adidas AG (ADS) Earnings Call Transcript & Summary

Hello, everybody. Warm greetings from Herzogenaurach to wherever you are in the world. Sebastian and I would like to welcome you to our Investor Media Day 2021 on behalf of our 60,000 employees, the Executive Board as well as the entire leadership team. It would have been great to have you in person at our global headquarters today. But of course, health and safety continue to be our first priority.

The good news is we're a digital-first company and, therefore, delighted to bring you a fully virtual investor and media day. The content you will see today has been pre-produced to give you a superior viewing experience as you follow us on your computer, laptop or tablet. Of course, we will be live at the end of the presentations for our Q&A session. In the course of the day, you will see many exciting locations here on our campus, the World of Sports. But this can, of course, not make up for a life experience. Over the past years, we've not only become a much better company, the detail of which you will hear from Kasper in just a few minutes. But during this time, we've also significantly upgraded our campus to ensure we have a world-class working environment for our people, one that sparks creativity, collaboration and, of course, innovation. We would have loved to show you around, allow you to experience this fantastic space and feel what this company is all about, sports. To give you some flavor, just last week, we started to build a brand-new training pitch for the German national football team who will stay with us during the Euro championship this summer. We are very much looking forward to having the German team on campus, and hopefully, shortly after that, also hosting you for a visit as soon as travel is safe again. Believe me, we can't wait to welcome you again.

Today is going to be an exciting day, packed with firsthand insights into adidas. Our Board and members of our senior leadership team will present deep dives on all our strategic focus areas and priorities. Let me give you an overview about our agenda for today. Kasper Rorsted, our CEO, will kick the Investor Media Day off with a brief recap of 2020 before walking you through our new 2025 strategy. Next up is Amanda Rajkumar, our Board member responsible for global human resources. She will speak about our people, our 60,000 employees that bring our strategy to life. Amanda is followed by Brian Grevy, our Board member responsible for global brands. Under the headline of credibility, Brian will talk all things: brand, product and storytelling. Aimee Arana, GM Training, may join Brian to present our cross-category women's plan. After a short break, Roland Auschel, our Board member responsible for global sales, will explain how we create a best-in-class consumer experience across our sales channels and markets. Roland will be joined by Scott Zalaznik, our Head of Digital, who oversees our e-com business and membership program. Martin Shankland, our Board member responsible for global operations, will first talk about our focus area, sustainability, before giving you more information about our strategic enabler, digital, as well as talk about our supply chain. Harm Ohlmeyer, our CFO, will then share the financial ambition and value creation framework our strategy will lead to. Finally, Kasper will bring it all home in his closing. After another short break, we will be live with our Q&A. Please note that we have scheduled 2 separate Q&A sessions, one for media and one for our investor audience. Yes, we know, this is quite a bit of content coming your way, but we hope you will enjoy the next few hours with us as we lay out our 2025 plans. And if you feel like exercising during the first break today, we've got you covered. One of our team coaches will get you moving in a short workout session.

As you've heard from Jan, we will recap our 2020 results to start. But the focus for the rest of the day will, of course, be on the big opportunity ahead of us, which we will capture through our new strategy. We crafted this strategy based on a comprehensive fact base, which was built over the past 2 years and was, of course, enriched by the many insights gained during 2020. Importantly, our strategy is tailored to our most valuable asset, the adidas brands. It goes without saying that Reebok has a bright future too given its status as one of the most iconic brands in a highly attractive industry. However, as you know, in context of the creation of the strategy and after careful consideration, we recently decided to launch a process aimed at divesting Reebok. We are convinced that both adidas and Reebok will be able to better realize their full growth potential independent of each other. As a result, we will report Reebok as discontinued operations from Q1 2021 onwards and announce the next steps when appropriate. But that's not for today. Today is all about adidas. And with that, over to Kasper. [Presentation]

It is indeed disappointing that you cannot be with us here today. I also would have much enjoyed showing you this fantastic campus filled with our great people, and everybody working here has a passion for sport and for the 3 stripes. And this is what makes this company and working for it absolutely unique. For me, leading this company is a great honor, and it's the best job in the world. Today is an exciting moment in our time and our growth journey. We've had 4 record years between 2016 and 2019, the relentless execution of Creating the New delivered exceptional brand momentum, financial results and shareholder returns. And then 2020 allowed us to prove our resilience and prepare for the future despite all the unprecedented challenges that COVID-19 threw at us. It was also a year that accelerated structural trends in our industry, making the sporting goods market even more attractive. We are now in the best position to leverage industry tailwinds by executing our new strategy, which is tailored to the world we now live in and based on a great foundation. But before I come to the reasons for my confidence about the years ahead, let's look back. 2020 was a year like no other. We're looking forward to a great year of sport, and we are well on track to achieve all our long-term targets. Then COVID stopped the world, a crisis we have never experienced before. The toll on human life is heartbreaking and has also caused the largest economic downturn in decades. The only way to get through a situation like this is by working as one team, thanks to our 60,000 employees. Despite all the challenges, we used 2020 to make adidas a better company. We put people first. The health and safety of our employees and those working for us across the entire value chain were our top priority. We safeguarded jobs and became even more diverse and inclusive. We increased our financial strength by securing strong investment-grade ratings and optimized our capital structure. We proved operational flexibility with our agile approach to sourcing and sell-in. We brought our most successful margin campaigns to life and launched products in an impactful way even during the lockdown. And we expanded our direct-to-consumer business, adding more than 50 million new members by improving the scalability of our digital backbone. All the way until the end of 2020, we focused on executing our priorities. As a result, our top line accelerated significantly, recovering quickly in the second half and returning to growth in the fourth quarter despite a strong comparison base and a second wave of store closures. We continued to drive over-proportional growth in D2C and e-com. We translated our strongest product pipeline with more than 100 hype drops in the fourth quarter into brand momentum, and we've protected our gross margin by remaining prudent in a very promotional environment. Our focus on profitable sell-through and disciplined sell-in is reflected in the gross margin progress, with our margin only slightly down in the fourth quarter. And lastly, we continued with the inventory normalization. We reduced our inventory levels by EUR 800 million versus the peak in June, achieving a healthy inventory level by year-end and that we feel very comfortable with going into 2021. Last year was clearly a year like no other, but it doesn't change our overall growth prospect. We did our homework in 2020, and we're now able to enter 2021 on full steam. Despite the strong finish in the fourth quarter, our full year results were, of course, negatively impacted by the coronavirus. Our net sales saw the biggest impact in the first half and experienced a strong sequential recovery in the second half. The gross margin was down only 2.3 percentage points in the most promotional marketplace ever, with more than half of decline due to negative effects. The strict cost controls we implemented triggered an operating profit improvement of more than EUR 1 billion from the second quarter to the third quarter. And as a result, our operating results was materially positive again during the second half of the year. Overall, we generated net income of EUR 429 million as we were able to mitigate the negative impact on our bottom line without jeopardizing future prospects. 2020 was the year of the pandemic, but it was also the last year of our 5-year strategy, Creating the New. We achieved exceptional results in all strategic growth areas during Creating the New despite the adverse impact in 2020. We doubled the net sales for adidas North America, achieving a CAGR of 15% over the 5-year period. We also doubled our revenues in Greater China, resulting in a 15% CAGR as well. And our e-com sales were up more than 7x during Creating the New, reaching more than EUR 4 billion in 2020. Creating the New was also a great success across our 3 strategic choices as presented in 2015. As part of open source, we became a pioneer in the industry by partnering up with Kanye and creating unprecedented hype with Yeezy. We developed the BOOST technology from 0 to a multibillion platform across different franchises and categories. And we were the first to double down on the most important cities in terms of sport and culture. As a result, net sales in our 6 key cities doubled, outgrowing the company average and the industry. With speed, we substantially increased the share of speed-enabled products, and we introduced 3D printing as a new manufacturing technology when everyone else believed it to be impossible. The execution of our acceleration plan as presented in 2017 also yielded a strong positive result. We made our portfolio better by completing the divestitures of TaylorMade and CCM and making Reebok profitable again. This successful turnaround builds the basis for a decision to start a process aimed at divesting Reebok. We believe as one of the most iconic brands, Reebok can better leverage the strong industry fundamentals independently from adidas. In North America, adidas gained significant market share and added more than EUR 2 billion of top line. As a result, we're now the clear #2 in the world largest market. With ONE adidas, we ramped up our global business services organization, and this builds the foundation for a flexible and scalable back end that we will still benefit from in the years to come. The significant investments into our digital ecosystem paid off, and this became particularly visible in 2020. We grew our e-commerce sales exceptionally, and our membership program, which we have built from scratch, reached more than 150 million members. The relentless execution of Creating the New also drove exceptional financial results. We added around EUR 7 billion to our top line in the 4 years before the pandemic. Our operating margin increased by around 5 percentage points between 2015 and 2019 to a healthy double-digit level, and we grew the net income by around EUR 1.2 billion during the period despite stepping up our marketing investments by more than EUR 700 million in those 4 years. Our shareholders participated consistently in our success over the entire 5-year period. We returned more than EUR 4 billion through dividends and share buybacks. Our market cap increased by more than EUR 40 billion. And our share price more than tripled, making it the best DAX 30 performer since the end of 2015. You see, we have a strong foundation in place upon which we can build now. We've proved our ability to deliver industry-first products, technologies and partnership again and again, and we can build on a strong track record with Creating the New. I think the numbers speak for themselves. We've also proven our resilience throughout 2020 and used the year well despite all the challenges. And last but not least, we have established a very scalable digital platform, and all of this gives me extremely high confidence for our next revenue cycle. This comes on top of the very healthy and even accelerated industry opportunities. As part of the strategy formulation, we decided to go after those opportunities by focusing on the adidas brand. So now let me come to the focus of the day, our new strategy, Own the Game. [Presentation]

