointment of the Supervisory Board members. If a member belongs to
the Supervisory Board or a committee for only part of a financial year, the fixed compensation for
Supervisory Board membership and additional compensation for membership in a committee are reduced
accordingly on a pro rata temporis basis.
ATTENDANCE FEE
For each personal attendance of meetings of the Supervisory Board and/or its committees requiring such
personal attendance, Supervisory Board members receive an additional attendance fee of € 1,000.
Members of committees that are formed on an ad hoc basis shall not receive an attendance fee. If several
meetings take place on one day, the attendance fee is only paid once.
EXPENSES
The Supervisory Board members are reimbursed for necessary expenses and travel expenses incurred in
connection with their mandates as well as for the VAT potentially payable on their compensation.
UPPER LIMIT
The upper limit for the compensation of the members of the Supervisory Board is determined by the fixed
compensation, the amount of which individually depends on the duties assumed on the Supervisory Board
or its committees, and the attendance fee, which is determined on the basis of the personal participation
in Supervisory Board and committee meetings.
SUPERVISORY BOARD COMPENSATION 2021
FIXED COMPENSATION AND ATTENDANCE FEE
In accordance with the current compensation system, the total compensation paid to the Supervisory
Board in the 2021 financial year amounted to € 2.2 million (2020: € 2.2 million). In addition, attendance
fees totaling € 31,000 (2020: € 28,000) were paid. To ensure the safety of all persons involved during the
ongoing coronavirus pandemic, the Supervisory Board and its committees continued to meet primarily in
virtual form during the year under review.
69
adidas
1
ANNUAL REPORT 2021
2
3
4
200% of the base amount
€ 160,000
100% of the base amount
Audit Committee
Chair
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
COMPENSATION FOR MEMBERSHIP IN A COMMITTEE
Membership
€ 40,000
General Committee
Chair
€ 80,000
Membership
€ 80,000
50% of the base amount
100% of the base amount
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
% of total
com-
pensation
Total
Chairman of the
240,000
80,000
99%
2,000
1%
fee
322,000
55,519
99%
2,000
1% 248,557
Supervisory Board1
lan Gallienne,
Deputy Chairman
160,000
of the Supervisory
191,038
68
com- Attendance
pensation
% of total
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
The following table shows the compensation for the individual Supervisory Board members for the
2021 financial year, for which the underlying service has been fully rendered by the balance sheet date on
December 31, 2021. The annual fixed compensation for Supervisory Board members is paid at the end of
the financial year. Payment may be made in December of the respective financial year or January of the
following year. Attendance fees are generally paid in January of the following year, i.e., after the final
Supervisory Board meeting in December of the respective financial year.
COMPENSATION GRANTED AND DUE FOR THE MEMBERS OF THE SUPERVISORY BOARD IN THE 2021 FINANCIAL YEAR IN €
2021
2020
Supervisory Board
members incumbent as
at December 31, 2021
Thomas Rabe,
Committee
function
Supervisory
Board
function
% of total
Committee
function
com- Attendance
pensation
com-
fee
pensation
Total
Supervisory
Board
function
% of total
Furthermore, the Supervisory Board members receive additional compensation for membership in certain
committees; in this regard, too, compensation is increased if the committee chair is assumed. The amount
of the respective additional compensation is based on the base amount determined for the Supervisory
Board members and depends on the tasks and responsibilities connected with the respective committee
membership.
ADDITIONAL COMPENSATION FOR MEMBERSHIP IN A COMMITTEE
300% of the base amount
Compensation for competition
450,000
100%
283,602
100%
56,217
prohibition¹
Pension payments²
Total compensation
in % of the
total com-
pensation
450,000
283,602
1,000
56,217
Herbert Hainer
Chief Executive Officer
until September 30, 2016
2021
in % of the
total com-
pensation
in €
100%
100%
662,078
662,078
100%
100%
in €
in €
3,513,850
2,876,484
15,274,594
11,698,458
1 Executive Board member with effect from February 1, 2020.
2 Executive Board member with effect from January 1, 2021.
COMMITMENTS UPON TERMINATION OF THE EXECUTIVE BOARD MANDATE
There were no intra-year changes to the Executive Board during the year under review. The benefits
granted to Executive Board members upon termination of tenure are explained in detail in the
compensation system. SEE SECTION 'COMMITMENTS UPON COMMENCEMENT OR TERMINATION OF THE EXECUTIVE BOARD MANDATE"
PAYMENTS TO FORMER MEMBERS OF THE EXECUTIVE BOARD
in % of the
total com-
pensation
The following table shows the compensation granted and due in the 2021 financial year to former
Executive Board members.
Karen Parkin
Global Human Resources
until June 30, 2020
Eric Liedtke
Global Brands
Gil Steyaert
Global Operations
2021
until December 31, 2019
2021
until February 26, 2019
2021
in €
in % of the
total com-
pensation
COMPENSATION GRANTED AND DUE IN ACCORDANCE WITH § 162 AKTG IN €
769,776
100%
2 Individualized disclosure of pension payments to former members of the Executive Board departed after December 31, 2011. Former member of the Executive Board departed prior to
December 31, 2011, received pension payments amounting to € 2,289,074 in the financial year 2021.
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
COMPENSATION OF THE SUPERVISORY BOARD MEMBERS
The compensation system that has been applicable for the members of the Supervisory Board since
January 1, 2021, was adopted by the shareholders at the Annual General Meeting on May 12, 2021, in
accordance with § 120a section 4 AktG. The compensation resolved by the Annual General Meeting on
May 11, 2017, was thus confirmed without changes. The compensation system for the members of the
Supervisory Board is set out in § 18 of the Articles of Association of adidas AG; there are no additional or
supplementary agreements. With respect to the monitoring and advising of the Executive Board, the
compensation received by adidas AG Supervisory Board members reflects the responsibility involved as
well as individual workload and time required. The current compensation system is permanently available
on the company's website. ADIDAS-GROUP.COM/S/COMPENSATION
COMPENSATION SYSTEM
When determining the compensation, particular consideration is given to ensure that it is appropriate and
in line with the current market levels in order to also attract suitable international candidates. This
contributes to the execution of the corporate strategy and promotes the long-term development of the
Company.
The compensation for Supervisory Board members consists of a fixed compensation for their work on the
Supervisory Board ('base amount') and an additional compensation for committee work, as well as an
attendance fee. The Supervisory Board members are not granted performance-related compensation. The
granting of a fixed compensation corresponds to the prevailing practice in other public listed companies
and has proved to be successful. The Executive Board and Supervisory Board are of the opinion that a fixed
compensation for the Supervisory Board members is most suitable to strengthen the independence of the
Supervisory Board and to take into account the advisory and supervisory function of the Supervisory Board,
which have to be performed independently of the company's success.
In addition, the Supervisory Board members are reimbursed for expenses they incur in connection with
their role.
GROUP MANAGEMENT REPORT -
OUR COMPANY
COMPENSATION FOR SUPERVISORY BOARD FUNCTION
COMPENSATION FOR SUPERVISORY BOARD FUNCTION
Membership
€ 80,000
Base amount
Deputy Chair
Chair
€ 160,000
€ 240,000
200% of the base amount
Each Supervisory Board member receives a fixed compensation for their work on the Supervisory Board,
which is paid following the end of the respective financial year. The Supervisory Board Chair and the two
deputies receive a higher fixed compensation in recognition of their additional responsibilities.
1 Benefits granted to a departing Executive Board member upon termination of their Executive Board mandate are reported in the compensation report in the total payments to former
members of the Executive Board and their surviving dependents as a total amount for the financial year in which the Executive Board member left the company. Compensation for post-
contractual competition prohibition constitutes compensation granted to members of the Executive Board in accordance with § 162 AktG. The compensation is paid monthly to the departed
former Executive Board members for the duration of the competition prohibition, subject to offsetting (e.g., of income from other use of their work capacity).
TO OUR SHAREHOLDERS
3
66
adidas
1
ANNUAL REPORT 2021
2
3
4
5
TO OUR SHAREHOLDERS
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
MISCELLANEOUS
The Executive Board members do not receive any additional compensation for intra-group mandates. The
Executive Board members have not received any loans or advance payments from adidas AG.
Furthermore, no Executive Board member received any payments or promises of payments from third
parties with regard to their work at adidas.