Our new strategy is completely rooted in sports. Sports is our past, our present and future and connects deeply with our purpose. Through sport, we have the power to change lives. And we're living by our purpose every day, and we'll continue to do so by expanding the limits of human possibilities by uniting people in sports and creating a more sustainable world, our mission to be the best sport brand in the world. And we are clear on what being best means. It means #1 or #2 position in each strategic category in the long term. In sport, having the right attitude is key to success, and we have defined our attitude: impossible is nothing. It defines us in our industry, and it's a mindset that goes back to the days of our founder, Adi Dassler. It shapes our stories, our products and our actions. And later on, Brian will talk more about this and how we'll bring impossible is nothing to life. We see 5 major industry trends driven by consumers and all accelerated post the pandemic. Athleisure, consumers want functionality and comfort, but they want to compromise on style. They want betterment. 50% of our consumers exercise to stay healthy. On digital, this is the way consumers connect, communicate and shop. On sustainability, it's a conviction for consumers, and it's a purchase driver for more than 70% of them. Premium, consumers want new technologies and material innovation. The structural trends explain why the industry is growing but also how it's being shaped and size matters. Our industry rewards scale, and we were uniquely positioned to take advantage. These consumer-driven structural trends make our industry fundamentally attractive. We expect mid-single-digit CAGR growth from '21 to '25 for the global sporting goods market. It will outpace the broader economy by a factor of 2, and the industry will grow by approximately EUR 100 billion until 2025. We have a laser-sharp understanding of the drivers and the opportunities. We see the major participation sports, running, training and outdoor, will drive around 40% of the industry growth until 2025. The lifestyle inspired by sport will account for approximately 50% of growth. Greater China will grow fastest to 2025, and North America will remain the largest single market. Greater China, North America, together with our home market, EMEA, will drive approximately 90% of the industry growth. The industry will be much more digital. Online will grow 3x faster than off-line. Online will reach an industry penetration rate of more than 40% by 2025. Our strategy is tailored exactly to those drivers to fully capture opportunities. Own the Game is our strategy until 2025. Own the Game is rooted in sport, and we own the game because we have what it takes and we control our destiny. Own the Game puts the consumer at the heart of everything we do. It's brought to life by our people. And our 3 strategic focus areas are to increase brand credibility, elevate the experience for our consumers and to push the boundaries on sustainability. We set up 2 enablers for success: our mindset of innovation across all dimensions of our business and the acceleration of our digital transformation throughout our entire value chain. We own the game, and we will create significant growth by 2025. People first. They are the force behind our relentless drive for innovation, and we need to ensure that our people have the relevant capabilities to tackle our opportunities. It's about attracting, growing and retaining talent. And we'll continue to invest in hiring, developing strategically relevant capabilities. And we want a level playing field for all. We want to continue our D&I journey with our full commitment. We have a unique workplace. It brings our purpose to life and unite people through the power of sport. We want to remain the employer of choice, and Amanda wants to expand on this topic. But now on to our 3 strategic focus areas, starting with credibility. Within our brand architecture, the adidas brand has already unique and strong credibility in sport and culture. And going forward, we'll sharpen the edges on both ends of the market. We want the best products for the athlete through innovation in sports. We want elevating the Originals business into the premium lifestyle segment. And we're addressing the gap in the middle by introducing sportswear. Adding a third pillar as a new consumer proposition will allow us to tap in to the biggest commercial opportunity, the athleisure part of the market. We'll expand the reach of our brands, and we'll increase our focus on each segment. When it comes to women, it's an opportunity on a company-wide level and it's a priority. Our goal is to grow our women's business at mid-teens CAGR between '21 and '25 and significantly faster than the rest of our business. We have 5 strategic categories. On the sports side, it's football, running, training and outdoor. Football has the biggest viewership. And running, training and outdoor has the highest participation and are the industry growth drivers. On lifestyle side, we're sharpening the architecture with sportswear and Originals. We will, of course, leverage our unique portfolio of partnerships across all categories, and Brian and Aimee will give you the details on how we strengthen adidas brand credibility and how we address the women's market. Beyond product, we bring brand to life through the consumer experiences in digital and in physical spaces. We'll accelerate our transformation into a D2C-led business built around membership. Our D2C share will rise approximately 50% by 2025 driven by e-com and our digitalized store fleet. Our membership offers personalized experiences to our most valuable consumers. Our membership program is ready to more than triple members to around 500 million by 2025. E-com is preferred store for our members, and it continues to be our most important store. Our aim is to double the size of e-com yet again to approximately EUR 8 billion to EUR 9 billion by 2025, and we'll double down in the key cities. They exert influence on the rest of the world. We know the winning formula because we've proven it in the 6 key cities, and now we're extending our portfolio to 12. Roland and Scott will give you all the details about our strategic focus area experience, and you will also hear from Martin and Harm how the D2C-led transformation touches all parts of our business. Sustainability is one of the greatest expressions of our purpose, and our commitment to sustainability is holistic. We've been pioneering the environmental and the social programs to act responsibly across the entire value chain for more than 20 years. We'll continue these programs while driving even greater impact with our consumers. The consumers must know that we care about sustainability as much as they do. The most visible way of doing this is through product. By 2025, 9 out of 10 of articles will be sustainable. And we're also committed to reducing the CO2 footprint of our product offerings to reach climate neutrality by 2050. Martin will explain how we keep pushing the boundaries in sustainability, and Brian and I will show you some of our most sustainable products. Two enablers will set us up for success, and the first enabler is digital. Digital goes beyond e-com. We are digitizing the core processes across the entire company, from creation to consumer. We are scaling 3D design capabilities, which will allow us to create better products, allowing designers to create in 3D and iterate early designs for consumers and customers. The vast majority of our sales in 2025 will come from our products that is created and sold digitally. Advanced analytics end-to-end will allow creation, allocation and planning all informed by data. Turning e-com and member data into insight will help us build better products and react faster to trends and engage consumers more personally. The second enabler, innovation, innovation across all dimensions of our business, from creation to consumer. And we've been pioneering industry-first for the benefits of the consumers since 1949. And I just wanted you to consider some examples of what we made possible in the recent years. We are turning ocean plastic into shoes with Parley. We're reshaping running footwear with UltraBOOST. We're inventing the first ever printed mid-sole with 4D. We've been redefining hype with Yeezy. We've been setting world records with adizero Adios Pro. And such innovations are tangible proof points of our credibility to elevate experiences and allow us to push the boundaries in sustainability. And let me give you a taste of what's to come. Product is king, and we have new technologies in concept that will roll out across our global product range in the seasons to come. FUTURECRAFT.STRUNG is our first of its kind prototype in our industry, combining athlete data and additive manufacturing. And this results in an upper that has precise fit and support while also being superlight and will build strong into our fastest footwear franchises. Now let me come to our running tech platforms. BOOST was and is big for us, having originated in running. And very recently, we introduced Lightstrike, the platform that powers record-breaking Adios adizero franchise. We upgraded 4D with a clear performance ankle and are just about to introduce it to runners around the world. Two entirely new platforms will complement our lineup until 2025. So we'll have 5 platforms coming from one, which is BOOST in the last strategic cycle. In lifestyle, we just established a new hype model, Hype to Scale. The exciting LEGO collab was many times oversubscribed, and the ZX Meissen sold for more than $100,000. These are just 2 examples. We'll keep the frequency high with a triple-digit number of hype drops per annum and commercialize more. We're having just as many ideas when it comes to innovation around the consumer experience. We engage members in design through the in-app innovations like the swipe pull mechanism. We feed members' input into our rapid creation development process. And in physical retail, we'll soon be opening the very first Terrex Mountain Lofts. It's a dedicated retail store in the Alps, bringing together outdoor, digital and sustainability. We'll scale the concept to key outdoor destinations later on. And in digital, we have only just started to leverage our end-to-end ecosystem. Our CONFIRMED app for sneakerheads are now also available in Europe, and it complements our suite of apps. We are the only sports brand to reward members for both sport and purchasing activity. Now onto the area of innovation I'm personally most proud of, sustainability. We have delivered many industry-first, and we will readily scale those, make one of our most iconic franchises, the most sustainable one, with Stan Smith. We'll kick it off with a vegan version Stan Smith. And we're about to introduce a Primegreen version, the Kermit collab. And later this year, we'll launch a recycled version of the LOOP and are made with nature iteration using Mylo and mushroom-based leather. Sustainability has never before been performed at this scale in our industry, and Stan Smith is only the beginning. We'll be adding many franchises into the circular loop like Free Hiker in outdoor and UltraBOOST in running. And with Run for the Oceans, we take consumers with us on a journey like no one else before. It started just a few years ago with a few thousand participants, and we'll be growing it into the largest running movement in the world. We have one global strategy, Own the Game, which we execute with local relevance. Key cities are where the local relevance matters the most, and we're extending from 6 to 12. We continue in Tokyo, Shanghai, Paris, London, New York and Los Angeles. And we're now adding Mexico, Berlin, Moscow and Dubai, Beijing and Seoul, and these cities exert influence on the rest of the world. We're doubling down on 3 markets: Greater China, North America and EMEA. And our ambition is to gain market share in all of these. Own the Game is a growth strategy, and this is where growth will come from. Our 5 strategic growth categories will drive more than 95% of our growth. Our 3 strategic markets will drive around 90% of our growth until 2025. And D2C will drive more than 80% of our growth, the majority coming from e-com. You can clearly see our strategy is well defined, and the growth we're expecting is a direct consequence of the strategic choices we have made. Own the Game will further improve our global market position. Our revenues will grow at a CAGR of 8% to 10% currency-neutral between '21 and '25. This means we're outgrowing the industry globally and in all major markets, which will translate into market share gains. The execution of Own the Game has already started so that we hit the ground running coming into 2021. Own the Game is a 5-year plan that we will execute all the way to the finish line as one team. Due to the uncertainties related to the pandemic, the financial ambition for 2025 has 2021 as a baseline so that we cover the 4-year period starting in '22. So let me first come to our outlook for 2021. We expect currency-neutral sales to grow strongly at mid- to high-teens rate. Our operating margin will bounce back at 9% to 10%. Our profitability in 2021 will be temporarily impacted by the planned Reebok divestiture. Harm will take you through this in detail. But let me now come to our focus of the day, '25 and the strong growth we're expecting until then. Own the Game will result in a currency-neutral sales growth CAGR of between 8% and 10% for the 4-year period starting in 2022. Our operating margin will increase to between 12% and 14%, which understates the absolute profit generation from the D2C shift. Our push to D2C is more visibly reflected in the absolute net income ambition. We're targeting a CAGR of 16% to 18%. Own the Game will generate significant free cash flow, which we'll almost entirely distribute to our shareholders. In total, we're expecting EUR 8 billion to EUR 9 billion of cumulative cash returns until 2025. And we're doing all of this while we're accelerating our investment into our brand and our enablers. In 2025, we will spend EUR 1 billion more on marketing than we do today, and we'll invest more than EUR 1 billion in digital over the next 4 years. So you can see Own the Game is a growth strategy founded in sport. It has the consumer at the heart of it, and it gives us a clear direction until 2025. I'm very excited to bring it to life together with the team, our 60,000 employees around the world. I'll be back later for the closing and look forward to the Q&A with you. But now let's hear the deep dives from the senior leadership team, and as for people always come first, over to Amanda. [Presentation]

Hello. My name is Amanda Rajkumar, and I joined adidas as the Executive Board member responsible for global human resources in January 2021. I am truly excited and honored to be part of this value- and passion-driven company. I've worked in the world of HR for the past 25 years, most recently with the financial leader, BNP Paribas. With every job I tackle, I bring my passion, my performance and my desire to pay it forward. From the U.K. to the U.S. and now to life here in Germany, I always make sure to immerse myself in the industry, in the company culture and also in my surrounding. Since January, I've had the pleasure of meeting many colleagues, some in person but mostly online. I'm learning about our team structures and organizations and, most importantly, how adidas operates to create value for our consumers and society. And let me tell you, my first impressions have been fantastic. I see a diverse company with people from all backgrounds and based all across the globe. I see individuals that go the extra mile. They show passion, strong camaraderie and collaboration. Their growth mindset shines through inspired by the exceptional workplaces we offer and our powerful brand culture. I see the aspiration for gender-balanced leadership. The industry where I've come from is not yet there, but there is still a way to go for us, too. I see that every employee, be they in the stores, in the distribution centers or in our corporate offices, they're living our people behaviors, what we call our 3 Cs: creativity, confidence and collaboration. And most importantly, during these pandemic times, I see my fellow Board colleagues have people safety and health as their #1 priority. Helping us keep our people safe from COVID-19 is our ability to pivot to have a better workplace flexibility. If the pandemic has taught us anything, it's that we need to be resilient, agile and adaptable to ensure we own the game. It's clear that our world is changing. Digital and business agility is one area that we will influence how we look at our people strategies moving forward. In my first 8 weeks on campus, I can already see how rooted the digital mindset is into adidas and how it was accelerated by a year of COVID. Staying on top of our game would not have been possible without moving into a home team digital working environment. Many of our office employees around the world are successfully working from home. We managed to shift the resources of many hundreds of people to other teams that required their skills to continue delivering our business. This temporary resource reallocation enabled us to not only manage our businesses but also provide our people the chance to expand their skill set and horizon. Continuing to enable this agility in our people and business environment will remain key over the coming 5 years. Creativity is also something that can give us a unique competitive advantage. Automation has crept into all walks of life, but we still recognize the value of creativity. Only by exploring new horizons and catalyzing the ingenuity of our people can we innovate and remain a high-performing company. More and more, people are looking for a sense of purpose and belonging. This influences where and how we seek to work, collaborate and interact. We want to be part of something bigger, something meaningful. We can also see that society seeks to be more respectful towards our environment. Sustainability is, of course, a hot topic in every industry, but here at adidas, I can see that we don't just pay it lip service. Sustainability is already part of our DNA. I am excited about the journey we have ahead of us to build a more sustainable environment with and for our people, and I am thankful for the track record the team has delivered so far. I see many opportunities at adidas to make greater impact for the future. Firstly, we want our teams to have the relevant capabilities to own the game. Secondly, we want a level playing field for all. And thirdly, we want to ensure our people thrive in a unique workplace that has our consumer at the heart of the game. What do I mean by the first opportunity, a team with the capabilities to own the game? A cornerstone of our track record at adidas has been the relentless drive for innovation and performance. This is enabled by our people who give their all every day. This area speaks to the continuous effort in nurturing and creating the conditions for our employees to be at their very best. Now we can address this in different ways. Our first port of call should be to those who make the biggest imprint on people, our leaders. Leaders in the company shape our future, our strategy creation and execution. They foster loyalty and engagement. It is my ambition to scale our efforts to promote authentic and accountable leadership and to develop leaders who act as cultural carriers and role models. Our stance is clear. All adidas leaders are accountable for how they show up every day, and we will enable this by refreshing our 3 Cs and our leadership framework to articulate on what it takes to drive the new strategy. We will make sure our leaders are capable of and held accountable for the values that we stand for. We already have strong leadership development experiences in place, and we will expand these offerings even more. A team with capabilities to own the game needs relevant skills. This means continuing to invest in hiring and developing strategically relevant capabilities in our workforce, be it in the areas of digital, technology, design, DTC, innovation. Each of my fellow Board colleagues should rest assured that their areas and perimeters have the right capabilities in place to succeed in our aspiration. We must enable our people to be agile, transformational drivers and to bring sports and culture credibility to our consumers. We can harness this potential by providing a developmental environment incorporating feedback for our people to grow to new heights. Years ago, we shifted from a traditional performance management approach to one where development is in focus, and we can further enhance these mechanisms to ensure the balance of both performance and development. Finally, successful teams grow and attract new players if the conditions are right. We will continue to invest in our unique workplace and culture to attract and retain the very best talent. Already, we are an employer of choice, and we received a mind-blowing number of applicants hoping to become part of the 3 stripes family. My ambition is to ensure we stay on top by continuously enhancing the conditions that inspire people to join and stay at adidas. Create a level playing field for all. This second area of opportunity will demonstrate our sincere and sustainable investment into diversity and inclusion. In 2020, we saw how society and our own employees raised their voices on the importance of diversity and inclusion through the Black Lives Matter movement. It was the year we made diversity and inclusion a worldwide priority for our company. Our position is clear. adidas has always been and will always be against discrimination in all forms, and we stand united against racism. To reinforce this commitment, we created an Accelerating Inclusion Committee headed by our CEO, Kasper, to drive clear commitments for our diversity inclusion journey with sincerity and with speed. These commitments included expanding employee listening, celebrating a global day of inclusion for all, strengthening our diverse talent groups and scaling access to mentoring and development programs. We also invested in our employee resource groups who represent the vibrant communities that make up adidas. Furthermore, we committed to invest $120 million in North America alone in the next 5 years. These funds will go into social engagement projects for Black and underrepresented communities. To support us in putting a diversity and inclusion lens on everything we do, we introduced mandatory training for all employees, including our executives. Our Creating a Culture of Inclusion course was rolled out over a 4-month period with its fullest completion. It's just the start of diversity and inclusion becoming as deeply ingrained in our culture as much as our history in sports is. Looking at our work through this DNA lens will help us to remove visible or invisible barriers that may exist today in our workplace. It means opening doors for all employees to developmental opportunities, to learning, to advancement in the company, to be the very best version of themselves. But it also means continuing to listen to our people, to enhance the company experience and output. Going forward, we will have our employees participate even more with their voice to enhance feedback and employee listening mechanisms. We know deliberate investment and focus into areas of diversity and inclusion works. We now have 35% women in leadership positions, up from 29% in 2015. It's now time to further our impact by continuing to scale diversity at all levels and, in particular, ensure that we have diverse representation amongst our leadership. Our ambition is to continue to be a workplace where our employees and future employees want to be, a workplace where diversity and inclusion are deeply ingrained in who we are, how we act, how we create and how we innovate. It's the level playing field we need to own the game. The third area of opportunity is a unique workplace. The adidas brand is unique in the world. We should fortify and expand the unique competitive advantage that we have. Our employees should feel more than ever before why they have joined this brand, why they belong here, but why it isn't like any other place to work. How can we do this? Adidas has a culture that lives and breathes our purpose. Through sport, we have the power to change lives. Our brand is rooted in sport, team spirit, making the best products for the consumer. This hasn't changed since the days of Adi Dassler himself. We should celebrate this powerful culture every day with our employees, future employees, consumers and communities. Celebrate that being part of adidas means being part of something bigger. To do this, we will firstly reinforce the power of the united team, the power of we, through our refreshed 3 Cs and leadership framework. Secondly, our purpose is so powerful and unique, but it's time we activated it even more. We will remind our teams every day why they joined this company and why it's worth dedicating their skill and talent to help adidas grow. This uniqueness is reflected in the spaces and resources we offer from our world-class offices and digital working environment to learning events, along with well-being and fitness programs and facilities. Our workplace is designed to unite people through the power of sport, collaboration and community. It's really exciting that we are providing both physical and virtual spaces where our people will be enabled and inspired every day to own the game. Now joining us in our unique workplace every day is our consumer, whether that's in our stores where we get face-to-face time with them, online through our e-com, app and social media or through projects we all work on to help deliver them the best products and experiences. The consumer takes the center stage in how we think at adidas. I believe we can take another leap and make an impact by deliberately broadening the exchange and interconnectivity on what we learn from our consumers and elevate it to all employees. Also, we can increase the focus on fostering holistic career journey across functions and locations from stores and distribution centers into offices and vice versa. This experience and knowledge exchange can then channel even more systematically into how we design, produce and operate from stores into product development and from the creation into the store. And the outcome are more excited and satisfied consumer. These 3 opportunities are not the only ones where we believe we can make an impact and leave an imprint on at adidas. In the coming months, I will continue to listen, learn and shape a new people strategy for our company. But one thing is already clear. It is our people that make adidas the successful brand that it is. And therefore, my people strategy has one goal: fully support our people to own the game. Thank you. [Presentation]