67
adidas
1
ANNUAL REPORT 2021
2
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
40,000
LTIP 2021/2025
Performance Bonus 2020
2018
1,083,852
538,849
1,170,246
581,974
1,577,143
1,702,857
828,394
894,425
255.00
219.20
255.00
219.20
2,113
2,654
3,248
4,080
Number of purchased shares
End of lock-up period³
May 31, 2023 May 31, 2022
May 31, 2023
2019
2020
2018
2019
May 31, 2024 May 31, 2023
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
2
3
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
May 31, 2022
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
LTI BONUS: ACQUISITION OF SHARES IN THE CONTEXT OF THE LONG-TERM VARIABLE COMPENSATION IN €
LTIP tranche¹
Grant Amount
Payout Amount
Purchase price²
Karen Parkin'
Eric Liedtke
2020
5
1 As a liquidity management measure, the Executive Board had decided in April 2020 to waive the LTIP Bonus for the 2020 financial year. Thus, no adidas AG shares were acquired by the
Executive Board members as part of the 2020 LTIP tranche. For the 2020 financial year, a special bonus was granted to the members of the Executive Board incumbent as at
December 31, 2020, for their outstanding performance in leading the company in times of the coronavirus pandemic. The special bonus amounted to 25% of the LTIP target amount
determined for the 2020 financial year for each Executive Board member. The special bonus was granted share-based and invested into the acquisition of adidas AG shares after deducting
applicable taxes and social security contributions in line with the conditions of the LTIP 2018/2020. The current compensation system adopted in 2021 no longer permits the granting of
special bonuses.
2 Share price at the time of the acquisition of shares. LTIP tranche 2018: Purchase price as at April 1, 2019, LTIP tranche 2019: Purchase price as at September 1, 2020 (as a liquidity
management measure in light of the coronavirus pandemic, the LTIP Payout Amount for the LTIP tranche 2019 was paid out in August 2020), special bonus 2020: Purchase price as at
April 1, 2021.
3 In accordance with a previous compensation system, the lock-up period of the three annual tranches of the LTIP 2018/2020 expires in the third financial year after the acquisition of the
shares upon expiry of the month in which the Annual General Meeting of adidas AG takes place. As of the 2021 financial year and in line with the new compensation system for the members
of the Executive Board, the lock-up period of the five annual tranches of the LTIP 2021/2025 expires at the end of the fourth financial year following each performance year.
31, 2021
Total value of
adidas AG shares
% of fixed
compensation
fixed
compensation
End of build-up
phase
2,083,333
15,765
253.20
as at December
3,991,698
300%
April 30, 2025
920,000
7,250
253.20
1,835,700
200%
200%
April 30, 2025
192%
1,842
Target in % of
shares
as at December
31, 2021
4 Executive Board member with effect from February 1, 2020. Prorated participation in the LTIP 2018/2020 in the 2020 financial year (LTIP tranche 2020).
5 Executive Board member with effect from January 1, 2021. First-time participation in the LTIP 2021/2025 in the 2021 financial year (LTIP tranche 2021).
6 Executive Board member with effect from March 4, 2019. Prorated participation in the LTIP 2018/2020 in the 2019 financial year (LTIP tranche 2019].
7 Executive Board member until June 30, 2020.
8 Executive Board member until December 31, 2019.
MALUS AND CLAWBACK PROVISIONS
The Supervisory Board did not make use of the available malus and clawback provisions in the 2021
financial year.
SHARE OWNERSHIP GUIDELINES: SHARE OWNERSHIP IN 2021
The share ownership of the Executive Board members incumbent as at December 31, 2021, in relation to
their respective annual fixed compensation is disclosed individually in the following:
SHARE OWNERSHIP IN THE 2021 FINANCIAL YEAR IN €
Share price
Executive Board members
December 31, 2021
Kasper Rorsted
Roland Auschel
Brian Grevy¹
Harm Ohlmeyer
Amanda Rajkumar²
Martin Shankland³
Total number of
2021 fixed
compensation
incumbent as at
380
255.00
270.75
Roland Auschel
2019
2018
571,429
300,144
270.75
3,154,285
1,656,788
3,405,714
1,788,851
262,857
138,065
1,450,972
762,125
1,566,629
2020
1,108
219.20
270.75
255.00
822,873
219.20
8,160
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2024 May 31, 2023
3,753
May 31, 2022
509
255.00
6,497
2,988
2018
2020
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
2019
5
As at December 31, 2021, the total number of adidas AG shares acquired since 2018 in the context of the
variable performance-related compensation and that are subject to a lock-up period amounts to
43,243 shares (2020:40,371 shares). The numbers of adidas AG shares acquired by the respective
Executive Board members are shown in the following table.
LTI BONUS: ACQUISITION OF SHARES IN THE CONTEXT OF THE LONG-TERM VARIABLE COMPENSATION IN €
LTIP tranche¹
Grant Amount
Payout Amount
Purchase price²
Number of purchased shares
End of lock-up period³
Kasper Rorsted
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
800,000
LTI BONUS: ACQUISITION OF SHARES IN THE CONTEXT OF THE LONG-TERM VARIABLE COMPENSATION IN €
Grant Amount
2,804
May 31, 2024
May 31, 2024 May 31, 2023 May 31, 2022
LTI BONUS: ACQUISITION OF SHARES IN THE CONTEXT OF THE LONG-TERM VARIABLE COMPENSATION IN €
LTIP tranche¹
Grant Amount
Payout Amount
Purchase price²
Number of purchased shares
2,232
End of lock-up period³
2020
Amanda Rajkumar5
2019
Martin Shankland'
2018
2020
2019
2018
196,350
103,132
894,469
469,821
61
LTIP tranche¹
469
219.20
Payout Amount
Purchase price²
Number of purchased shares
End of lock-up period³
Brian Grevy'
Harm Ohlmeyer
2020
2019
2018
406
2020
2018
209,524
110,052
270.75
241,945
127,081
270.75
1,083,852
569,295
1,170,246
614,670
255.00
2019
0
406
102,799
11,500,000
in acc. with § 87a AktG
63
5,150,000
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
COMPENSATION GRANTED AND DUE FOR THE EXECUTIVE BOARD MEMBERS IN THE 2021 FINANCIAL YEAR IN €
Brian Grevy❝
Global Brands
Harm Ohlmeyer
Chief Financial Officer
Maximum compensation
(incl. service cost)
1,680,129
4,367,390
Other
Total compensation
8,989,637
100%
2,602,845
100%
3,888,572
100%
1,207,430
2021
100%
Pension benefits
1,103,127
1,111,383
478,818
472,699
(service cost)³
Total compensation
10,092,764
3,714,228
in acc. with § 162 AktG
2020
2021
2020
Pension allowance
17,865
106,499
27,687
27,687
in % of the
total com-
pensation
78%
Variable performance-
related components
Other benefits
2,420,000
209,524
10%
3,060,000
77%
241,945
22%
Performance Bonus 2021
620,000
1,035,000
75%
262,857
846,806
733,333
in €
in % of the
total com-
pensation
in €
in % of the
total com-
pensation
in % of the
total com-
in €
pensation
in €
900,000
Fixed non-performance-
25%
839,833
41%
927,687
23%
874,493
related components
Fixed compensation
800,000
817,865
571,429
Special Bonus 20202
(2020 tranche)1
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
62
5
Furthermore, in the interest of consistent and transparent reporting, the service costs for the defined
contribution pension commitments granted to individual Executive Board members appointed before
January 1, 2021, are shown in the following; however, this does not represent an actual allocation to the
Executive Board members and does not qualify as compensation granted and due as specified in
§ 162 AktG.
COMPENSATION GRANTED AND DUE FOR THE EXECUTIVE BOARD MEMBERS IN THE 2021 FINANCIAL YEAR IN €
Kasper Rorsted
Chief Executive Officer
2021
2020
2021
Roland Auschel
Global Sales
2020
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
in €
The following table shows the compensation granted and due in the 2021 financial year to individual
Executive Board members incumbent as at December 31, 2021, for which the underlying service has been
fully rendered by the balance sheet date on December 31, 2021, or on December 31, 2020. The variable
performance-related compensation components for the year under review are payable only following
approval of the consolidated financial statements of the past financial year.
1 Executive Board member with effect from February 1, 2020. Prorated participation in the LTIP 2018/2020 in the 2020 financial year (LTIP tranche 2020).
2 Executive Board member with effect from January 1, 2021. First-time participation in the LTIP 2021/2025 in the 2021 financial year (LTIP tranche 2021).
3 Executive Board member with effect from March 4, 2019. Prorated participation in the LTIP 2018/2020 in the 2019 financial year (LTIP tranche 2019).