Let me start with what is at our core, our identity. Every strong brand needs a strong identity. Ours is defined by our purpose, our mission and our attitude. Through sports, we have the power to change lives. This is our purpose, and we live it every day by expanding the limits of human possibilities, by including and uniting people in sport and by creating a more sustainable world. Our mission is to be the best sports brand in the world, and we are very clear on what being best means. We are the best when our consumer tell us we are. We measure it by having a leading position in each strategic category. We are the best if we are credible, inclusive and the most sustainable sports brand in the eyes of the consumer. Credibility means we deliver groundbreaking innovation in sports as well as cutting-edge fashion items that are culturally connected. We are sharpening our edges in sport and culture, pushing possibilities and enabling impossible performance. Inclusivity means we are the brand that invites, inspires and unites all people in sport. We enable diverse points of view to drive our creative process, pushing all people forward. Being the best also means leading the industry in sustainability. We have always been and will continue to be at that forefront of setting standards and expectations for sustainability, be it in our products and its creation. We started our journey to end plastic waste when nobody had an answer to it, and we continue to push those boundaries. In sports, having the right attitude is key to be successful. Therefore, our brand attitude will be the difference maker to our future successes. Our attitude defines us. It shapes our stories, products and actions. Impossible is nothing. This is adidas. This is how we act. This is how we want the consumers to experience us. We are rebellious optimists driven by actions, looking to shape a better future in a collaborative way with consumers and our partners, always positive in the face of challenges. We see possibilities where others only see the impossible. Impossible is nothing is not just a tag line for us. By being optimistic and knowing the power of sports, we see endless possibilities. So apply this power and push all people forward with actions. Looking back at our history, it's clear, we are at our best when we see possibilities. Seeing possibilities where others see limits has always been our innovation engine. Take a look at this film for inspiration, and you will understand how innovation always has and always will define our future and enable us to own the game. [Presentation]

Bringing impossible is nothing to life is a core part of our new strength. Today's consumer expects a clear and consistent message from a brand, a story that connects and continuous across all touch forms. This is why we are fundamentally revisiting how we communicate to our consumers. We are moving from a fragmented style of category and channel approach to a unified brand storytelling in which brand campaigns, moments and products play in symphony. Our marketing investments will reflect this approach. Accordingly, fewer, more consistent, bigger campaigns focus on key launches. We will be louder and prouder than ever before. To support this approach, we will significantly increase our marketing spending over the next couple of years. As a result, in 2025, we will invest around EUR 1 billion more into the brand, our products, their activations and our interaction with consumers than we are today. Next month, you will see the launch of the first chapter of our new campaign. This will be a first example of our whole new approach to storytelling. We will apply what we learned from our home team and ready for sport campaign in 2020 and maximize the power of partner publishing. You've heard it. We don't see boundaries. We see endless possibilities, particularly in our industry, and we will go after them with a clear positioning and voice of our brand. 2020 had been a transformative year for our consumers, and we have been there with them and know firsthand what they now expect from a brand. Their world has changed, their life has changed, their needs have changed. And we all have been forced to pause, listen and rethink our priorities. We are seeing an acceleration of several consumer trends, which we will address with our strategic priorities. Firstly, the role of sport has evolved. More and more people work out and stay active. Betterment reflects a holistic approach to physical and mental health. Our consumers' motivation to do sport has changed. They're moving from a competition to camaraderie, from a single record to a journey. The biggest participation sports, running, training and outdoor, are further growing and expanding from the traditional audience, including all people, inspiring them through sports at the same time. Football continues to be the #1 sport in terms of viewership, and we see the influence of top players expanding beyond their score. Secondly, the way we live our lives, where we spend our time and what we wear has changed. We see a huge demand for athleisure wear. That will not go away. Our consumers are looking for comfort and style. As a result, the lifestyle sector is the growth market of our industry. So while one end consumers expect constant performance innovation from us to be credible in sports, they also look at sports-inspired cloth they can wear with comfort and style with a growing trend toward premiumization. Another big trend is sustainability. We have been leaders in sustainability for decades, and our consumers are becoming more and more conscious about the impact of their buying decisions on the environment. And our consumers are becoming more and more conscious about the impact of their buying decisions on the environment. And finally, to be a truly inclusive brand, a brand for all, we have to serve her, her needs and become her brand of choice for sport and lifestyle. There is no doubt that the women's business is one of our biggest opportunities. Given this market is expected to grow above-average in the years to come. Our plan is designed to address exactly these consumer needs and gives us a clear focus, thanks to the following strategic priorities. Firstly, we will introduce a new brand architecture that will allow us to play our best game in all areas of the expanding playing field of the sports and sports life [ market ]. The sports industry is pushing the etches. At one end, it requires constant performance and innovation, while at the other end, it pushes into streetwear and high-end fashion. Between both ends, we find a growing midfield. In order to be able to be our best in all of these areas, we will sharpen the etches of sport and originals and introduce a new consumer-facing sportswear proposition, dedicated to that large growing market in between. Secondly, we will move away from the undifferentiated gender approach of the past. Instead, we will now execute a cross-category women's plan to inspire and enable her in sports and culture and become her trusted partner on a daily betterment journey. As a result, our women's business will grow much faster over the next 5 years and represents a significantly higher share of our business in 2025. Thirdly, we will focus on 5 strategic categories to sharpen our credibility and drive innovations. Football is the most huge sport and a key to authenticate our brand on the field and on the world's biggest stages. Running and Training and Outdoor will drive 40% of the industry growth. On top of that, Running is also the most important category to drive consumer perception as a true sports trend. Lifestyle on the other side is the biggest commercial opportunity, generating 50% of the industry growth at very attractive margin level. With our unparalleled portfolio of partners, we will elevate our offer. Across sport, lifestyle, creating hype and maximizing brand need. Let's now go through the plans for each of our strategic priorities in more detail. I will start with our new brand architecture. Our consumers consider us as their partner in sports with our high-performing products, marked with the batch of sports. In addition, they see in us their lifestyle brand. With the distinct originally Trefoil, a unicorn in our industry. To stay at the forefront in sport and culture, we need to constantly sharpening and pushing our etches. This creates a gap between our sports and rituals offering. By addressing the gap, we can expand our field of play. And in order to do so, we are introducing a new consumer proposition, sportswear, this will allow us to address the growing relevance of casual sports products and at leisure, while ensuring that our sports and originals business can focus on sharpening their position. Across all proposition, consumers will find a wide variety of products that cover their entire good, better, best price range. To give you a flavor of our propositions going forward, I will introduce each of the 3 expressions of our brands briefly. adidas performance is the best products for the athlete that enables them to play and perform inside the lines of the playing field. It is built and worn for sport. Going forward, our Performance products will feature a new logo that will transition starting in 2022. Sportswear is the modern product that enables self-expression and comfort. It is born from sports and worn for style. This new proposition is a holistic concept, with its own creative and product identity. Featuring its own logo, we will launch it in 2022. Originals is inspired by sport and worn on the streets. The Trefoil will celebrate iconic product that connects to culture, leveraging our exceptional outcome and expand into new premium segments. And partnerships will play an important role for all 3 propositions. We have always worked closely with top athletes in sports as well as with culturally-relevant designers, influencers on the lifestyle side. In the future, we will explore ways to broaden and diversify our partnerships to create brand heat with dedicated offers for all 3 segments. This fresh and never seen before collections we've developed in collaboration with our partners are mostly focused on higher price points. They are inspired by adidas and worn for status. In summary, by introducing sportswear, we can expand our reach as a brand, while at the same time, be more focused on the consumers in each market segment. We will achieve this by focusing on the best products for the athletes. Through innovation and sports, elevating Originals into the premium segment through crafting material and cultural relevance, tapping into the huge athleisure market with a dedicated sports relevance, diversifying and elevating partnerships such as adidas by Stella McCartney, IVY PARK with Beyoncé, Pharrell, YEEZY and Y-3 and building new strategic partnerships relevant to key markets. Now let me introduce you to our Head of Training, Aimee Arana, who will guide you through our plan for her.

Thank you, Brian. As we look at our women's business today, it's clear there is enormous opportunity for growth. Why? Because women represent the fastest-growing consumer group. Women's participation in sport is on the rise, and women control the biggest share of household spending in both sport and lifestyle. At the core of our new 'Own the Game' strategy is a deep understanding of our consumers and especially women. We are fussed about thinking about what she needs, what she wants and how we can inspire her on her betterment journey to see the possibilities. We want to get to know her as an individual, creating a one-to-one personal relationship through our ecosystem. Ultimately, we want to know her so well we can anticipate her needs. And we want to become her daily partner on her betterment journey. By doing so, we believe we will be able to grow our women's business at a mid-teens CAGR between 2021 and 2025. First, to reach this goal, we will flip the script to drive credibility for her through premium, no compromise offer across the full breadth of our brand. We are the brand that can offer her the best product for Running, Training, Outdoor and Lifestyle. Second, we will change the way we engage with her. We will build a one-to-one relationship through 24/7 dedicated campaigns. We will use our unique partner portfolio with diverse talent and our own strengths to create a unique experience for her through our membership program. It's about bringing all these ingredients together to orchestrate the perfect symphony. Now let's dive into the details. All of our sport innovations will better cater for women's needs. This means prioritizing that correct proportion, style, fit and ensuring footwear and apparel are tested and proven like never before, elements that are paramount to winning her in sport. She doesn't compromise on style and performance and neither will we. Let's start with the fundamentals. We will focus on the products that she covets the most, both in footwear and apparel with an emphasis on our strategic categories, Running, Training, Outdoor as well as Lifestyle. When it comes to enabling women to own the game, creating the best-in-class product like bras and tights is a must. That's why we have built up a team of industry experts to deliver captivating designs, perfected fit, paired with groundbreaking material innovations to create the best possible product. You will see proof of this already in 2021. Examples are our new core motion studio bra and sculpt tight, both will use engineered knit compression based on women's body mapping and motion studies to deliver that precise muscle support where she needs it most. In addition, we will extend our inclusive offer across diving, modesty ware, our maternity range as well as gender-neutral concepts to enable everyone's personal fitness journey. The Designed To Move tights from our maternity range is an extension of our key product thesis to keep her active and moving throughout all stages of pregnancy. With product built for her needs, we also support girls to stay in sport and feel confident. Teenage girls drop out of sport at twice the rate of boys. This happens around age 13 and 14. Sometimes these girls make it back to sport, sometimes they don't. With stay and play product, in this range, we will offer period protection in high-performing sport products such as training tights and shorts to give her confidence to be able to play and compete in sport throughout her cycle. This is how we are going to inspire and enable women and girls to join a sport, to stay in sport, and most importantly, thrive on all sporting stages around the world. And that's not all. We will accompany her also throughout her life beyond exercise. Our street wearing premium propositions also offer tremendous opportunities for growth. Our lifestyle offer will deliver a dedicated footwear franchise portfolio created for her by her as well as more unisex iterations and access to the best type offers throughout extended sizing. Women have always been part of sneaker culture, but we are acknowledging what she demands and taking her seriously. We are listening. We will create specific versions of those most iconic franchises, including the Stan Smith, Forum and Superstar for her. In addition, we will introduce several women-exclusive footwear concepts with software being the very first of its kind. This tough lightweight concept is built on the insight that comfort plays a huge role for Gen Z consumers with the notion that self-care isn't selfish. Product is how we enable women. But as I mentioned, we need to inspire them. How? By building that one-to-one relationship through dedicated storytelling. Key to winning her heart and mind will be the relationships we build and the experience we create along the entirety of this consumer journey and way beyond. We'll use this excitement around our product drops to grow our adidas women's community and will accelerate our membership programs as we create a seamless connection with strategic partners and communities. In this context, I'm extremely proud to announce our partnership with Peloton, the leading interactive fitness platform. Together, we see great potential to delight and surprise our highly engaged communities by multiplying the power of both brands in a number of exciting ways. Our shared values are around well-being, inclusivity, community, provide an incredible foundation, and we look forward to bringing these brands together. Through these connected fitness communities, we will become her true partner who supports her with all elements of her betterment journey. Our partners also have a key role to play in connecting with these female consumers. Whether that's Stella McCartney, where we highlight our leadership in premium sustainability performance, or Beyoncé, with IVY PARK, which underlines our commitment to inclusivity. These partnerships will be strengthened and scaled over the coming 5 years across the brand. adidas by Stella McCartney, Beach Defender and Earth Protector are great examples of collections that are sustainable, premium apparel. And our very first vegan football shoe, the Stella stylish Predator is the outcome of an unexpected collaboration between Stella McCartney and Paul Pogba. We brought them together in one of our Home Team Huddles last year, and that's where this idea for this project of a stylish sustainable football boot for all genders was born. [Presentation]

This is how we're going to take these opportunities to inspire and enable women like never before to own the game with adidas. [Presentation]