13%
200%
April 30, 2025
900,000
5,505
253.20
1,393,866
155%
200%
TOTAL ANNUAL COMPENSATION IN 2021: COMPENSATION GRANTED AND DUE
April 30, 2025
200%
April 30, 2025
800,000
2,222
253.20
562,610
70%
200%
April 30, 2025
800,000
253.20
in % of the
total com-
pensation
in % of the
total com-
pensation
related components
6,875,000
76%
571,429
22%
2,944,000
76%
262,857
22%
Variable performance-
Performance Bonus 2021
874,000
Performance Bonus 2020
0
0
LTIP 2021/2025
4,687,500
2,070,000
(2021 tranche)1
LTIP 2018/2020
2,187,500
in €
78%
920,000
24,572
in €
in % of the
total com-
pensation
in €
Fixed non-performance-
related components
2,114,637
24%
2,031,417
78%
in % of the
total com-
pensation
944,572
944,572
Fixed compensation
2,083,333
Other benefits
Pension allowance
31,303
2,000,000
31,417
920,000
24,572
24%
99%
100%
1%
99%
80,000
134,068
2%
3,000
98%
51,068
80,000
Kathrin Menges5
31,038
100%
31,038
81,000
1,000
99%
80,000
Christian Klein4
Kersee³
52,068
1,000
2%
1%
Roland Nosko
80,000
82,000
2%
2,000
98%
80,000
Beate Rohrig
122,000
2%
2,000
98%
40,000
80,000
122,000
2%
2,000
98%
40,000
80,000
81,000
1,000
98%
51,068
of the Supervisory
202,000
1%
2,000
99%
40,000
201,000 160,000
0%
1,000
100%
40,000
160,000
Deputy Chairman
Udo Müller,
Board²
127,557
1%
1,000
2,000
Board
Petra Auerbacher
80,000
98%
Jackie Joyner-
81,000
1%
1,000
99%
80,000
82,000
2%
2,000
99%
98%
Roswitha Hermann
81,000
1%
1,000
99%
80,000
82,000
2%
2,000
80,000
1,000
1%
81,000
1%
15,519
202,000 111,038
80,000
82,000
99%
2,000
98%
80,000
2%
Nassef Sawiris
Wirtschaftsprüferin
STRONG STOCK MARKET RECOVERY IN 2021
In 2021, the robust recovery of the global economy supported by strong monetary and fiscal stimulus led
to a sturdy rebound of global stock markets. Toward the end of the year, the emergence of new
coronavirus variants as well as multi-year high inflation levels left their mark on markets around the
world. Nevertheless, the DAX gained almost 16% in 2021, while the EURO STOXX 50 and the MSCI World
Textiles, Apparel and Luxury Goods Index increased by 21% and 22%, respectively. Despite the company's
strong operational and financial performance, the adidas AG share underperformed the broader stock
market and ended 2021 with a decrease of 15% compared to the prior year. The challenging market
environment in China, ongoing challenges from the covid-19 pandemic and the impact of supply chain
disruptions weighed on the development of the adidas AG share.
LEVEL 1 ADR UNDERPERFORMS COMMON STOCK
Our Level 1 ADR closed 2021 at US $ 144.00, representing a decrease of 21% versus the prior year level
(2020: US $ 182.99). The more pronounced decrease of the Level 1 ADR price compared to the ordinary
share price was due to the valuation of the US dollar versus the euro in 2021. The number of Level 1 ADRs
outstanding increased to 10.8 million at year-end 2021 compared to 8.9 million at the end of 2020. The
average daily trading volume increased to around 65,000 ADRs in 2021 (2020: around 55,000). Further
information on our ADR program can be found on our website. ADIDAS-GROUP.COM/ADR
ADIDAS AG SHARE MEMBER OF IMPORTANT INDICES
The adidas AG share is part of a variety of high-quality indices around the world such as the DAX, the
EURO STOXX 50 Index as well as the MSCI World Textiles, Apparel and Luxury Goods Index. At December
31, 2021, our weighting in the DAX was 3% (2020: 5% within the DAX 30). Within the DAX, we ranked 12 on
market capitalization (2020: 6 within the DAX 30) at year-end 2021. The lower weighting and rank
compared to the prior year are mainly related to the expansion of the DAX from 30 to 40 stocks.
77
Wirtschaftsprüfungsgesellschaft
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
adidas
Global stock markets were volatile in 2021 but ended the year with a strong performance. The DAX
gained almost 16% and the EURO STOXX 50 increased by 21%, in line with the MSCI World Textiles,
Apparel and Luxury Goods Index that was up 22%. Despite the company's strong operational and
financial performance, the adidas AG share underperformed the broader stock market and ended 2021
with a decrease of 15% compared to the prior year. As a result of the strong operational and financial
performance in 2021 as well as Management's confidence in the strength of the company's financial
position and long-term growth aspirations, we will propose a dividend per share of € 3.30 at our 2022
Annual General Meeting.
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
(German Public Auditor)
Schmidt
Wirtschaftsprüfer
[German Public Auditor)
76
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
4
Huber-Straßer
OUR SHARE
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
22
101
152
249
Source: Bloomberg.
FIVE-YEAR SHARE PRICE DEVELOPMENT'
| Dec 31, 2016
MSCI World Textiles, Apparel and Luxury Goods Index
300
200
150
100
50
adidas AG
DAX
Dec 31, 2021 |
250
EURO STOXX 50
54
31
PERFORMANCE OF THE ADIDAS AG SHARE AND IMPORTANT INDICES AT YEAR-END 2021 IN %
KPMG AG
3 years
5 years
10 years
adidas AG
(15)
39
69
418
16
50
38
130
DAX
21
43
GROUP MANAGEMENT REPORT -
OUR COMPANY
1 year
Financial criterion: Increase in net income from continuing operations compared to the previous year
(weighting: 80%)
2022 LTIP TRANCHE
1
adidas
75
CHAIRMAN OF THE SUPERVISORY BOARD
THOMAS RABE
For the Supervisory Board
February 2022
ANNUAL REPORT 2021
CHIEF EXECUTIVE OFFICER
-EURO STOXX 50
K-8e1
For the Executive Board
The target achievement of the performance criteria set for the 2022 financial year and the related
determination of the variable performance-related compensation will be disclosed in detail in the 2022
Compensation Report.
1 Percentage of sustainable articles (by count) offered at the points-of-sale (average of Fall/Winter season of the current financial year and Spring/Summer
season of the following financial year). The definition of sustainable articles is based on the proportion of environmentally preferred material content of the
article weight. For apparel (excluding trims), the environmentally preferred material content is required to amount to at least 70%, for accessories/gear
(excluding trims) at least 50% and for footwear (full shoe) at least 20% of the article weight. Only articles with verified environmentally preferred material
contents are included. Licensed articles are excluded. Without Reebok.
0%
50%
KASPER RORSTED
100%
2
4
Munich, February 25, 2022
Our objectives are to obtain reasonable assurance about whether the compensation report complies, in all
material respects, with the disclosure requirements pursuant to § 162 section 1 and 2 AktG, and to issue
an assurance report that includes our opinion. We planned and performed our examination to obtain
evidence about the formal completeness of the compensation report by comparing the disclosures made
in the compensation report with the disclosures required by § 162 section 1 and 2 AktG. In accordance with
§ 162 section 3 AktG, we have not examined whether the disclosures are correct or individual disclosures
are complete or whether the compensation report is fairly presented.
OUR RESPONSIBILITIES
The Executive Board and the Supervisory Board are responsible for the preparation of the compensation
report, including the related disclosures, in accordance with the requirements of § 162 AktG. The
Executive Board and the Supervisory Board are also responsible for such internal control as they have
determined necessary to enable the preparation of the compensation report that is free from material
misstatement, whether due to fraud or error.
RESPONSIBILITIES OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD
We conducted our examination of the compensation report in compliance with § 162 section 3 AktG taking
into account the IDW assurance standard: Examination of the compensation report pursuant to § 162 section 3
AktG (IDW ASS 870 (08.2021). Our responsibilities under this regulation and this standard are further
described in the 'Our Responsibilities' section of our assurance report. Our audit firm has applied the IDW
Standard on Quality Management 1: Requirements for Quality Management in Audit Firms (IDW QS 1). We
have complied with our professional duties pursuant to the German Public Accountants Act [WPO] and the
Professional Charter for Auditors/Chartered Accountants [BS WP/vBP], including the independence
requirements.
BASIS FOR OPINION
3
We have formally examined the compensation report of adidas AG, Herzogenaurach, for the financial year
from January 1 to December 31, 2021, to determine whether the disclosures pursuant to § 162 section 1
and 2 AktG have been made in the compensation report. In accordance with § 162 section 3 AktG, we have
not examined the content of the compensation report. In our opinion, the accompanying compensation
report complies, in all material respects, with the disclosure requirements pursuant to § 162 section 1 and
2 AktG. Our opinion does not cover the content of the compensation report.
To adidas AG, Herzogenaurach
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON EXAMINATION OF THE
COMPENSATION REPORT PURSUANT TO § 162 SECTION 3 AKTG
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
5
OPINION
150%
200%
achievement
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
For the 2022 financial year, the following threshold values were defined for the determination of target
achievement of the increase in net income from continuing operations and the share of sustainable
articles offered:
2
1
adidas
74
The target values for the annual LTIP tranches follow directly from the externally published long-term net
income growth targets of the Company and from the sustainability target for the share of sustainable
articles offered. With regard to the increase in net income from continuing operations compared to the
previous year, taking into account the expected circumstances of the financial year 2022, in particular the
elimination of a large portion of the stranded costs related to the Reebok divestiture, the Supervisory
Board has set the target value for 100% target achievement at +€ 375 million and therefore at the upper
end of the predetermined target value corridor of +€ 225 million to +€ 425 million.
On the one hand, this reflects the strategic target of sustainably increasing net income from continuing
operations and thus creating the basis for an attractive return for our shareholders. On the other hand, the
key strategic focus for adidas to further drive change in the field of sustainability and to move from
effective individual initiatives to a scaled and comprehensive sustainability program is integrated into the
Executive Board compensation.
ESG criterion: Share of sustainable articles offered (weighting: 20%)
The Supervisory Board has defined the following financial and ESG-related performance criteria linked to
strategic objectives for each of the five performance years (2021 to 2025) of the LTIP 2021/2025:
ANNUAL REPORT 2021
LTIP 2021/2025: TARGET FIGURES FOR THE 2022 FINANCIAL YEAR
Increase in net income from continuing operations
compared to the previous year
+€ 735 million
Degree of target
0%
50%
100%
150%
200%
Degree of target
achievement
62%
66%
70%
74%
78%
Share of sustainable articles offered¹
+€ 15 million
+€ 195 million
+€ 375 million
+€ 555 million
The individual criteria for the 2022 financial year will be disclosed ex-post in the 2022 Compensation
Report in order to avoid communicating competition-relevant operating and strategic considerations in
advance. In this Compensation Report, the respective target achievements will be explained transparently,
and the concrete calculation of the Performance Bonus Amount will be set out comprehensively.
MSCI World Textiles, Apparel & Luxury Goods Index
Deutsche Börse Prime Consumer
THE ADIDAS AG SHARE
300
250
200
150
289.69
295.40
adidas
350
1
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
ANNUAL REPORT 2021
5
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
400
80
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
DIVIDEND PROPOSAL OF € 3.30 PER SHARE
As a result of the strong operational and financial performance in 2021, the company's financial position
as well as Management's confidence in our long-term growth aspirations, the adidas AG Executive and
Supervisory Boards will recommend paying a dividend of € 3.30 per dividend-entitled share to
shareholders at the Annual General Meeting on May 12, 2022. This represents an increase of 10%
compared to the prior-year dividend (2021: € 3.00). The total payout of € 632 million (2021: € 585 million)
reflects a payout ratio of 42.4% of net income from continuing operations based on the number of shares
outstanding at December 31, 2021 (2021: 126.8%). This is within the target range of between 30% and 50%
of net income from continuing operations as defined in our dividend policy.
ADIDAS RETURNS € 1.6 BILLION TO SHAREHOLDERS IN 2021
As part of our new strategy 'Own the Game' we plan to share between € 8 billion and € 9 billion with our
shareholders in the five-year period between 2021 and 2025 through regular dividend pay-outs in a range
of between 30% and 50% of net income from continuing operations and share buybacks. Against this
background, the Executive Board decided in June 2021 to start repurchasing shares in the second half of
the year. Between July 1 and November 25, 2021, adidas AG bought back 3,471,205 shares for a total
amount of € 1 billion. After the completion, adidas decided to cancel a total of 8,316,186 treasury shares,
reducing the company's share count and stock capital accordingly. Including the dividend payment of
€ 585 million in May 2021, adidas AG returned nearly € 1.6 billion to its shareholders in 2021. In addition,
the Executive Board decided in December 2021 to launch a multi-year share buyback program. During the
course of this program, starting in January 2022, the company plans to repurchase shares in an amount of
up to € 4 billion until 2025. Taking the share buyback activity in 2021 into consideration, adidas intends to
return up to € 5 billion to its shareholders through regular share buybacks during the five-year strategic
cycle.
450
STRONG INTERNATIONAL INVESTOR BASE
SHAREHOLDER STRUCTURE BY INVESTOR GROUP'
19% Private investors and
undisclosed holdings
1 As of January 2022.
79
81% Institutional investors
80
Based on our share register, we estimate that adidas AG currently has more than 125,000 shareholders
(2020: more than 115,000). In our latest ownership analysis conducted in January 2022, we identified
almost 100% of our shares outstanding. Institutional investors represent the largest investor group,
holding 81% of shares outstanding (2020: 86%). Private investors and undisclosed holdings account for
19% (2020: 11%). Lastly, adidas AG currently holds 0.3% of the company's shares as treasury shares
(2020: 3%); this decline versus the prior year mainly reflects the cancelation of 8,316, 186 treasury shares
in November 2021.
GROUP MANAGEMENT REPORT -
OUR COMPANY
In terms of geographical distribution, the North American market currently accounts for 31% of
institutional shareholdings (2020: 35%), followed by the UK and Ireland with 26% (2020: 26%). Identified
German investors hold 12% of institutional shareholdings (2020: 11%). Institutional investors from other
continental European countries account for 28% (2020: 24%) and 3% of institutional shareholders were
identified in other regions of the world (2020: 3%).
3% Rest of world
Dec.
252.55 281.60
258.80 301.95
30-day moving average
High and low share prices
1 Based on daily Xetra closing prices. Source: Bloomberg.
287.10 317.50
Nov.
305.40 322.70
263.70 301.45
260.10 284.05
249.40 298.40
245.00
266.35
31% North America
28% Continental Europe
299.05 336.25
SHAREHOLDER STRUCTURE BY REGION 12
Oct.
Aug.
12% Germany
26% United Kingdom & Ireland
1 As of January 2022.
2 Reflects institutional investors only.
MAJORITY OF ANALYSTS WITH A POSITIVE RATING OF ADIDAS AG SHARE
Around 35 analysts from investment banks and brokerage firms regularly publish research reports on
adidas. The majority of analysts recommend to 'buy' our share. This is reflected in the recommendation
split for our share as at December 31, 2021. 63% of analysts recommended that investors 'buy' our share
(2020: 37%), 31% advised investors to 'hold' our share (2020: 46%), and 6% recommended 'selling' our share
(2020: 17%).
ADIDAS AG HIGH AND LOW SHARE PRICES PER MONTH ' IN €
Sep.
274.60
261.70 300.00
Jan.
Feb.
Mar.
Apr.
May Jun.
Jul.
297.70
1 Index: December 31, 2016 = 100. Source: Bloomberg.
TO OUR SHAREHOLDERS
3
€
7.47
2.31
€
7.47
2.31
€
195,066,060
253.20
€
336.25
316.05
- DAX
€
245.00
166.92
297.90
€ in millions
Important indices
191,594,855
Number of shares outstanding at
year-end¹
shares
Basic earnings per share²
Diluted earnings per share²
Year-end price
Year high
Year low
2020
Market capitalization³
Dividend payout
Dividend payout ratio²
Dividend yield
Shareholders' equity per share³
Price-earnings ratio at year-end
Average trading volume per trading
day7
2021
Dividend per share
4
48,512
€
33.9
shares
546,483
128.9
808,394
1 All shares carry full dividend rights, excluding treasury shares.
2 Based on net income from continuing operations.
3 Based on number of shares outstanding at year-end, excluding treasury shares.
X
4 Subject to Annual General Meeting approval.
6 Based on basic EPS from continuing operations.
7 Based on number of shares traded on all German stock exchanges.
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adidas
1
ANNUAL REPORT 2021
2
5 Based on the number of shares outstanding at December 31, 2021.
58,110
33.09
€
3.304
3.00
€ in millions
6325
585
STOXX Europe 50
EURO STOXX 50
39.24
MSCI World Textiles, Apparel and Luxury Goods
The other two criteria are defined individually for the respective Executive Board member and are overall
weighted at 40% ('individual criteria'). These individual criteria allow for a further differentiation depending
on the specific operating and strategic challenges of each individual Executive Board function. For the two
individual targets, financial as well as non-financial performance criteria may be applied. These are
directly related to the corporate strategy and its financial goals of sustainable growth, profitability, and
cash flow generation, which are based on the strategic focus on credibility, consumer experience, and
sustainability. Furthermore, these criteria are directly related to the defined success factors for the
implementation of the strategy: the employees of the Company, a mindset of innovation across all
dimensions of our business as well as using the speed and agility of digitalization throughout the entire
value chain.