Thank you, Aimee. I am super excited about what we have coming for our female consumers. Back to our overall plan. We talked about sharpening our brand architecture and I'll focus on her. Let me now spend some time on our 5 strategic categories. Focus drives energy. That's why we are moving from competing in over 20 sports to focusing on the 4 biggest and most influential sports as well as the lifestyle category. This is where we will double down and pursue ambitious targets. Football, our home game. This is where we come from. This is where we will magnify its impact on our brand by using a beautiful game to tell our brand story on the world's biggest stage. Running our footwear innovation machine will drive a performance edge through footwear innovations, training, one of the biggest participation sports worldwide with the lowest entry barrier, where we inspire and enable everyone to be their best. Outdoor is motivated by the climate crisis and accelerated by COVID-19. People are searching for closer connection to nature. To equip them for the outdoors, we challenge industry norms with a more sustainable and digital offering. Last but not least, the lifestyle. It is the biggest commercial opportunity. Through our enhanced architecture, we will be able to pioneer a new etch in sports-inspired streetwear and lifestyle. By 2025, these 5 strategic categories together, will account for more than 95% of our combined growth. That's a good reason for us to fully focus our energy on these 5 for the next 5 years. Now let's look at them one by one. Football is the global #1 sports by viewership, and its influence transcends traditional boundaries into popular culture. Since the day of Adi Dassler, adidas and football have been synonymous with one another, and this won't change. We will continue to lead in football with a very clear plan. We'll be highly visible when we pitch, where millions of consumers are watching. Continue to bring innovation to the game through our leading product franchises. We will push D2C and membership, elevate experience in grassroot communities. Let's start with how we're going to own the world's biggest stage and use it to tell our brand stories. We have an unmatched list of partners throughout the world of football. Going forward, we will sharpen our focus on the most consumer-relevant players, both women's and men's as well as props and federations will be highly visible on the pitch at all major events and tournaments. I'm extremely excited that we can share with all of you today that we have extended our UEFA Champion's League contract. We have secured the UEFA Women's contract, which includes the Women's EURO, the Champion's League and all other youth and grassroots competition. We will leverage these global platforms and relevant players to deploy and elevate activation plans across the entire brand. The launch of the Running UB21 with David Beckham. And on our Outdoor, my shelves our apparel franchisees with [indiscernible] are just 2 of recent examples of this new approach. At the same time, we will continue owning innovation through the game on the pitch as the #1 brand in football. Our history of innovation is unsurpassed. [ Single ads is screwing starts of a cover ], the Predator, which has held [ meeting ] legends and soon became legends themselves. Going forward, we will even accelerate the speed of bringing newness into the marketplace. This will be spearheaded by our leading franchisees, the X, Predator and Copa. We will reimagine speed and control and touch. Those are the concepts that matters most for the players on the pitch. For speed, we will come to the market in Q2 with the X. The X Speedflow providing unprecedented agility for control. We launched the Predator Freak, an example of data-driven performance, enhancing the signs that enables superior control and increased pulse serve and for touch, the Copa Sense, which we just launched, allows to play us to experience the feel of the ball like never before. And very soon, we will add a completely new model to match our consumers' needs for personalization, the game move. It's a modular concept. It allows for choices of color and style and comes with a hybrid tooling to perform both on firm ground and artificial grass. To present our boot and their benefits to consume in a clear way, we will also revitalize the point of sale, for example, by introducing a newly developed digital footwear wall for football. And we are creating an elevated e-com experience akin to specialty stores, a prime membership first mindset. The final element of our football strategy is community. Football is a team sport. And its influence doesn't stop at the lines of the pitch. Last year, we launched the adidas football collection, a purpose-based initiative, provided free access to football for kids. Since the launch of the partnership with [indiscernible], we have equipped a staggering 10,000 grassroot teams across Europe. We have created close to 100 mini pitches across the U.S., yet this is only the start as we will expand the adidas football collection across our key cities within the next strategic phase of the program that we will launch at the Euro at 2021. Let's now turn to the biggest sports category, Running. It's also one of the most accessible and most inclusive sports. Our consumers has different reasons to run, some run to break records. Some run to stay fit, some run to relieve their mental stress or anxiety. Some run alone. And for some running have also become a team sport. The individual motivation creates the need for diverse technologies, features and aesthetics. That's what adidas Running will deliver, like it always has in the past. Our founder, Adi Dassler, created modern Running with a pair of spikes with Jesse Owens, who won 4 gold medals in them at the Olympic Games in 1936. Hundreds of medals, world records has followed, thanks to a constant innovation and an obsession with athlete's needs. So winning Running, we have a clear plan. We will win with athletes and races through unparalleled innovation. We want to gain expert advocacy. We will diversify our portfolio through strong franchisees and innovation technology platforms addressing the different consumer needs. We will motivate the world to run, drive participation and membership. In Running, winning is the most tangible currency for innovation. Consequently, we will focus on creating industry-leading footwear, innovations that empower our athletes to win and break records. The ADIZERO ADIOS PRO is our latest example, breaking the half marathon world record 3 times. And in '21, we are making it even better, launching the version 2 now with the exposed energy [ ratch ]. And in the beginning of next year, we will merge the Lightstrike platform with our latest offer revolution, the FUTURECRAFT.STRUNG technology, which you will see here. STRUNG allows us to create something that is traditionally really hard to achieve, an upper that has precise fit and support, while also being super lightweight. By merging Lightstrike Pro and STRUNG, we are creating the ultimate fast experience for serious runners. We are looking forward to seeing these innovations on the feet of runners, winning races and records. And in addition to build fast shoes, we continue to set sites for record performance by signing more elite athletes and federation. The re-signing of the Ethiopian Federation as well as Peres Jepchirchir and Kibiwott Kandie, both holder of the half marathon world record is just the beginning of that journey. While the future of running is that you don't need much to start, finding the right shoe is incredibly important. We will make running accessible by diversifying the offer for every runner around the world. BOOST has revolutionized the running industry and continues to be a key platform and growth driver first, but we will add 4 more platforms to serve the needs of all runners. I mentioned earlier that at the end of last year, we introduced Lightstrike, providing super light cushioning for explosive movement and endurance speed. In addition, we are about to add 4D, reengineered as a real performance enhancing technology. We applied the most innovative 3D-printed technology to running and engineered a true performance benefit that runners will immediately feel. And C, thanks to the iconic look of this industry-first [ mindset ], on top of boost, Lightstrike and 4D will add another 2 completely new technical platforms. So we are going from one platform to 5. This shows the innovation power in our running offer. These technologies will build the platform for our top running franchisees, which we plan to increase to 7. UltraBOOST is, of course, going to remain one of them. In April, we made our biggest and most popular franchise also more sustainable by launching the UltraBOOST made to be remade. The first commercial drop of a loop concept. The entire shoe is made from one material, which is an incredible achievement. It can be broken down and the shoe will become part of future products. The 4D forward, to be launched in May, is another one. We applied the most innovative 3D-printed technology to running and engineered a true performance benefit that you can see and feel as it will propel you move forward, proven by thousands of runners and experts. On top of this, we will introduce new concept and franchisees to bring our cutting-edge technologies to life. Being on the podiums, leading in footwear innovation, doesn't only build credibility with our consumers around the world, but it gains expert efficacy as well. Building on that, we will elevate our services to running experts in specialty retails. This drives trial and loyalty to win market share sin the technical running market. We're introducing a specialized sales team in specialty doors to drive expert recommendation and premium consultancy in our own direct-to-consumer touchpoint. And lastly, the expansion of adidas runners and Run For The Ocean will create the most inclusive, digital and physical community presence. What started just a few years ago with only a few thousand participants will grow into the largest running movement in the world. By 2025, we will have accumulated a number of more than 40 million runners joining us on that journey. With the ambition to turn them into members. We will motivate the world to run for a good course. Turning to training. Training is the biggest participation sport. More than ever, people value the positive impact it has on their physical and mental health. Training is the most fundamental sport. You can train all year long. Indoors, outdoors, alone, or in a community, live or connected digitally. adidas training will empower everyone's betterment journey through a data-driven personalized experience via the adidas membership program. This builds the association of adidas streaming as off the fitness network connected to a product innovation pipeline. We will approach training as a stand-alone sport and focus on experiences and membership growth in our fitness network. Within apparel, we will be focusing on 3 major concepts. Ready, which helps athletes to perform at their best, no matter the external conditions or internal, from cold to rain to heat, and promotion with beautiful crafted mitts and engineered compression as already illustrated by Aimee. And not to forget Futurecraft apparel, a new concept to further cater to individual needs. This never-seen-before technology allows us to scan any body type and turn it into a physical product, creating a 100% personalized custom-fit apparel, moving away from standardized traditional sizes. In 2022, we will add footwear to the mix, building a comprehensive activity-led training range for her and for him. Our head to toe offer will be organized on the 3 core pillars: string, hip, studio and yoga, to create and merchandise the products together to ensure that consumer finds everything they need for their specific activity. For example, we will introduce a strength range with the Drop Step shoe, the D4TT and pants. That's the product site of the true game changer to empower everyone's betterments, a journey they on will be us partnering with the fitness communities to create experiences that drives membership. First, we will include partnerships with training ambassadors that will enrich our network of athletes to cover each of the 3 pillars: strength, HIIT as well, studio and yoga. Second, we also just introduced a new training series for her on YouTube. This series kicked off in February, which works out from body-positive advocacy, Jessamyn Stanley and as well the Paralympic Medalist, Denise Schindler. Third, we will also work with industry partners such as Peloton, as announced by Aimee. All of this will allow us to fast track our membership build, push out DTC channels, while becoming more credible in Training. In parallel, we move up scale with high-end retailers such as NET-A-PORTER and [ Essence ], which will help us to expand our reach beyond the core Training category. In addition to Training, we see the rise in the outdoor activities like hiking, skiing, mountain biking and trail running. Consumer sees the outdoor activities as so much more than sports. For them, it's a way of life. The pandemic have increased this trend, and they need to stay healthy and connected with nature. 1/3 of outdoor consumer lift in urbanized areas, and that ratio will continue to grow. Many urban dwelling outdoor consumers weren't raised on traditional outdoor activities and don't define themselves as outdoorsy. Yet, the activities they enjoy often take them outside. This provides adidas with an advantage over traditional brands, building on the already existing relationship we have with this consumer through sports and lifestyle, we can now expand into the outdoors. So the question is, how are we going to do that? Well, we will build authenticity through technical outdoor products. We increase credibility through authentic partnerships. We expand our presence to meet our outdoor consumers where they are. Having established a fast footwear range, we will accelerate in technical apparel with style and performance and of course, sustainability as one of the key drivers of success to future authenticate adidas in the outdoor industry. The progress we are making with highly innovative outdoor products that don't compromise on style is clearly visible. We just won 7 awards at the ISPO fair for technical innovation in footwear and apparel. The TERREX AGRAVIC ULTRA for technical trails won a gold recognition. It's innovative sole construction that gives the athlete's great running economy and propulsion up and downhill. And not to forget the Women's adidas TERREX MYSHELTER PRIMALOFT jacket and pants were awarded for the first and only parley insulation in the world. With the Free Hiker that I have here in my hands, outdoor is entering the made to be remade space taking the loop concepts into the outdoor. Going forward, we will continue to lead in sustainability and innovation in outdoor with a particular focus on the materials and the innovation. To better connect with our next-generation of outdoor consumers, we enter new partnerships with outdoor icons, destination and events that resonates with their mindsets and lifestyle. We are extremely proud to have teamed up with Mikaela Shiffrin, [ Ruth Krufty ] and Timothy Olson and to be present at the Infinity trails this year, and there's so much more to come. We will meet the outdoor consumers where they are. We will meet them in cities. We will disrupt the marketplace with a D2C format, specifically dedicated to our Outdoor TERREX brand as well as with specialty wholesales. In addition, we will soon open the first TERREX Mountain lock retail experience in the Alps and latest stainless concept to key outdoor destinations around the globe. So you've just gotten the deep dive into one side of our brand architecture that is focused on sport, and let me now elaborate on lifestyle. Our lifestyle segment offers our brand one of the biggest opportunities for growth in consumer efficacy. It is just centered around 2 different propositions, Sportswear, which I introduced earlier and adidas Originals with partnerships spanning across both. We have created this clear distinction to get both consumer segments, athleisure and sports-inspired streetwear equal focus and a dedicated offering. Let me start with a deep dive into sportswear. The creation of sportswear as our new consumer proposition will allow us the following. We will allow it to create a new identity, develop a dedicated sports lifestyle collection, roll out sportswear-specific experiences at the point of sale. Consumers will buy into sports, we are looking for sports functionality, comfort with no compromise in style. Our sportswear will be launched in 2022 and subsequently rolled out and expanded into a head to toe old price point and old channel product offer. Athletes and partners will make it aspirational for everyone, looking to buy athletic, yet stylish addition to their everyday wardrobe. This new proposition provides the opportunity to tap into the young archive of our sports products and drive scale. Sportswear allows us to address the growing relevance of cash and sports product for our consumers with a specific brand identity. Born from sports, built for purpose and daringly simple. We will offer style versatility and comfort with products made for modern lifestyle. With spots where we have the optimum positioning to leverage the growth opportunity of athleisure, while allowing Original business to premiumize further. adidas Originals has been the pioneering brand in streetwear for more than 2 decades. We will now take it to the next frontier. It will be even more connected to the Gen C and the modern sneaker head and to be truly embedded in culture. The key to success will be elevating the Trefoil across all dimensions: product, marketing and experience. So how will we do that? By premiumizing our offering, by infusing purpose and cultural credibility into our influencer-based engagement model at scale and by pushing exclusivity and driving high. To elevate our product offering. We will drive a premiumized approach with a very clear focus on craft and sustainability, supported by cultural relevance, partnerships, we will celebrate the true stars of Originals, our iconic franchisees. Let's start with one of our biggest and most iconic franchisees, the Stan Smith. We will make one of our most popular styles, also our most sustainable one. And as we say always iconic, now more sustainable. We kicked it off last year with plain classics and continue this year with a prime green version in collaboration with Kermit the Frog, who knows best that it's not easy being green. We will further push the boundaries with a made to remade Stan Smith, and we will launch a made with nature iteration using Mylo, a mushroom-based material that performs like leathers later this year. In addition, we will massively expand our modern platforms, NMD and ZX. NMD was introduced 5 years ago with 2 styles. To celebrate the fifth year's anniversary and building on the success of the NMD R1 Series, we will incubate the NMD S1 at a premium price position this fall, to strengthen our ties with the highly influential sneaker community. On top of that the ZX, which we reintroduced last year with the ZX 2K Boost, we will further diversify this whole franchisee through the addition of new styles. It will be spearheaded by the ZX 5k Boost this year and another completely new model in 2022, driving high street newness at a commercial price point. We will also develop completely new franchises that will incubate and build equity into. One example is the 4D fusion, which just got off from a great start delivering design innovation with a 4D midsole coded for radical all-day comfort. OZWEEGO, an already highly-successful running franchise globally, is another example of our successful franchisee incubation strategy. We will be expanding the OZWEEGO platform with a portfolio of additional trend-led franchisees and further iteration across price points, with [ Oscilia ] and the [ Osra ] models launching later this year. And, of course, innovation doesn't stop with footprint. In apparel, we will expand our sustainable Primeblue offer and as of 2022, all of adicolor will be made with 100% recycled polyester. And I can't wait to launch our new premium apparel concept, Blue version, this year, expanding our extremely successful portfolio with a new concept with true Originals DNA contemporized through a luxury fashion brand. And as for the second part of our plan, to stay culturally relevant as a brand, we need to keep that specialness. This is where hype comes in. This is where we play with scarcity and limited product runs. Hype is our key mechanic to drive brand heat and commercial growth. We use the excitement and the heat around the hype drops of key franchises models to create a halo effect and amplify franchisees to scale with a focus on our Top 10. We show we can do this recently with the A-ZX series. Infamously ZX LEGO was oversubscribed 24 time and the ZX MEISSEN sold an action a $126,000. And these are just 2 examples of many, many more. We will drive hype to scale consistently, managing and monitoring the volume and the numbers of growth we're putting into the marketplace. We need to strike the right balance between driving brand heat, but also commercializing the significant opportunity we have with sneakerheads around the world. And for that, in 2021, we are planning another triple-digit amount of hype launches. Finally, our plan for Originals also includes a decisive shift towards our own channels and a very premium retail partners. Our membership program and to confirm that will be key in this D2C transformation. We launched to confirm that in Europe earlier this month after a successful entry in the U.S. and China. This increasing focus on creating connected experiences with our consumers will be further supported by our Originals flagship store program with new openings in key cities. Across our entire brand architecture, we amplify our credibility through partnerships. We were the first in our industry to employ an open source mindset to inspire fresh perspectives. We have a clear idea of how to drive brand heat through partnerships, a model that we have pioneered successfully over the past years. Building on this winning formula, we will expand our rosters with both global and local relevant partners, grow our successful partnerships, such as YEEZY on a global scale, but also smaller ones on local level to drive cultural relevance and disrupt the industry with basketball. It goes without saying that we prefer to be secretive about new partnerships. We want to surprise both you and our consumers when we break the news. But you can be rest assured that when it comes to growing these successful partnerships, we have a very clear plan. For example, Stella McCartney, Parley and [ Wide 3 ], with whom we will be expanding our reach into fashion and sustainability. Beyoncé and Pharrell Williams coming from music culture and elevating our key brand franchisees together with us. And we are, of course, excited to continue our pioneering partnership with Kanye West and YEEZY. As we continue to redefine the sneaker game, seeing and seizing new opportunities ahead, bringing Kanye's vision to life, delivering the next frontier and egalitarian design to the masses. We're building on the unmatched successes and the impact we've had with iconic products such as the YEEZY 350, the 380 and the 700. One of our most recent and for me, personally, one of our most exciting moves was the announcement of our partnership with Jerry Lorenzo, Founder of the American luxury streetwear label Fear of God and overall key influencer in the fashion design community. Under the leadership of Jerry, we will disrupt the basketball category with our creativity and carve-out our own place in the legacy of the sport, honoring the rich culture of basketball. Jerry and his team will join our hub in one of our key cities, L.A. L.A. is the epicenter of basketball culture, and Jerry's name is synonymous with the City of Angels. I'm looking forward to big things on and off the court. The Forum will be the first franchisee born from basketball, with which we will lead this effort. Through the course of this year, we will bring out new takes from this classic silhouette and surprise our consumers with exciting collabs. You will see the first product from our partnership with Jerry Lorenzo, and newly created Fear of God Athletics starting to take shape in 2021, with first product launches coming in 2022. We have a clear plan, to become the best sports brand in the world. And one of the key enabler for us to become exactly that, is innovation. The room I'm in right now is our future lab. A location filled with technology, science, knowledge and years and years of experience. It is the birthplace of numerous innovation that we have excited our consumer with and will continue to do so. Sports is where we come from. The consumer is always at the center. And innovation in all shapes and forms is what defines our future. We are optimistic and confident because we got what it takes, our people, our products, our partners and of course, our plan. Seeing possibilities is what drives innovation. We match in the future. We see what it could be. We see endless possibilities in people's path to betterment in their lives and, of course, for our planet. We are on a journey together with everyone who shares our belief, that possibilities are endless and that we can build a world that is more inclusive, more sustainable and where sport and unite us. We invite you and everyone to participate through our product that equip us to own the game through experiences that inspire and connect our communities. And through innovations that makes impossible possible. [Presentation]

So after 2 hours, it is time for a quick break. And with that, hi now live from Herzo. I'm sure that after the first round of presentations, you can already understand why we are so excited about the next 5 years. The opportunities ahead and adidas' future. And I have to admit, I'm equally excited about the innovation and product pipeline we have seen from Kasper and Brian. I personally cannot wait to run in the ADIOS PRO 2. Yes, it might not get me to the Olympics or make me break a world record, but it will definitely help me improve my personal best. Driving brand credibility even further in both sports and culture, has allowed us to build our powerful brand over the past 70 years and will be an even bigger focus towards 2025. But as you've heard from Kasper, we have defined 2 additional strategic focus areas that allow us to translate credibility into growth, experience and sustainability. We will be back at 2:15 with Roland and Scott, who will explain how we will offer a best-in-class consumer experience, both digitally and in physical touchpoints. Martin will then walk you through our ambition to scale up sustainability to a level that's not been seen in our industry so far. After that, Roland will tell you how we will bring our strategy to life in our key markets. Following Roland, Harm will elaborate on how 'Own the Game' will drive growth on several accounts, and how we will create significant value over the next couple of years. Kasper will then bring it all home before we will be live with our Q&A session. I look forward to your questions on 'Own the Game', and how we will win until 2025. The rest of the day will continue to be about sports. And in this spirit, we have organized a short workout session for you during this break. I will get moving myself behind the stage for the next 10 minutes with our coach. So I can only invite you to join me and get moving too. See you later. [Break]

In the marketing place that's becoming more and more promising yet diversified and competitive by the day. Let me explain how we will play to our strengths to win over the next 5 years and how we will bring own-the-game to life. We know that consumers increasingly engage with brands that are not only offering strong services but amazing experiences. For us, this means we need to find ways to truly connect with them to ultimately change their lives through sport. To build direct relationships with our consumers, we need to understand the consumer behavior and their shopping preferences. We observed 4 consumer-driven changes to which we have tailored our strategy. First, as consumers shop more and more online, online channels will be growing 3x faster than offline and represent more than 40% of the industry by 2025; second, consumers prefer to shop with their favorite brands directly. Hence, the mono brand part of the market will grow twice as fast as multi brand; third, the population in cities will continue to significantly outgrow the rural population. By 2025, almost 2/3 of the world's population will live in urban areas; and lastly, loyalty matters more than ever. We can see a clear shift from transactional relationships to experiential relationships with brands, and membership becomes the pinnacle. So how are these insights shaping our strategy? By 2025, we will no longer think in channels. We will move beyond distinct online and offline channels. We will own the game by fully embracing and embedding consumer experience as our strategic focus area, and this is how. Firstly, we will become a member-first brand. We will connect 500 million members through personalized, relevant experiences and amazing brand moment. We believe membership will be the red threat across channels and offer the best platform for our product, storytelling and experiences. Secondly, we will evolve our operating model to address consumers more direct. Our main playground will be the direct-to-consumer or DTC business. This means that we will leverage our own e-com and our own retail to engage directly with our consumers. This will drive significant growth. We aim at generating every second euro in revenue through DTC by 2025. Thirdly, key cities remain the global amplifiers of trends. And therefore, we will expand our portfolio from 6 to 12. It is in our key cities where experiences come to life and where we connect with our consumers best. We will also continued to include our key partners in sport, lifestyle and wholesale into this holistic consumer experience. One important aspect to accelerate this will be membership spanning across all our touch points, owned and partnered, online and offline. These strategic priorities will deepen the connection to our consumers and will drive a DTC-led business transformation for adidas. Now let me introduce you to Scott Zalaznik, who is leading our digital business, and who will now guide you through our plan on membership and e-com.

Thank you, Roland, and hello, everyone. As Roland mentioned, membership is one of our strategic priorities to own the game. Membership embraces the consumer as the one who drives us, who inspires us. Our goal is to ensure members have an elevated premium experience. They expect us to know who they are and to improve their lives through sports. But what does the best-in-class elevated membership experience mean? It means by 2025, to have the very best global sports community in the world. An industry-leading program that attracts, engages and retains 500 million members. Just imagine, in 5 years, membership will be the most personalized always-on golden ticket to the adidas brand, our athletes, products, stories and partners. It will be available at every touch point, every store and will make our members feel a part of the 3-stripes family. Every product and experience will be designed with a member's-first mentality. This will enable us to create products and services that can be personalized and merchandised based on what they are interested in and what's relevant to them. And last but not least, we envision a world where membership with adidas is how we measure ourselves. Every business unit, every market, every store and ultimately, every employee will have a connection and objective to be truly member first. Why do we choose to continue to invest in members as our strategic priority? Well, we see membership as the catalyst within our DTC-led approach. Membership will be ingrained into our training, experiences and merchandising across our amazing store fleet and, of course, our digital family of touch points. Our goal across all of these touch points is for one member experience to build upon the next through the leverage of technology, data, mobile and personalized service. We see this experience-led approach bridging the gap between the emotional and the transactional, connecting the members to our brand for life. At the same time, membership is financially rewarding. Members buy 60% more often. And when they buy, they buy more, 30% more. Part of the journey to become member of SES has driven us to measure consumer lifetime value or CLTV. This ultimately allows us to understand and forecast the current and future value of our member base. We see our members have more than double the CLTV than our nonmembers. We measure and optimize for CLTV across acquisition, engagement and retention. Now let's talk about how we get there. In 2020, we have already grown our member base to over 150 million members. Looking at the next 5 years, it's all about elevating our members' experience with the brand, turning brand engagement into commercial growth and brand loyalty. One of our top strategies to create this elevated connection to the brand is by rewarding personal sport achievement with activity-led surprise and delight moments. In these member moments, we will unlock exclusive products and experiences through our brand moments like Run For The Oceans, the World Cups and the Olympic games. But we won't stop there. Our members are also looking for moments to celebrate them. Last year, we were the first sports brand to offer global members week. As many brands were moving into the holiday sales period, we were offering millions of members exclusive products, celebrity content and experiences across our strategic categories. From 4D to football to the first ever launch of our made to be remade sustainability member experience, we offered our members the very best. And I'm proud to say that beginning in 2021, we now have member events scheduled on our key brand moments calendar. Member moments are now shoulder to shoulder with a new product launch or an amazing sport event and increasingly will be the red thread through them all. When hosting events and activations for our members or creating new products, we do so knowing what they are interested in because we care what members think, and we are constantly leveraging data and member feedback to enhance our offering. One example is the 3-swipes program. Here, we have created an in-app innovation targeting select members to give us positive or negative feedback about products, Colorways or future releases. What's truly amazing about this program is that we have seen a high correlation of member feedback and sell-through. This is giving us confidence that this program will only become more important and integrated into our creation process. Not only do we leverage this member input for seasonal creation, we also feed it into our rapid creation development process to read and react to trends in increasingly in-season opportunities. We also plan to further leverage our membership capabilities across DTC and specifically our stores and retail employees. An example of this is what we call Bring It To Me. Now Bring It To Me was born from our retail employees who saw an opportunity to offer a more premium experience when waiting for a product. Our digital experts worked with our store staff to create an experience that leverages the adidas app, our membership profile, and in-store geolocation tracking to find the shopper wherever they are in the store. Later this year, we'll build on Bring It To Me by also offering self-checkout. This will give the members the opportunity to pay from their device directly and walk out with the product in hand. The story about membership would not be complete without mentioning our family of commerce and sports apps. Here, we will continue to invest in connected and rewarding journeys across training, running and shopping through the increasingly blurred lines of physical and digital member experiences. Let's go through a recent example to talk about the perfect member journey. We just released our latest iteration of our most popular running shoe, the Ultraboost 21. We started by offering our Icon Running enthusiast members the first 200 pairs. Then we offered all our members early access to the global launch and an exclusive Colorway. Lastly, we had 400,000 members accept the running challenge to compete and win their next favorite pair of Ultraboost. This connection between member first, member only and member challenge is how we envision the future of member engagement and product launches. This is where we believe our competitive advantage lies. Now let's talk about our next competitive advantage: Our e-com business and strategic focus on digital acceleration. Digital is, of course, key for our next stage of DTC-led growth, and we aim to double our e-com revenue to EUR 8 billion to EUR 9 billion by 2025. As a company, we strategically invested into e-com early. These investments allowed us to radically increase the size and contribution of our e-com business, where months surpassed prior year quarters and quarters surpassed previous years. In the last 5 years, we have seen our own e-com business multiply 7x. We call e-com, our #1 store. It is where consumers get to see adidas at our very best with our widest product offering, the best storytelling and our greatest depth. And e-com as a platform also helps us to look to the future by offering a strategic advantage to test and scale new products, experiences and services. We have invested in teams and tech to monitor and react to trends, respond to challenges or opportunities we see in the marketplace. Digital also helps us decide where we are best to embed our significant investments in data science and artificial intelligence to further automate and optimize results in real time. We see our #1 responsibility in e-com to be the window to the soul of the brand. To do this, we know that we have to embrace the products we sell and the stories we tell. We also know to own the game, we have to be member first. Adidas.com and the adidas app offer seamless consumer experience tailored to mobile. They are the entry points to the brand. And as such, are our acquisition engine and membership, representing the entire breadth and depth of our offering, partnerships and categories. Dotcom also allows us to enter strategic alliances with our wholesale digital partners to leverage each other's channels, inventory and traffic. Next, we use our sports apps to acquire, engage and retain members through running and training as well as a mechanism to introduce them to new products and challenges that truly improve their lives through sports. We have invested heavily to ensure that our app ecosystem connects seamlessly across sport, commerce and our stores to increase average order frequency and, of course, consumer lifetime value. Now let's shift gears to culture and lifestyle. And specifically, one of our most important and influential consumers, the SNEAKERHEAD. While lifestyle is an important category across all of our channels, we have created an incredibly focused and premium destination specifically for the SNEAKERHEAD: the CONFIRMED app. The CONFIRMED app is the digital embodiment of your favorite sneaker shop. It is the home of our amazing collaborations, fashion and our cultural best. In summary, our e-com focus will be built upon the achievements and foundation set over the past 5 years while investing forward in an increasingly digital marketplace and a future-proofed organization. Okay. Let's start to shift gears toward retail and the omni experience. Similar to e-com, we invested early in connected seamless shopping experiences across our digital ecosystem and our stores. Thankfully, we have seen omni-channel services such as click and collect, ship from store and endless aisle be heavily leveraged and it's put us in a great position to accelerate our DTC-led members-first strategy. We will continue to build upon experiences that connect the online to offline world and within our stores themselves by leveraging digital technologies for the consumer, the member and the store employee. As we think about the store experience as well as the marketplace of the future, we see our members-first strategy as a red thread into our DTC touch points and increasingly with our most strategic wholesale partners. Now Roland, tell us how you see this today and in the future across our amazing store fleet in key cities.