- FTSE4Good Index Series
%
42.45
126.8
%
1.0
MSCI World ESG Leaders Index
Both performance criteria are directly linked to the annual guidance externally communicated and, at the
same time, follow directly from the - also externally communicated - long-term growth targets of adidas.
1
100% target value
Roland Auschel
3,889
222%
1,207
(58%)
2,883
(8%)
3,129
(32%)
4,624
8,650
Brian Grevy²
58%
2,049
Harm Ohlmeyer³
3,988
257%
1,116
(48%)
2,164
(11%)
2,435
3,238
18%
(18%)
(10%)
employees in
Germany
108
15%
93
(15%)
110
11%
98
26
7,111
2%
(on a full-time
equivalent basis)
€ in thousands
Total annual compensation of Executive Board members € in thousands
Kasper Rorsted
8,990
245%
2,603
(59%)
6,381
96
2,059
Amanda Rajkumar4
4,345
4,883
Gil Steyaert8
56
(84%)
344
(91%)
3,838
74%
2,207
37%
(30%)
1,606
662
1%
653
(56%)
1,483
(36%)
2,324
(62%)
6,091
Payments to
Herbert Hainer⁹
3,434
153%
8,676
Martin Shankland5
3,550
287%
917
(52%)
1,920
Payments to former Executive Board members € in thousands
Karen Parkin
450
(92%)
100% target achievement in line
with guidance externally
communicated at the beginning
of the 2022 financial year
5,976
158%
2,315
(4%)
2,401
50%
1,604
Eric Liedtke
284
(43%)
500
(94%)
compensation of
Average annual
buch - HGB)
(Handelsgesetz-
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
RELATIVE COMPENSATION DEVELOPMENT: COMPENSATION GRANTED AND DUE FOR THE EXECUTIVE BOARD MEMBERS
2021
2020
2019
2018
201710
in €/%
Change
in %/pp
4
in €/%
in €/%
Change
in %/pp
in €/%
Change
in %/pp
in €/%
Change
in %/pp
Earnings development € in millions
Net sales¹
21,234
7%
Change
in %/pp
3
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
adidas
1
ANNUAL REPORT 2021
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
RELATIVE DEVELOPMENT OF COMPENSATION
The annual changes in the compensation for members of the Executive Board and the Supervisory Board,
in the average compensation for employees in Germany on a full-time equivalent basis, and in the
development of the company's earnings, are outlined in accordance with § 162 AktG in the following.
The development of the company's earnings is shown using key indicators that are also relevant for the
variable performance-related compensation of Executive Board members. The workforce of adidas AG
(including all employee groups) was used as relevant peer group representing all employees. In the 2021
financial year, the average total number of full-time equivalent employees was 7,143 (2020: 7,028). The
average employee compensation was calculated on the basis of annual personnel expenses for the peer
group. This includes the cost of wages and salaries, short- and long-term variable compensation
components, other benefits, employer's social security contributions, and pension expenses.
The following table shows the relative development of total compensation for the active members of the
Executive Board during the year under review. The performance-related variable compensation for
Executive Board members granted in accordance with the compensation system valid during the year
under review is shown for the year for which the compensation was agreed upon, and for which the
underlying service has been fully rendered by the balance sheet date on December 31, of the respective
financial year. The variable performance-related compensation components granted for the respective
financial year are payable only following approval of the consolidated financial statements for the past
financial year.
Pension payments to former members of the Executive Board as well as the compensation payments to
former members of the Executive Board, which, in addition to the annual Executive Board compensation,
also include any severance payments and any compensation owed under the post-contractual competition
prohibitions payable by the company on a monthly basis, are shown individually.
The annual service costs for the defined contribution pension commitments granted to active members of
the Executive Board appointed before January 1, 2021, are not shown in the following, as these costs do
not qualify as compensation granted and due as specified in § 162 AktG.
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1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
5
19,844
Executive Board
(16%)
8%
429
(78%)
1,918
12%
1,709
20%
1,430
operations¹
Net income of
adidas AG in
248%
accordance with
1,850
174%
674
(65%)
1,947
37%
1,424
159%
549
Commercial Code
the German
1,492
continuing
Net income from
21,915
3%
21,218
Gross margin¹
50.7%
1.0pp
49.7%
(2.3pp)
52.0%
0.2pp
51.8%
14.0pp
50.4%
Operating margin¹
9.4%
5.6pp
3.8%
(7.5pp)
11.3%
0.5pp
10.8%
1.0pp
9.8%
23,640
members who
1.3
(5%)
122
Roland Nosko
69
24%
86
2%
88
(8%)
81
66%
0%
134
31
161%
81
Christian Klein³
Kersee²
52
Jackie Joyner-
55
48%
81
Kathrin Menges
1%
122
134
163
Frank Scheiderer¹
70
24%
in €
87
2%
89
(9%)
81
(9%)
1%
57
43%
81
1%
82
Beate Rohrig
107
20%
129
4%
Nassef Sawiris
14
Hermann¹
82
128
58%
202
Deputy Chairman
lan Gallienne,
Supervisory Board¹
137
81%
249
30%
(25%)
322
Thomas Rabe,
Members of the Supervisory Board as at December 31, 2021 € in thousands
Change in %
in €
Change in %
in €
Change in %
in €
Change in %
2,289
Chairman of the
171
1%
169
Roswitha
58
40%
81
1%
82
Petra Auerbacher¹
Supervisory Board
71
22%
87
94%
169
20%
202
(0%)
201
Chairman of the
Udo Müller, Deputy
Board
of the Supervisory
131
29%
(1%)
164
82
112
4
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
RELATIVE COMPENSATION DEVELOPMENT: COMPENSATION GRANTED AND DUE FOR THE SUPERVISORY BOARD MEMBERS
2021
2020
2019
20186
2017
in €
3
Change in %
30%
Weighting
1 Continuing operations.
Increase in operating margin¹
Currency-neutral sales growth¹
Performance criterion
2022 PERFORMANCE BONUS: SHARED CRITERIA - TARGET FIGURES
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
46%
2
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
2,418
(4%)
2,515
2%
2,467
2%
2,424
left before
December 31, 2011
1 From continuing operations as reported in the Annual Report for the respective financial year. As of the 2021 financial year, Reebok is shown as discontinued operations.
2 Executive Board member with effect from February 1, 2020.
3 Executive Board member with effect from March 7, 2017.
4 Executive Board member with effect from January 1, 2021.
5 Executive Board member with effect from March 4, 2019.
6 Executive Board member with effect from May 12, 2017, until June 30, 2020. In addition to the compensation as a member of the Executive Board, the compensation disclosed for Karen Parkin for the 2020 financial
year also includes the severance payment granted to her in connection with her departure. From the date of her departure, for the duration of the contractually agreed competition prohibition Karen Parkin receives a
monthly compensation amounting to 50% of the last monthly fixed compensation paid.
7 Executive Board member until December 31, 2019. In addition to the compensation as a member of the Executive Board, the compensation disclosed for Eric Liedtke for the 2019 financial year also includes the
severance payment granted to him in connection with his departure. From the date of his departure, for the duration of the contractually agreed competition prohibition Eric Liedtke received a monthly compensation
amounting to 50% of the last monthly fixed compensation paid.
8 Executive Board member with effect from May 12, 2017, until February 26, 2019. In addition to the compensation as a member of the Executive Board, the compensation disclosed for Gil Steyaert for the 2019 financial
year also includes the severance payment granted to him in connection with his departure. From the date of his departure, for the duration of the contractually agreed competition prohibition, Gil Steyaert received a
monthly compensation amounting to 50% of the last monthly fixed compensation paid.
9 Chief Executive Officer and Executive Board member until September 30, 2016. The compensation disclosed for Herbert Hainer consists of compensation granted to him in connection with his departure as well as of
the monthly compensation paid to him for the duration of the contractually agreed competition prohibition in the amount of 50% of the last monthly fixed compensation. Since 2019, Herbert Hainer receives a monthly
pension payment, which is paid against the background of the defined benefit pension plan granted to him and is adjusted annually in the same proportion as well as at the same time as the statutory pensions in
Germany.
10 Increased compensation for the 2017 financial year for members of the Executive Board in light of the payout of the three-year LTIP Bonus (LTIP 2015/2017).