As Scott explained, ensuring a seamless, enhanced consumer experience is central to how we approach DTC. Let's have a look at how we bring this to life by investing in next-generation digital capabilities across our retail store fleet. In retail, just like in e-com, we want to inspire consumers with product and stores. We let them experience the world of the 3-stripes firsthand with the help of our store staff, our team of brand ambassadors. Halo stores, our consumers really connect with our brand. These stores are true brand builders, thanks to exclusive products, enhanced consumer experiences and members-only areas. They are the top of the pyramid, if you will. Their total consumer impact is even bigger and will increase further over the next years as their presence in the world's key trade zones creates priceless media value. These Halo stores enable us to test new experience features and thereby understand what resonates best with consumers and ultimately help us understand local culture in our global key cities. Our recently opened stores in Tokyo Shinjuku, [ early munstrasse ] and Beijing APM are great examples of where key city insights were used to truly connect adidas with the local culture. This global local connection is key, and I'll highlight 3 stores here. Our store on London's Oxford Street has proven to be a successful execution. Here, consumers enjoy the best the brand has to offer. The best expertise, best products, artist collaborations, location-based surprises and exclusive treats for members. Also in London, we opened our first gender-neutral original Halo store in one of the city's most creative boroughs, Carnaby. Our consumers love this store, not only for its gender-neutral approach but for the locally designed interior, the sustainable materials used throughout the store, and the artwork penned by local creators. And for the latest addition to our Halo store fleet, join me in a trip to Dubai. Our new store located in the Dubai Mall is not only the first Halo store across the Middle East, India and Africa. It is also the most digitally connected adidas store with over 60 consumer-facing digital touch points. It is also the most sustainable store in the region, offering consumers and shoppers a unique experience with innovation at its core. And the first featuring a dedicated outdoor sports section. Looking ahead, we plan to double our global network of Halo stores by 2025. We will also continue to reshape our concept store fleet. With this, we will improve profitability and rejuvenate our concept stores. Over the next years, there will be less concept stores overall. That said, we will not have fewer square meters as we will open bigger stores at where it matters most for our consumers. Factory outlets, which speak to our value consumers, will remain a commercial engine and a growth opportunity for us. We will upsize existing real estate enhanced premium centers and add stores to the fleet. Factory outlets are our main channel to clear excess inventory and are still underrepresented in many areas globally. Our consumers will also in factory outlets enjoy a better shopping experience because we will bring capabilities such as mobile checkout and click and collect to our factory outlets as well. Data analytics will help us make sure our fleet is more consumer and more communitator and thus increase local relevancy. We will achieve this through geo located, differentiated assortments that both leverage offline and online purchasing search data as well as social media. Digital capabilities remain at the center of our investment strategy, ensuring we continue to delight our consumers with a smooth and seamless shopping experience. RFID capabilities will improve stock availability and artificial intelligence will drive the way we plan our stores. Lastly, a critical success factor for the overall store experience spanning from Halo stores to factory outlets are, of course, our tremendous retail employees. They are key to any retail experience. And of course, we consider them a true investment into the future of our brand. As experts in products and stories, they know adidas best, and they engage face-to-face with our consumers every day. They are our true brand and product ambassadors and enrich our product feedback by connecting, engaging and inspiring consumers every day. Over the next years, we set out to become an even stronger retail employer and collaborate closer with our more than 35,000 retail experts globally and build strong talent pipelines for career pathing. The shift to online shopping highlighted earlier will also shape our wholesale and franchise network. Less partners will exist all ready for the future. With strong online and offline capabilities, we will foster deeper in future-proof relationships with our key partners. First, we will reshape the collaboration with our global top 30 alliance partners to drive growth, both online and offline. With those players, we have a truly global omnichannel premium presence on the High Street, in the mall and online. Second, we will focus and prioritize our global top 40 influencer accounts to ensure we continue to win and build credibility in our priority categories of lifestyle, running, football and outdoor. Together with these partners, we will improve our consumers' experience, inventory management and drive sales growth. We look at the mix of global key players such as JD and Foot Locker. Strong national multi-brand players such as [ The Sporting Goods and Coboots ] in North America, Deichmann or SportsDirect in Europe, ABC-MART in APAC and of course, our franchise partners, Bile and Y-o-Y in Greater China as well as up and coming online players such as Zalando and ASOS. The digital transformation doesn't stop at our DTC channels. It's also a growth opportunity to explore with our key wholesale and franchise partners. We will bring our digital capabilities to our partners to ensure our consumers have a seamless omnichannel experience. We will scale our successful partner program and optimize the use of inventory across the marketplace, improving the consumer experience and driving our online market share. With this and our strategic decision to create a dedicated team, digital partner commerce or DPC in short to drive our digital wholesale partner sales, we expect that the majority of our sales will be made online by 2025. We will also transform the way we do business with our wider wholesale and franchise network. By 2025, we plan to sell over 80% of our wholesale partners via our self-service online portal called Click. We will integrate new functionalities to enhance the wholesalers experience, such as 3D imagery and augmented reality. This reduces the need for traditional sample-based selling and shortens our selling time lines, allowing us to react faster to trends, all while improving our customers' experience. Leveraging AI and predictive algorithms will help us scale our product assortment recommendations to ultimately improve retailer profitability and importantly, improve the marketplace health, especially for our key product franchises. This success formula will make sure that no matter where our consumers choose to shop, they have a great experience with our brand. Now it's time to look at where we bring the best experience to life in our key cities. Global key cities are where trends emerge. They have a strong cultural influence on the rest of the world and as urbanization continues, create significant commercial opportunities. In recent years, we've developed a winning game plan for our 6 global key cities, Tokyo, Shanghai, Paris, London, New York and Los Angeles. It was a great journey of agile learning and continuous best practice sharing. And facing the challenges the pandemic presented, we successfully evolved, and we quickly adjusted to focus on hyper local and newly evolving consumer habits. Over the next 5 years, we will continue to invest in our original 6 global key cities and expand our portfolio by adding 6 new ones: Mexico City, Berlin, Moscow, Dubai, Beijing and Seoul. We will connect with the most influential consumers in these 12 cities to harness trend insights and leverage cultural moments that shape our seasonal product range creation and storytelling like, for example, our Originals energy collections. We will also prioritize them with targeted incubation product launches and with access to our limited volume products. And this goes hand-in-hand with evolving the commercial environment for each city that is unique to every location. To enhance our consumers' experience, we will offer members unique and exclusive experiences through our own stores and our partners' top stores. By the end of 2021, we will have opened Halo stores in every global key city, with the latest projects being Dubai and Moscow. But we will not stop there. We are also developing our digital ecosystem in key cities. We'll have the adidas app, our sports app and available soon in all key cities, our premium destination for SNEAKERHEADs, CONFIRMED, newsrooms for social media and we will use geo targeting to connect with low consumers when it matters most. Clearly, members are more important than ever. And there is no place where this proves truer than in our key cities. In summary, over the next 5 years, we will create more direct relationships with consumers to make sure we truly connect with them and change their lives through sport. We will move beyond distinct online and offline channels and own the game by fully embracing experience as our strategic focus area. Membership will be the red thread in all touch points and channels, online and offline, owned and partner. We will become a member-first brand, connecting through personalized, relevant experience and brand moments that only adidas can create. Direct-to-consumer will be our playground and account for half of our total business by 2025. E-com will be our spearhead of growth. Not only will we grow it to EUR 8 billion to EUR 9 billion in sales, but it will also inform new products based on consumer inputs. Our industry-leading retail network will evolve from Halo stores and the reshaped commercial fleet to a modernized factory outlet, all updated and digitally enabled. And of course, we will further strengthen the relationship with our key wholesale and franchise partners to deliver brand authentication and expand our overall reach. We will leverage our unique success formula where it matters most, in our 6 global key cities, and we will double down, adding 6 additional global key cities. This winning combination will unlock a business transformation for adidas to become the best sports brand in the world. [Presentation]