72
adidas
1
TO OUR SHAREHOLDERS
ANNUAL REPORT 2021
4
3
30%
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
164
(1%)
163
Günter Weigl¹
57
41%
80
0%
80
Jing Ulrich¹
46%
2
193
26%
243
Bodo Uebber1.4
58
40%
81
1%
82
Michael Storl¹
253%
112
55
58
5
Member of the Supervisory Board until the end of the Annual General Meeting on May 12, 2021
Herbert
ANNUAL REPORT 2021
1
adidas
73
Two of these criteria are the same for all Executive Board members and are overall weighted at 60%
('shared criteria'). In line with the strategic focus on sustainable growth and profitability, the Supervisory
Board of adidas AG has established the following financial performance criteria for the two shared criteria
for the 2022 financial year:
2022 PERFORMANCE BONUS
In accordance with the compensation system for the Executive Board, the Supervisory Board set the
targets and threshold values for the key criteria governing the variable performance-related
compensation components at the start of the 2022 financial year.
OUTLOOK FOR 2022
5 Supervisory Board member until the end of the Annual General Meeting on May 12, 2021. Chairman of the Audit Committee until the end of the Annual General Meeting on August 11, 2020.
6 Increase in Supervisory Board compensation as of July 1, 2017, in light of the adjusted compensation for members of the Supervisory Board resolved by the 2017 Annual General Meeting.
4 Chairman of the Audit Committee from the end of the Annual General Meeting on August 11, 2020.
The amount of the Performance Bonus is determined based on the achievement of four weighted criteria.
193
30%
252
1%
254
3 Supervisory Board member from the end of the Annual General Meeting on August 11, 2020.
1 Supervisory Board member from the end of the Annual General Meeting on May 9, 2019.
2 Supervisory Board member from the end of the Annual General Meeting on May 12, 2021.
Kauffmann5
(17%)
(73%)
212
Managers' transactions involving adidas AG shares (ISIN DE000A1EWWW0) or related financial
instruments, as defined by Article 19 of the European Market Abuse Regulation (MAR), conducted by
members of our Executive or Supervisory Boards, or by any person in close relationship with these
persons, are reported on our website. ADIDAS-GROUP.COM/S/MANAGERS-TRANSACTIONS
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2
GLOBAL BRANDS
MANAGEMENT REPORT
OUR COMPANY
STRATEGY
GLOBAL OPERATIONS
GLOBAL SALES
MANAGERS' TRANSACTIONS REPORTED ON CORPORATE WEBSITE
GROUP
➤ ADIDAS-GROUP.COM/S/VOTING_RIGHTS_NOTIFICATIONS SEE NOTE 25
ANNUAL REPORT 2021
VOTING RIGHTS NOTIFICATIONS PUBLISHED
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
5
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
GROUP MANAGEMENT REPORT -
OUR COMPANY
TO OUR SHAREHOLDERS
4
3
2
1
adidas
OUR PEOPLE
All voting rights notifications received in 2021 in accordance with §§ 33 et seq. of the German Securities
Trading Act (Wertpapierhandelsgesetz - WpHG) (§§ 21 et seq. German Securities Trading Act old version)
are published on our corporate website. Information on reportable shareholdings that currently exceed or
fall below a certain threshold can also be found in the Notes section of this Annual Report.
SUSTAINABILITY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
82
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
GLOBAL BRANDS
THE CONSUMER AT THE HEART OF EVERYTHING WE DO
Global Brands oversees the innovation, design, development and marketing of the company's sports and
lifestyle offerings. By constantly developing desirable products and providing inspiring experiences, the
function strives to build a strong image as well as trust and loyalty with consumers to capitalize on
growth opportunities in the sporting goods industry.
ADIDAS BRAND
The adidas brand has a long history and deep-rooted connection with sport. We believe that through sport,
we have the power to change lives. This is our purpose, and we live it every day by expanding the limits of
human possibilities, including and uniting people in sport and creating a more sustainable world. For us to
continue to transcend cultures and remain one of the most recognized and iconic brands, on and off the
field of play, we need to maintain credibility. This means delivering groundbreaking innovations in sports,
as well as cutting-edge fashion items that are culturally relevant. As we are continuously sharpening our
edges in adidas Performance' and 'Lifestyle,' we have introduced our new 'Sportswear' proposition as a
part of adidas' updated brand architecture.
With the first collection launching in 2022, 'Sportswear' will be the modern product born from sport and
worn for style, enabling self-expression and comfort. adidas 'Performance' is built and worn for sport,
focusing on providing the athlete with the best product to enable them to perform inside the lines of the
playing field. Leading our fashion and luxury segment, adidas Originals is inspired by sport and worn on
the streets. The Trefoil will celebrate iconic products that connect to culture, leveraging our exceptional
archive, and expanding into new premium segments.
ICONIC PRODUCT FRANCHISES
We are convinced that footwear has the highest influence on brand perception among product categories
and is a powerful driver of consumer desire, a proven lever for growing market share. Access to athlete
data, cutting-edge technological innovations and an archive that is unrivaled in the industry provide deep
insights and ample opportunity to create newness and innovation in footwear, adding new chapters to our
brand's rich heritage. At the same time, we have a clear strategy to reduce the number of footwear
models, putting a stronger focus on key franchises. Simply put, franchises are our most iconic symbols of
sport and culture acting as lighthouses for our brand. Franchises not only shape sport, but also influence
culture. They offer the best of adidas to the consumer while creating new trends and building brand equity.
They are directly targeted at the consumer through iconic designs, functionality and unique stories, and
have the potential to be iterated and expanded over time. Their life cycles are tightly managed to ensure
longevity and relevance with the consumer. Key footwear franchises for the adidas brand include, among
others, Ultraboost, NMD, and Superstar. In 2021, key footwear franchises of the adidas brand represented
more than 35% of its footwear business. On the apparel side, the brand continues to build out franchises
such as the MyShelter Jacket, the Tiro Pant, and the Z.N.E. Hoodie.
5
adidas
ANNUAL REPORT 2021
5
CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
2
3
4
TO OUR SHAREHOLDERS
GROUP MANAGEMENT REPORT -
OUR COMPANY
GROUP MANAGEMENT REPORT -
FINANCIAL REVIEW
1
GROUP MANAGEMENT REPORT -
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TO OUR SHAREHOLDERS
4
recycled materials, made to be remade, or made with natural and renewable materials. We define
articles as sustainable when they show environmental benefits versus conventional articles due to the
materials used, meaning they are - to a significant degree - made with environmentally preferred
materials.
What we do: We are committed to reducing the CO2e footprint of our product offerings as we work to
reach climate neutrality by 2050. We achieve this through initiatives such as driving zero-carbon within
our own operations and promoting environmental programs along our entire value chain in close
cooperation with our suppliers.
What we say: We are vocal about our efforts that focus on creating low-impact products that are made
to be remade. To guide our consumer to make more sustainable choices, we communicate clearly and
consistently, with simple measures that make it easy to understand our ambitions and our progress.
INNOVATION AND DIGITAL
Two strategic enablers set us up for success. The first is applying a mindset of deep and broad innovation
across all dimensions of our business. The second is using the speed and agility of Digital throughout our
entire value chain. These strategic enablers are particularly powerful when it comes to executing on the
three strategic focus areas - Credibility, Experience, and Sustainability - that support us in intensifying our
focus on the consumer and driving growth.
FINANCIAL AMBITION FOR 2025
'Own the Game' is designed to yield growth in terms of revenue, profitability, and cash generation, which in
turn creates long-term value for our shareholders. Therefore, we are focused on rigorously driving
execution and managing all of the factors under our control, which enables us to:
Achieve top-line growth above industry average: We aim to increase currency-neutral revenue at a
rate of between 8% and 10% per annum on average in the period between 2021 and 2025, where 2021
is the base year.
Further expand both gross and operating margin: We expect to expand our gross margin to a level of
between 53% and 55% and our operating margin to a level of between 12% and 14% by 2025.
Grow our bottom line sustainably: We plan to grow our net income from continuing operations by an
average of between 16% and 18% per annum in the period between 2021 and 2025, where 2021 is the
the base year.
Invest in future organic growth: We are committed to reinvesting between 3% and 4% of net sales into
our business by means of annual capital expenditure.
Deliver attractive cash return to shareholders: Based on the material growth in terms of revenue and
profitability, we will generate substantial cumulative free cash flow until 2025. The majority of it -
between € 8 billion and € 9 billion - will be made available and distributed to shareholders through a
consistent dividend pay-out in a range between 30% and 50% of net income from continuing
operations, complemented by share buybacks. In 2021, we bought back shares in an amount of
€ 1 billion. Including the dividend payment of € 585 million in May, we already returned nearly
€ 1.6 billion to our shareholders during the first year of 'Own the Game.'
As a global leader in our industry with a strong strategy in place, we are very well positioned for the years
ahead.
86
88
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1
ANNUAL REPORT 2021
2
3
BRAND DESIRABILITY FUELED BY INNOVATION AND COLLABORATIONS
In addition to leveraging iconic product franchises, creating innovative concepts to meet the needs of
athletes and consumers is a prerequisite to strengthening our market position and a premise to being the
best sports brand in the world. We remain highly committed to maintaining a full and innovative concept
pipeline, bringing new groundbreaking technologies and processes to life, investing in sustainability, and
exploring all the possibilities of digitalization. Technologies such as Boost, Lightstrike, Repetitor, 4D, and
Strung are proof points for our broader technology and innovation approach.
The modern innovation landscape extends beyond product and increasingly requires innovation teams to
consider the development of experiences and services, as well as the provision of greater levels of
transparency and direct integration of our consumer through co-creation. In partnership with our 'Trend &
Cultural Insights' teams, foresight and trend analyses are shared on an ongoing basis, documenting shifts
in society and culture. True to the vision of creative collaboration, our innovation approach is widely based
on this open-source mindset, which provides the starting point to build concepts of relevance.
We also collaborate with athletes and consumers, universities and innovative companies, as well as
national and international governments and research organizations. We are enhancing our innovative
collaboration with both our established partners such as BASF, Carbon, Parley for the Oceans and
Allbirds, whilst simultaneously seeking out new ones such as Pond Biomaterials, Spinnova, and Bolt
Threads.
Blue Version: This is the pinnacle of our apparel range as a fashion concept. The collection represents
a selection of our most iconic adidas Originals pieces which are authentically premiumized. The
products show that Originals - then, now, and in the future - can influence generations through high-
quality lifestyle products inspired by sportswear.
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ANNUAL REPORT 2021
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3
4
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CONSOLIDATED FINANCIAL ADDITIONAL INFORMATION
STATEMENTS
Forum: This sneaker shaped basketball culture in the 1980s. Designed to help players improve their
game, it dominated the court and later took over the streetwear scene. In 2021, the silhouette was re-
introduced to a new generation, supported through many exciting collaborative drops such as the 'Bad
Bunny Forum Back to School' sneaker. Here, adidas Originals and rapper Bad Bunny teamed up for a
new take on the silhouette.
adidas x Marimekko: In 2021, we unveiled a debut line with Marimekko, marking the first-ever sports
apparel collaboration for the iconic Finnish design house. The limited-edition collection featured a
lineup of beautiful, bold pieces that blend Marimekko's art of printmaking and functional style with
adidas' expertise in sports performance. The collaboration marked a true collision of icons, with a
shared history of pushing boundaries of innovation and style for over seven decades. The all-female
teams worked side by side to explore Marimekko's vaults to handpick timeless prints for this collection
and beyond.
IMPACTFUL AND EFFECTIVE MARKETING INVESTMENTS
An additional important building block of creating brand desirability and winning the consumer are our
marketing investments. adidas is focused on creating inspirational and innovative concepts that drive
consumer advocacy and build brand equity. The company historically spends almost half of its marketing
investment on partners, with the remainder spent on brand marketing activities such as digital,
advertising, point-of-sale, and grassroots activations. In addition, the company will further consolidate and
focus resources to create powerful brand statements overarching several categories under one narrative.
This will be achieved by focusing on two main drivers:
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Brand drivers: Brand campaigns are at the pinnacle of our communication strategy. They demonstrate
our purpose 'Through sport, we have the power to change lives,' conveying to consumers what adidas
stands for, and driving a globally consistent positioning. Furthermore, brand campaigns support
adidas' brand priorities of sport and culture credibility, sustainability, and inclusivity by establishing an
emotional connection through the brand narrative. adidas also authenticates the brand in using sport
moments as platforms to drive sports credibility by enabling athlete and event activations. Lastly, we
leverage our partnerships, for example with Beyoncé, Kanye West, and Pharrell Williams, to drive
brand heat and freshness in lifestyle through partner activation and special product executions.
Commercial drivers: Product campaigns are created to focus on a specific product franchise (e.g.,
Ultraboost or Forum). These campaigns are driven by a clear performance or style benefit and are
expressed through storytelling around products' unique selling propositions. Additional commercial
content is driving conversion at the point of sale (in-store and online) by highlighting a product feature
or benefit for key items, volume drivers, and key franchises.
Impossible is Nothing: In 2021, adidas (re-)launched the brand campaign 'Impossible is Nothing'
to impactfully demonstrate the brand attitude of rebellious optimism told through the stories of
sports marketing partners and entertainment influencers across categories globally. 'Impossible
is Nothing' was originally introduced in 2004 (with Muhammad Ali) and is now brought to a new
generation of athletes, artists, and consumers. When we relaunched our 'Impossible is Nothing'
brand campaign in spring 2021, optimism in the world was in short supply. Yet adidas chose to
see possibilities. We partnered with athletes and artists around the globe to share their stories of
hope, inclusion, sustainability, and belonging, inspiring all people to see their own possibilities.
The Impossible is Nothing' brand attitude launched in 50 countries resulting in over one billion
social media views, garnering over 18 million engagements. The campaign connected with people
who see themselves and their own story in the narrative. In fall/winter 2021, our 'Impossible is
Nothing' campaign continued with more stories focused on 'innovation' with the adizero
franchise, and 'credibility' with Lionel Messi, Peres Jepchirchir, and Candace Parker.
Techfit Period-Proof Tights: These are part of our commitment to better support the needs of our
diverse female community. We set out to create a product that helps athletes stay in sport throughout
their cycle by giving them an added layer of protection. After over two years of development and
rigorous testing, the Techfit Period-Proof Tights have a set of absorbent layers and a membrane that
help protect against leaks thanks to our new Flow Shield technology, giving athletes added confidence
whilst training through their period. The Techfit Period-Proof collection was our first step in creating
performance wear that supports women during their period, with more to come down the line.
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Beyond innovative technologies, sustainable concepts, and materials, key products and collaborations of
the 2021 business year include:
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COMMERCIALIZATION OF INNOVATIONS
We believe developing industry-leading technologies, materials and consumer experiences is only one
aspect of being an innovative leader. Equally important is the successful commercialization of those
innovative concepts.
We have a long heritage of innovation and strive to provide athletes with the best by creating high-
performance, competitive products. In 2021, we continued to serve consumers with innovative
technologies, materials and sustainable concepts built into our products:
4DFWD: With this, adidas has accelerated 4D's development from a conceptual innovation to a running
shoe available in large quantities and multiple variations that will continue to be scaled further. The
adidas 4D concept features midsoles 3D-printed with light and oxygen using Digital Light Synthesis, a
unique technology developed by Carbon, to produce high-performance footwear. The new adidas
4DFWD lattice midsole was chosen from one of five million possible structures and is made of 40% bio-
based material. The FWD cell redirects vertical impact forces forward leading to a 15% reduction of
peak braking force experienced by the athlete. The midsole pioneers a digital footwear component
creation process that eliminates the necessity of traditional prototyping or molding.
Adizero Adios Pro 2: The new iteration of our record-breaking elite performance shoe represents the
pinnacle of our running product offer. The shoe features two layers of re-sculpted Lightstrike Pro
midsole and the signature carbon-infused EnergyRODS. These are designed to mimic the foot's
metatarsals, delivering an anatomically driven transition from heel to toe, limiting energy loss and
providing a propulsive feeling. Beyond this, we were able to reduce the weight of the midsole, alter the
upper for a more natural fit, and add a Continental rubber outsole for better grip. The adizero Adios
Pro 2 is a high-performance running shoe created for elite athletes and was developed in collaboration
with some of the fastest athletes in the world. Since its launch, our athletes were able to break six
world records with this franchise.
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Futurenatural: Foot scans of thousands of basketball athletes worldwide were analyzed to create a
new last, or shoe mold that delivers an anatomically correct representation of an athlete's foot. The
one-piece shoe mold works with an athlete's natural movement to unlock total freedom of movement
and dynamic angles. The first iteration of the technology applied to footwear was featured on James
Harden's fifth signature basketball sneaker, the Harden Vol. 5. The textured upper of the shoe is forged
using extreme pressure from all directions and then assembled to the outsole creating a seamless
design. This offers the athlete a superior stability and full ground contact for a natural feel.
Predator Freak Vegan: With this, we revealed our first 100% vegan football boot, designed in
collaboration with Paul Pogba and Stella McCartney. The limited-edition boot offers the latest
performance innovations from the Predator franchise with vegan materials and components that meet
the requirements of football players on all levels. adidas Demonskin rubber spikes in signal orange
were calibrated by a computer algorithm to afford improved ball control and swerve.
Made To Be Remade (MTBR): The concept was introduced in 2019 with the Futurecraft. Loop but has
come a long way since. In 2021, we have increased our MTBR product line-up and made progress in our
efforts toward circularity. Every MTBR product has a QR code attached to it, functioning as a gateway to
a digital experience, educating and engaging consumers whilst also enabling them to return the product.