Hi, everyone. I'm Martin Shankland, the Executive Board member for global operation. Today, I'll be taking you through our ambitions for sustainability as well as digital and supply chain. The formulation of this strategy is fueled by our mission to be the best sports brand and inspired by our attitude that impossible is nothing. I'd like to kick off with sustainability, which has been identified as 1 of our 3 strategic focus areas for the next 5 years. At adidas, our commitment to sustainability is uniquely holistic and deeply embedded into how we've done business for over 2 decades. It's rooted in our purpose that through sport, we have the power to change lives. We act on this purpose every single day, challenging ourselves to create lasting change and use our attitude to see possibilities where others only see the impossible. Sustainability demands boldness, old ideas, old ambitions and old action. We know that 70% of consumers name sustainability as an important purchase driver and aim to buy more from sustainable brands in the future. We know that you as our investors see sustainability as a core element of our business. And we know that our employees want us to continue to raise the bar in this important field. For more than 20 years, we have pioneered environmental and social programs to act responsibly across the entire value chain such as establishing supplier facing human and labor rights program as early as in 1997. We've been founding members and entered into partnerships with organizations such as the Better Cotton Issue and the Leather Working Group to source materials that are created against sustainable and ethical standards, while at the same time, capping into strategic partners such as Fashion for Good to jointly drive sustainable innovations for the fashion industry. While this has earned our significant recognition, we know we can't rest on these accolades. We have to continue to push the boundaries and move from strong stand-alone initiatives to a scaled and comprehensive sustainability program. As we enter this new strategy cycle, we know we're leading the industry in the eyes of many stakeholder groups. The recognition we've received today is a testament to this. We continue advancing these environmental and social programs while driving even greater impact with our consumer. So far, the focus of our consumer communication was on ending plastic waste. We've proven impossible is nothing here by building and scaling an entire supply chain, together with Parley for the Oceans to recycle plastic waste and develop game-changing innovation that tackle widespread plastic pollution. Going forward, we will put consumers firmly at the center of what we do. We know they want to make a difference. They want to understand our commitments and action. They want to be inspired by bold choices and ambitious goals. They want to be given opportunities to participate and create change. We've heard them loud and clear. They don't want to be passengers on this journey. They want to be agents of change. We want our consumers to know we care about sustainability as much as they do. We'll do this through our actions, and we'll do this through how we talk about these actions. We will communicate simply and consistently with clear messages that provide an access point for consumers to easily understand our ambitions and progress to date. We'll move from choosing whether to talk about sustainability in our brand and product communication towards an always-on approach that increases our total number of touch points with consumers. We'll lean into product drops, sporting events, dotcom activation and grow our Run for the Oceans movement. This always on approach to communication will start with our own people. We're inviting our 62,000 employees around the world to create change with us. We'll dive into what our ambitions are and help them to identify connection points where they contribute and commit to tangible actions in their day-to-day lives inside and outside of work, all to ultimately empower them to become ambassadors of the change we all want to see. Now we can't develop more impactful messaging that elevates our commitment to sustainability in good conscience if we aren't setting ambitious goals for ourselves and making bold choices. The biggest way we'll do this is making a commitment that 9 out of our 10 articles offered will be sustainable. This is a massive ambition considering we create tens of thousands of articles annually. How we'll do this revolves around how we expand and innovate our 3 loops. First, the recycled loop, which are products that are made in part with recycled material such as recycled polyester or Pala Ocean plastic. In 2020, more than 70% of all polyester used in our apparel and footwear was recycled, and we produced 15 million pairs of shoes made from Pala Ocean plastic. You've seen these materials across our product categories and in key franchises such as the recent launch of Ultraboost 21. We've made tremendous progress to bring this loop to scale, and we'll continue building on this momentum. For example, by using 100% recycled polyester in our products by 2024. Second, the circular loop includes products that are made to be worn, returned, ground up and then remade into new products. After 3 generations of prototype, made to be remade is ready to be commercialized. You'll see our made to be remade Free Hiker this fall. Today, we can successfully recycle product made from single material. Going forward, we'll innovate around products made from multiple materials and scale them from 1,000 to million. Third, the regenerative loop, which includes products that are made in part with natural and renewable material. We call these products made with nature. We'll create products with mushroom-based materials that perform like leather and explore applications of algae-derived polymers that spun into fiber. We'll explore natural fibers, biopolymers, biosynthetic and natural footwear [ myceles ] with the help of partners. You'll hear Brian talk about how we'll introduce a Primegreen version of Stan Smith this spring. The innovation, though, won't stop there. We'll also soon introduce a Stan Smith made with mylar. We're also introducing bio-based material into our 4D products with the release of 2 models manufactured with made with nature material, 4D [ Ford ] and 4D [ Ford Holtz ]. Beyond these 3 loops, we'll also look to create a low-impact, low-carbon range. Late last year, we announced our partnership with Albis to develop a performance shoe with the lowest ever carbon footprint. We will commercialize the low impact range beginning next year with the goal of having thousands of products in the market by 2025. We are setting a high bar for ourselves because we want our actions around sustainability to carry the greatest impact for our people and the planet. We're also changing how we create, sell and engage with our consumer by moving towards circular services, where products can be kept in play for longer through our Infinite Play program. This program will include product take-backs for e-commerce and rental offering plus made to be remade product. We'll launch a take-back program in the U.S. later this year and scale and accelerate in other markets. By 2025, we'll have tens of millions of worn wear taken back. The progress we'll make on the product side is a key lever to mitigate our impact on our planet. Specifically, we look at carbon emissions. We aim to reduce our carbon footprint by 15% per product on average by 2025, as measured by emissions. This is the first big step as we work to reach climate neutrality by 2050. So how will we tackle this? Well, we need to reduce the footprint of our entire value chain. Our supply partners will play a critical role in helping us achieve this target, as 90% of all our emissions are linked to material, fabric and garment production. There are some things we can make immediate progress on. For example, we'll invest in doubling renewable energy use at our suppliers by the end of this year by increasing on-site rooftop solar installation. In the midterm, we're getting started with power purchase agreements beginning with Vietnam. We're also looking for ways to reduce the need for energy in the first place. We will challenge our own manufacturing and design practices, for example, by reducing the weight in our material patents and the weight of the materials used. Another way is through what we are calling waterless coloration, which makes the dyeing process more sustainable by cutting water and energy use by up to 90%. We're going to onboard suppliers to produce the first 1 million pieces of apparel using this technology within the year. While a lot of the footprint lies upstream, our consumers and employees also care about what they experience firsthand. So we'll double down on green energy across our own sites, including our more than 2,000 stores, our distribution centers and our headquarters and offices around the world in order to go fully carbon neutral by 2025. Our commitment to sustainability is not a statement. It's a call to action. We want to inspire and share with others the optimism that we feel around the challenge ahead, not because it's easy, but because we're confident in our plan and what we're able to do together. I'd like to shift from sustainability to digital and supply chain. As Kasper mentioned, digital includes digital creation, tech and data and analytics. It's a complement to what Roland and Scott are driving on the experience side. So let me start off with our plans in the digital space. By 2025, more than 50% of our net sales growth will come from our e-com business. Our consumers connect with us digitally through social media, dot-com and our various apps. Of course, COVID-19 has accelerated the rate at which we're becoming a digital-led company, and with that, we need to fundamentally change the way we work. We need to continue to shift to a digital-first mindset in the way we create and sell product. This shift in mindset requires investments in 3 main areas: in our teams, in the digitalization of our core processes and advanced data and analytics capabilities. First and foremost, we need to set our teams up for success. We will do 2 things: bring data and technology expertise in-house and make tech an integral part of our business. Just as the design and development of our product is a core competency of ours, so, too, is the development of our digital landscape. This landscape is always evolving, and having the internal talent means we can match this rate of change and even develop a true competitive advantage. We're going to significantly invest in building up our own internal tech talent in 7 tech hubs around the world, including Gurgaon, Amsterdam and Zaragoza. And in this year alone, we'll have hired more than 700 engineers across these 7 locations, increasing our internal engineering team by more than 50%. Now to ensure we drive the greatest impact with this expertise, the tech and business teams will be integrated going forward to drive end-to-end accountability for our digital products and ultimately deliver what consumers want. The second significant investment within digital is in digitalizing the core processes of our company. We have the vision of building an end-to-end, connected company, from the very start of our creation process by the sourcing of our products to selling our product to our consumers and customers. By 2025, the vast majority of our net sales will come from products that are created and sold in digitally. To achieve this ambition, we've established a digital transformation program to build up capabilities in 3 main areas: the creation engine, the digital go-to-market and the underlying foundations. Within the creation engine, we're building 3D design capabilities at scale, allowing our designers and marketers to create in 3D, iterate early designs with customers and consumers and thereby creating a better product. To date, we are already creating more than [ EUR 5 billion ] worth of our business in 3D. In the digital go-to-market, our capabilities are enabling a best-in-class experience for our customers and consumers. For our customers, this means being able to plan their assortment digitally, experiencing a digital product in 360 degrees, enable their product feedback to be made to our creation teams in a systematic way so that it can be actioned as well as analytics to identify gaps in their assortment. As a result of COVID-19, selling in digitally was more important than ever, which led to a massive increase in the number of accounts tapping into these capabilities over the last year. For our end consumers, 3D imagery unlocks new, immersive experiences, such as virtual try-on at scale. The underlying foundational investments will help us to digitally enable our fulfillment and planning processes based on the new DTC-led requirement. The most significant initiative we'll invest in is a new ERP system, S/4HANA. But this is more a business transformation opportunity than a tech transformation. Our current processes and systems were originally designed for our wholesale business, and this is our opportunity to design and align our business processes for our DTC-led future, standardize these processes globally and implement a modern SAP platform to support the speed and data requirements of our new business model. S/4HANA will be rolled out to all markets by the end of 2025. The third main priority within digital is data and analytics. As you'd expect, we see tremendous opportunity here. With a digital-first mindset, we are inherently having more data. Now it's up to us to leverage it. Over the last years, we began to explore the potential of advanced analytics in our e-com business, where, today, we have in-depth, real-time insights about how our product is performing. We run algorithms, for example, to understand how similar products cannibalize one another. We also read consumer data to make personalized recommendations based on the individual background and what other consumers have shown. Yet the true value lies in establishing these capabilities fully end-to-end, and this is why we'll extend our advanced analytics from our e-com business through our full value chain, establishing a feedback loop that informs our decision. We're accumulating an unprecedented amount of consumer data through the work our DTC team is doing across e-com and our member base. Turning this data into insights will help us build more exciting products, react to trends faster than before and engage with our consumers on a more personal level. An example of this sits within our 3 [ swipes ] tool, which Scott described earlier, which gives us more powerful predictive capability. In supply chain, we'll improve our demand planning process by using AI to predict and restock our evergreen product like our classic Stan Smiths and Superstars, and we'll do that in a fully automated way. We'll also be able to predict demand trends based on regional and economic data, which helps our teams to transfer stock and maximize full price sell-through. To give data and analytics the platform it needs, we are making 3 major organizational design choices. We'll carve it out of [ tech work since today ] and establish it as a stand-alone business function reporting directly to the Board. We'll manage data science as a value function with a separate P&L, and we'll significantly invest in hiring data scientists and engineers. Over the next 5 years, we are investing more than EUR 1 billion into tech and data through both CapEx and OpEx. So now to our supply chain. As Roland and Scott emphasized, consumers are increasingly engaging with brands that offer experiences. In supply chain, how experience looks is simple. It's about getting the right product in the right place at the right time. With our shift to DTC-led, we have more direct interactions with our consumers, which gives us the opportunity to further elevate service levels to contribute to this superior consumer experience. This experience is also important for our wholesale partners, who are also growing their digital businesses. As we invest into our supply chain capabilities, we'll also focus on improving our level of responsiveness to ensure that we can react more quickly and surgically to consumer demand and trend and sell more at full price. Let's first talk about experience. With the shift to a DTC-led business, the delivery to our e-com consumers in particular becomes more crucial because it becomes a more meaningful touch point. Here, we'll give consumers choices of becoming more flexible to deliver at differentiated speed, offering next-day delivery services to more consumers in more locations to those who want it and increasing reliability in our delivery promises. We've already enabled next-day delivery for consumers in our 12 key cities. Now we'll expand it so that more than half of our consumers across the globe can receive product next day. We want to be recognized for our reliability, and we aspire to becoming the best in our peer group in terms of on-time delivery. To further enable this, we are driving digitalization and automation in our supply chain in a few ways. We're building best-in-class distribution centers with flexibility to serve multiple channels. We're expanding our omni-channel network that integrates stores into our e-com delivery choices, for example, through ship from store. And we develop and implement state-of-the-art supply and demand planning tools to enable more accurate forecasting and deployment of products within our DTC network more intelligently. To deliver a superior consumer experience, we need a responsive supply chain that can react to changes in demand in a controlled and agile manner. The 2 capabilities enabling this are speed and inventory control. Speed means the ability to manufacture and deliver fast to capture opportunities. Inventory control means operating at the lowest inventory level necessary to have the available open to buy to be able to react with the speed capability. Now over the past 5 years, we quadrupled our speed production, which resulted in us achieving the higher share of 30-day lead time in the industry. However, while we became significantly faster, we did not become more agile. Why? Well, we still follow the early order time lines of wholesale. With the shift towards DTC, we become more accountable for our inventory, which means we have greater opportunities to control what goes into the marketplace. This creates the perfect opportunity to convert our speed capabilities into market agility, and we'll do so in several ways. We'll further expand our speed manufacturing to approximately 1/3 of our product. We'll help our customers operate at lower inventory levels by scaling never-out-of-stock, and we'll anchor inventory control as a central metric and mindset throughout our business so that the speed proposition is being used to the fullest possible extent. We'll also tap into our apparel near-shore bases in Central America and Europe to reduce overall times from order to delivery in our market. These bases are increasingly significant as we shift towards DTC-led. And we can react to consumer demand and trends faster, leading to more sales, more sales at full price and increasing consumer satisfaction. To turn our speed into an opportunity for our customers, we're scaling never-out-of-stock from low single digits to approximately 1/4 of our volume in Europe and North America. This allows our customers to order product in smaller increments, which also results in leaner inventories and translates our agility into their advantage. To convert our speed capabilities into market agility, we need to achieve greater inventory control. We have set ambitious inventory targets fully integrated into our bonus structure to ensure shared accountability across the company. An experience-driven supply chain is more expensive. To finance the considerable investments we'll make, we've set up an integrated cost-efficiency program that not only mitigates the cost increases of our bold business model but also creates leverage of the company. We'll do this in a few ways: increasing efficiency in our inbound management, setting up productivity programs for our DTC network with a focus on processes and automation and by increasing last-mile reliability. Both digital and supply chain management are instrumental to the success of our 2025 strategy. By shifting towards a DTC-led strategy, we're fundamentally changing the way we work towards the digital and consumer-first setup. On the digital side, we are building up the expertise and capabilities in-house to truly become a tech-driven company inside and out. In our supply chain, we focus on a superior delivery experience both through our consumers and wholesale partners, increasing agility and responsiveness while balancing with cost efficiencies to stay competitive. It's change that's inspired by our attitude that impossible is nothing, and I'm more than confident we'll get there. [Presentation]

Where do we bring Own the Game to life? Yes, in our markets. This is where our consumers will experience the full excitement of our brand. It is where we build credibility through innovations, products and campaigns and, more importantly, where we win the minds and hearts of our consumers. Let me share 3 important insights, which infuse our strategic focus from a market perspective. Greater China, and this is no surprise to you, is projected to be the fastest-growing sporting goods markets globally in the years to come. North America, however, will remain the largest sporting goods market by 2025. And EMEA is our home market. It is not only critical to Own the Game in our own stadium. EMEA will continue to be our biggest market in 2025. Together, these 3 major markets are expected to contribute about 90% of the overall industry growth between 2021 and 2025. Last year, we simplified our market structure and reduced the number from 6 to 5. We separated Greater China from our regional APAC setup to focus on the fastest-growing sporting goods market. And we consolidated Europe, CIS and Emerging Markets into the new markets, EMEA, to leverage the individual strengths and build an even stronger home market. The newly formed EMEA and Greater China, together with North America, are the 3 strategic markets that we will focus on until 2025. Our ambition is to take further market share in all of these strategic markets. Greater China will be our growth engine with low double-digit net sales growth, whilst we target high single-digit net sales growth in EMEA and North America. We will achieve these growth ambitions through executing on all elements of our global strategy and by making sure we are relevant for the local consumers. We have global focus areas, credibility, experience and sustainability, and we will bring them to life through relevant activation and storytelling in our markets. And finding the right balance between leveraging global strengths and being hyperlocal where it matters will be key to our success going forward. We know these local markets, and there are new ones better than anyone in our industry. In many cases, we were even the very first brand to address local consumer specifically. Our market teams are an integral part of the strategy development, and we're execution-ready now. We will be fast out of the gate. Let's have a look at the high-level plans for our strategic markets. I will use examples of how we tailor the global strategy to make it relevant for the local consumer. Greater China is the fastest-growing sportswear market and now home to 2 of our global key cities: Shanghai and Beijing. Fueled by economic growth and increasing sports and fitness participation, China offers tremendous top line growth, not only for global players, but also homegrown brands. Our ambition in Greater China is to become the leading global sports brands in the hearts and minds of Chinese Gen Z consumers. Now how are we going to gain the status of a global brand that truly resonates with Chinese culture? We will inspire our Chinese consumers through relevant brand moments and use major platforms such as the 2022 Beijing Winter Olympics and the 2023 FIFA Club World Championship to showcase our brand. We will engage with consumers through storytelling with global and local brand partners, and we will continue to work with the Chinese Ministry of Education to develop football in China. And we will complement our global product offering with relevant speed-to-market product concepts developed in our own creation center, Asia, in Shanghai, where we design specific products Chinese consumers really want. And finally, we will move from a franchise-led business to a direct-to-consumer business by 2025. This DTC-led business will be largely driven by e-com with our continued investment in our digital capabilities and our dedicated digital hub in China. We recognize that China has a unique digital ecosystem, and we'll successfully tap into that in tandem with boosting our physical retail success through [ halo ] stores and factory outlets. And despite this shift, franchise will remain our biggest channel, and we will continue to see profitable business growth with our long-term franchise partners with a future-proof strategy to scale in the top 21 and the future cities in China. There is no doubt that we're very excited about the growth prospects we have in Greater China. In North America, we want to build on our tremendous success over the past 5 years where we doubled the business and now want to take additional market share. How will we do this? We will continue to make strong progress winning on the field of play and elevating our U.S. icons, just to name a few, Patrick Mahomes, Mikaela Shiffrin, Aaron Rodgers and Becky Sauerbrunn. For those of you that don't know Becky, she's the new captain of the U.S. women's national soccer team and will lead the team to the next World Cup in 2023. With our long-term Major League Soccer partnership, we have an exceptional platform to continue to lead in soccer as we prepare for the FIFA World Cup 2026 to be held in Mexico, Canada and the U.S. And as you have heard from Brian already, we have just announced an exciting new partnership with Jerry Lorenzo and Fear of God Athletics, through which we plan to completely disrupt the basketball category, both on and off the court. The team will be based in our key city, Los Angeles, because L.A. is where the game of basketball intersects with culture and lifestyle. And while we have made strong progress in our other key city, New York, we continue to see immense opportunity to win even more consumers over. We will focus on major activations in the boroughs of the city, working closely with key alliance partners on the wholesale side and using our brand partners, James Harden and Aaron Judge, to underpin our sports credibility. So with the power of our sports icons, our new exciting basketball setup, combined with the energy that Beyoncé, Pharrell and Kanye provide, we have outstanding partnerships in place to continue to fuel growth, with strong connectivity across U.S. sport and culture. Also, in North America, our most digital market, we are putting DTC at the center of our execution plans. In addition, we will increase our focus on fewer wholesale partners and will bring our concepts to life across the commercial ecosystem. In EMEA, we have the ambition to own the game on our home turf in sports and lifestyle. EMEA is home to 5 of our global key cities. In those cities and across the region, we will strengthen our sports credibility by doubling down on 2 focus categories: football and running. EMEA is not only our home but also the home of football. Here, the international football calendar gives us the perfect opportunity to make a brand statement. Just think about the global sports moments that will take place in EMEA. We've got the FIFA World Cup 2022 in Qatar and the UEFA European Football Championships that takes place across Europe this summer, while Germany will host it in 2024. In addition, we'll be visible all year-round through our strong club and federation partnership portfolio, including Bayern Munich, Real Madrid, Juventus, Manchester United, Arsenal, along with Germany, Spain, Belgium and Russia, just to mention a few. Next to football, we will focus on running to sharpen our edges in sport, lending our running franchise innovations during global sports moments such as the Olympics in our key city, Paris, in 2024 and by building the largest running community through adidas runners and our very own running and sustainability movement, Run For The Oceans, will be key to our success. To own the game at home and lifestyle, we will expand our running-inspired and women's dedicated footwear business in Originals, evolving our lifestyle distribution to a smaller number of distribution partners. And we will, of course, put relentless focus on e-com and our own store experience, which are the centerpiece of our DTC-led approach also in EMEA. On the wholesale side, we will focus on trusted, winning accounts and accelerate our digital partner commerce business. Overall, we will drive efficiency by reducing the total account base and increasing self-service capabilities. By capitalizing on our home turf advantage, EMEA will continue to be our biggest market in 2025. So in summary, we are a global brand with a global strategy, focusing on credibility, experience and sustainability. In the markets where our strategy will come to life, we will be fast, agile and hyperlocal. We will focus on winning over consumers' hearts and minds in 3 markets, Greater China, North America and EMEA, in which we will invest over-proportionally to take market share. Together with our market teams, we are ready to own the game. [Presentation]