We are excited to be scaling MTBR across franchises with the Stan Smith and Terrex Free Hiker having
joined the line-up alongside the Ultraboost. Furthermore, our offering was expanded by new MTBR
Running and adidas by Stella McCartney apparel. With this, we are offering performance- and lifestyle-
focused MTBR footwear and apparel at a greater scale, providing more choice to our consumers.
adidas x Allbirds Futurecraft.Footprint: Seeing the possibilities of accelerating a carbon-neutral
future for sports and style, we teamed up with Allbirds to create a performance running shoe with a
carbon footprint of merely 2.94kg (measured against a comparable running shoe: adizero RC3 at
7.86kg CO2e emission) – a personal best for both brands. It is the result of a collective ambition to make
a performance running shoe with no carbon footprint. In under 12 months, we reimagined materials,
manufacturing techniques, and even packaging to reach the lowest possible CO2e impact - whilst
chasing the vision for a low-carbon shoe without compromising performance.
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OUR ATTITUDE: IMPOSSIBLE IS NOTHING
We are rebellious optimists driven by action to shape a future together and we see the world with
possibilities where others only see the impossible.
NEW STRATEGY 'OWN THE GAME' FOR THE PERIOD UNTIL 2025
'Own the Game' is our strategy that guides us through to 2025 - a plan rooted in sport. Sport is adidas'
past, present and future. 'Own the Game' puts the consumer at the heart of everything we do and is
brought to life by our people. Our strategic focus is on increasing brand credibility, elevating the
experience for our consumers and pushing the boundaries in sustainability. The execution of our strategy
is enabled by a mindset of innovation across all dimensions of our business as well as our digital
transformation. We own the game and drive significant growth.
'OWN THE GAME' IS OUR STRATEGY FOR THE PERIOD UNTIL 2025
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OWN THE
GAME
SPORT
CREDIBILITY
We are the best when we are the credible, inclusive, sustainable leader with a first or second position
regarding market share in each strategic category in the long term.
INNOVATION
CONSUMER
EXPERIENCE
SUSTAINABILITY
DIGITAL
GROWTH
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OUR MISSION: TO BE THE BEST SPORTS BRAND IN THE WORLD
We will always strive to expand the limits of human possibilities, to include and unite people in sport, and
to create a more sustainable world.
OUR PURPOSE: THROUGH SPORT, WE HAVE THE POWER TO CHANGE LIVES
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With sport playing an increasingly important role in more and more people's lives, both on and off the
field of play, we operate in a highly attractive industry. Based on our deep understanding of our
consumer and the authenticity of the adidas brand, we push the boundaries of products, experiences
and services. We do so according to our strategy ‘Own the Game,' which allows us to fully capitalize on
the acceleration of favorable long-term structural trends.
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Partnerships: We amplify our credibility through our partnerships by leveraging their power,
authenticity, and reach. We expand our portfolio of partners, which already includes Beyoncé, Jerry
Lorenzo, Kanye West, Pharrell Williams, Stella McCartney, and Yohji Yamamoto, all of whom continue
to play a significant role in wowing our consumers on the lifestyle side. Likewise, we continue to
leverage our partnerships with the biggest symbols in sport, be it with teams like Bayern Munich or
Real Madrid, athletes like Lionel Messi or Mikaela Shiffrin, or events like the Boston and Berlin
Marathons.
EXPERIENCE
To grow long-term relationships with our consumer, we excite and empower them by creating
personalized experiences in both digital and physical spaces. With this in mind, we accelerate our
transformation into a direct-to-consumer-led ('DTC-led') business built around membership.
Membership: With the launch of our membership program in 2018, we laid the foundation for offering
personalized experiences to our most valuable consumers. Through membership, we reward
engagement and purchasing activity by offering exclusive hype products, access to launches and
special events, and more. We are now ready to take this to the next level with the goal of increasing our
member base to around 500 million by 2025. In 2021, we reached 240 million members and are well on
track to achieve our 2025 ambition.
DTC-led: E-commerce continues to be our most important store. Both adidas.com and the adidas app
are seeing enhancements across the entire consumer journey. By 2025, our e-commerce business is
expected to account for between € 8 billion and € 9 billion of our company's net sales. In 2021, we
reached a level of € 3.942 billion. While e-commerce is the pinnacle of our DTC strategy, our physical
stores continue to play a crucial role in creating a physical and emotional connection with our brand.
Retail formats will be digitized with fully fledged omni-channel capabilities. The DTC business,
comprising our e-commerce as well as our physical stores, is projected to account for around half of
the company's net sales by 2025. In 2021, our DTC business accounted for 38% of the company's net
sales. We also continue to leverage our strong relationships with strictly selected wholesale partners
and 'win-with-the-winners' to ensure a holistic experience for the consumer no matter the point of
sale.
Key Cities: We are building on our 'Key Cities' portfolio of Tokyo, Shanghai, Paris, London, New York
and Los Angeles by adding Mexico City, Berlin, Moscow, Dubai, Beijing, and Seoul. These cities
represent the beating heart of our global consumer experience and exert influence on the rest of the
world, while at the same time offering commercial opportunities as urbanization continues.
Strategic markets: We focus on Greater China, North America and EMEA to bring exciting consumer
experiences to life, pursuing a tailored approach that appeals to local trends. Our ambition is to gain
market share in all three strategic markets, which are expected to jointly account for around 90% of
net sales growth until 2025.
SUSTAINABILITY
Our commitment to sustainability is truly holistic and deeply embedded into how we have done business
for over two decades. It's rooted in our purpose 'Through sport, we have the power to change lives.' As we
continue to be pioneers in sustainability, we move from strong stand-alone initiatives to a comprehensive
consumer-facing program with a sustainability offering at scale.
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What we offer: We keep pushing the boundaries of our sustainable offering, so that our consumers are
able to choose from a uniquely comprehensive range. By 2025, nine out of ten of our articles will be
sustainable. How we do this revolves around how we expand and innovate our 3-loops: made from
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CONSUMER
Our consumers are at the heart of 'Own the Game.' Consumers drive structural trends in our industry
through their preferences and behaviors. They strive to live active and healthy lives, they wish to blend
sport and lifestyle, and they are digital by default as well as sustainable by conviction. 'Own the Game'
captures those consumer-driven opportunities and carves out new ones for their benefit. In 2025, 'Own the
Game' will not only have delivered overproportionate growth for adidas, but also deepened relationships
with our consumers, as we continue to actively live our purpose 'Through sport, we have the power to
change lives.'
PEOPLE
To successfully deliver on our five-year strategy, we empower our people to truly own the game. Our
people strategy comprises three key pillars: Leadership, Betterment, and Performance, underpinned by
Diversity, Equity, and Inclusion.
Leadership: We grow our people to demonstrate leadership at all levels of the organization, to
empower and inspire others, so that everyone can realize their potential in our company. By taking
ownership, showing courage and driving innovation our people can own the game.
Betterment: We are committed to building the strategic capabilities required to execute our strategy.
We do so by creating an employee experience that attracts talent and provides relevant learning and
career-building opportunities to upskill and reskill for the future.
Performance: We evolve our performance management philosophy to clearly articulate our ambition
to win, to play by our values, to embed a strong feedback culture, and to recognize both outstanding
individual and team results.
Diversity, Equity, and Inclusion: We are committed to providing an equal starting line for all our
people, ensuring that everyone has the same career opportunities. One of our commitments is to
increase the share of women in management positions (Director level and above) globally to more than
40% by 2025.
CREDIBILITY
We are a leading brand thanks to our credibility in both sport and culture. To continue to excite our
consumers with innovative concepts that support our mission, we sharpen our brand, refine our product
offering and leverage partnerships to further enhance our credibility with consumers.
Sport: We focus on the most important sport categories: Football, Training, Running, and Outdoor.
Football is the biggest sport in terms of viewership, while Running, Training, and Outdoor are the
biggest participation sports. Our products in these categories are built for sport and worn for sport.
Lifestyle: To tap into the biggest commercial opportunity for our brand, we sharpen our brand
architecture by introducing a new consumer proposition called 'Sportswear'. These products are born
from sport and worn for style. At the same time, we extend Originals, which is inspired by sport and
worn on the street, into the premium segment through top-quality materials and craftsmanship.
Women: We execute a cross-category plan to achieve product excellence and elevate the women's
experience through our membership program to become her indispensable sports brand. Our goal is
to grow currency-neutral net sales for our Women's business at a mid-teens rate per annum on
average between 2021 and 2025, thereby significantly increasing the Women's share of our overall
business.
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