Through the course of today, you have heard from my Board colleagues how we will execute our new strategy, Own the Game. I will now guide you through how this execution will translate into financial success for adidas until 2025 or, more specifically, how it will result in growth on several accounts because one thing is clear, Own the Game is a growth strategy. Strategically, Own the Game is a 5-year plan, and it will be executed as such. But the coronavirus pandemic had a significant impact on the financial year 2020, screwing the comparison base. With this in mind, we have decided to split the 5-year plan into 2 parts from a financial point of view. First, there's year 1, 2021, and then there are the following 4 years, 2022 to 2025. Let me start with the outlook for the current year before walking you through the growth algorithm of our strategy in detail. When looking at 2021, please bear in mind that this is already excluding Reebok, for which we have just begun a formal divestiture process. As a result, Reebok will be reported as discontinued operations as of Q1 of this year. After the significant revenue decline experienced in 2020 due to the global pandemic, the recovery, combined with execution of Own the Game and our strong product pipeline, will drive a strong acceleration in terms of currency-neutral sales in 2021. We expect sales to increase at the mid- to high-teens rate on a currency-neutral basis. Excluding currencies, this will actually get us back to the 2019 sales level or even somewhat above. That said, like last year, we expect currencies to be significant, as mentioned, resulting in lower sales growth in reported terms. Our gross margin is also expected to almost fully recover to pre-COVID levels and reach a level of around 52% in 2021. Unfavorable currency developments will continue to weigh on the gross margin development, especially in the first half of the year. This will be more than compensated by an improved pricing mix as we continue to be very disciplined with regards to promotions as well as the benefits from the continued channel shift. While we'll continue to expect to control non-value-adding costs, we will accelerate brand investments. We want to be there when consumers return to all the large and the small stages of sport and to connect with them in a meaningful way. You heard it from Brian. We will be there for them louder than ever before. Nevertheless, our operating margin is projected to increase significantly to a level of between 9% to 10% this year. This operating margin outlook includes around EUR 250 million of stranded costs related to the intended divestiture of Reebok. Excluding this effect, which I will be discussing in more detail in a moment, our margin would be even more than 1 percentage point higher. Our net income from continuing operations is projected to increase to a level of between EUR 1.25 billion to EUR 1.45 billion. This, again, includes about EUR 200 million of stranded costs, but the drag is very temporary. Let me explain why. As you know, we have fully integrated the Reebok business into adidas for efficiency reasons. That means that some resources, IT, stores, warehouses, offices and employees, have been used by both adidas and Reebok. As we prepare Reebok to operate on its own, some of these shared capacities and resources and the costs associated will remain with adidas. These so-called stranded costs amount to around EUR 250 million on an operating profit level. And while, in 2021, we expect to bear them and report them as part of our continuing operations, we will have either largely passed them on or actively managed them down ourselves as of next year. As a result, we anticipate that only 30% of the EUR 250 million will reoccur in 2022. By 2023, we will have fully eliminated these costs from our P&L. This concludes my shorter-term and more operational comments. Today's focus is clearly on our new strategy. You have heard it. Own the Game is a growth strategy, and I will now explain what that means for our financials. We have set ourselves ambitious top line goals for 2025. We are aiming to grow currency-neutral net sales on average at a pace of 8% to 10% per year and find notable market share gains. Again, this CAGR is for the 4 years starting in 2022 and comes on top of the strong recovery we are expecting this year. E-com will continue to grow much faster than that. As a result, this channel will yet again double its size for more than EUR 4 billion in 2020 to EUR 8 billion to EUR 9 billion by 2025. At that point in time, our direct-to-consumer business, the sum of own retail and own e-commerce, will account for about 50% of net sales. The industry backdrop of our growth ambition is highly attractive. Sporting goods will keep growing at a mid-single-digit rate per annum, which means that its size will expand by around EUR 100 billion to almost EUR 400 billion by 2025. This industry growth represents a massive opportunity in itself. And as our industry rewards scale, we are in an ideal position to outperform this growth and gain market share by adding between 8% to 10% to our top line per annum on average between 2021 and 2025. Looking at our 3 strategic markets, the biggest opportunity clearly lies in Greater China. The market is projected to grow the fastest globally, and we aim to grow even faster at a low double-digit rate. Roland has already described how we are going to win in China. In North America, we made great progress over the past 5 years, having secured a clear #2 position in the market. Nevertheless, the opportunity in the world's biggest market remains huge. Consequently, we target the most significant market outperformance, meaning the biggest market share gains in North America. The market is anticipated to expand in the mid-single digits per annum, and we will outperform this by growing net sales in the high single digits on average per year. This will be coupled with significant profitability improvements. There's no reason why, over time, North America shouldn't be able to reach the profitability levels of other more mature markets. But make no mistake, we will continue to invest into our presence in this all-important market and continue to disrupt the marketplace. Our partnership with Jerry Lorenzo is the best example of this. Our home market, EMEA, is expected to expand somewhat faster than North America, and we will grow here in the high single digits as well. To cut a long story short, we will gain market share globally and in all 3 strategic markets. These market share gains, through over-proportional top line growth, is going to come directly from our strategic priorities. The vast majority of our growth will be driven by those categories, markets and channels that we have defined as our priorities for the next 5 years. Out of all the strategic priorities you have heard about today, the shift to DTC-led business model has the most profound impact on our financials from top to bottom line and has also significant implications on how we operate. So let me spend some time on this shift and its implications. Consumers' behavior is changing and is moving in our favor. The change is twofold. First, consumers are shopping more and more online. As a result, net sales in the sporting goods industry through digital channels are expected to grow 3x faster than offline. By 2025, online will likely represent more than 40% of the entire industry, a truly seismic shift for the sector compared to just a few years ago. This also triggers the second change. Historically, especially consumers in Europe and North America prefer to shop in multi-branded environments. With a shift to e-com, more and more consumers are shopping with their favorite brands directly. As a result, mono-brand is forecast to grow twice as fast as multi-brand. We will fully capitalize on this opportunity and grow the DTC share of our business to around 50% by 2025. This will allow us to own the interaction with the consumer and control our destiny. The transformation from a largely wholesale-driven to a DTC-led business model has already and will continue to significantly change our financials. By selling our products directly to the end consumer, we will generate higher revenues. With sourcing costs being unchanged, this will have a positive impact on our gross margin. At the same time, operating overheads will be impacted, particularly due to the significantly higher share of variable costs in e-commerce, whether it's shipping, returns handling, payment or customer service. So while moving towards DTC is also accretive to operating margin overall, the true financial benefit is that we can generate much higher absolute profits and cash flows. In the years to come, our business model shift will change the way we create value from a relative margin contribution to an absolute euro contribution. Speaking of contribution, let me now move to our bottom line growth ambition. Over the coming years, we are aiming to expand our gross margin to an industry-leading level of between 53% to 55%. Our operating margin will increase to a level of between 12% to 14%. And as I just described, the absolute contribution will be much higher. We want to grow our net income by between 16% to 18% per year on average during the 4-year period between 2021 and 2025. I will now walk you through the different P&L line items in more detail. Let me first decompose our operating margin development and put our ambition into some historical context. In 2015, when we initiated Creating the New, we had an operating margin of 6.5%. Through our relentless strategy execution, we were able to drive the margin up to 11.3% in 2019. This is not the end. Despite value creation shifting towards higher absolute contribution, the margin will increase as well. By 2025, we expect our operating margin to reach a level of between 12% to 14%. This will be mainly driven by a higher gross margin as well as reduced operating overheads as a percentage of sales. Marketing will not contribute in a meaningful way here as we keep investing heavily into our brand. From a regional perspective, Greater China will continue to be our most profitable market. While profitability in the region will come down slightly, as frequently mentioned in the past, as local marketing spend increases, it will remain well above the 30%. In all other regions, margins should increase. North America clearly has the biggest potential. I know I'm repeating myself, but I want to reiterate again that we don't see any fundamental reason why our business in North America shouldn't be on a similar profitability level like other more mature markets. Let's now break down the drivers of our operating margin expansion further. Our already industry-leading gross margin will go up further to a level of between 53% to 55%. The business model shifts to a DTC-led has 2 benefits here. First, there's a direct benefit, as outlined before. Higher sales at the same sourcing cost lead to gross margin expansion. Second, there is an indirect benefit as well. In a DTC-led world, we control the sales process much better and gather way more consumer data, which, in the end, will lead to less discounting and a higher share of full-price sales. In addition, our new brand architecture with the ambition to premiumize Originals as well as to focus on just 5 strategic categories will also contribute to the margin uplift. Some of these benefits are expected to be offset by increasing sourcing costs, mainly caused by higher labor costs in Asia. To support our brand and our top line growth, we will keep investing into marketing. Our spending in absolute euro terms will go up significantly. In 2025, we will invest around EUR 1 billion more into our brand, its products and the activation compared to this year. This reflects an additional EUR 250 million marketing firepower that we will have year-after-year toward 2025. We will further increase our investments into sports marketing. Our brands and our strategy are rooted in sport, and we will make sure that the consumer has no doubt about that. At the same time, we will make sure to spur the growth in our member base and the digital business by targeted marketing activities based on consumer data and insights. And above all, we will elevate our product storytelling and bring our brand attitude to life like never before to increase funding for campaign and content creation. We will run fewer but more consistent and bigger campaigns focused on hype drops and major franchise launches, which will increase both the effectiveness and efficiency of our marketing efforts. The more significant contribution to increasing operating margin is coming from operating overhead efficiencies. On the one hand, we keep investing into the business, also in OpEx terms. The higher DTC share will result in higher OpEx, particularly for e-commerce, as I mentioned before. On the other hand, we are targeting efficiency gains that will more than offset this increase. To be clear, this is not about cutting costs. This is about leveraging our investments that we have started during Creating the New that we will seamlessly extend into Own the Game. I want to give you 2 examples here. First of all, we want to reach the next level of operational efficiency by leveraging state-of-the-art technology within our global business services. The focus will be on automation and digitization to achieve more touchless processes to deliver higher information quality and service efficiency. We will also broaden the scope of GBS to more services in more markets and thereby increasing integration and bringing the required desk to our services along the entire value chain. GBS will support the execution of our strategy by reducing organizational complexity and integrating data across functions. This upgrade of GBS will be enabled by a transformed IT infrastructure. We will be moving from a fragmented ERP landscape with lots of manual interfaces to a globally integrated cloud-based ERP system with the highest level of automation. This change will unlock new business potential as we will ensure smarter and faster decision-making based on real-time data that is reliable, holistic and easy to access. With those initiatives, we are building the foundation for an agile and efficient organization for the long term. And in the years ahead, they will also enable us to leverage our top line growth all the way through the P&L. This gets me to our bottom line ambition for 2025. In addition to the expected net sales growth and operating margin expansion, a roughly stable financial result and largely unchanged tax rate will provide support. All in, net income growth will materially outpace the top line development at a rate of 16% to 18% on average during the 4-year period until 2025. Here, the absolute contribution comes the shift towards the DTC-led business model will clearly become visible. On top, share buybacks will accelerate EPS growth even further. Let us now look beyond the P&L. As explained before, moving from a largely wholesale-driven to a DTC-led business model is a tremendous opportunity from a strategic and from a financial perspective. But it also means that an increasing share of sales is realized by shipping individual parcels to consumers instead of large bulks of products to wholesale partners. Individual product returns need to be handled. Omni-channel offerings are becoming more important. All of this increases the complexity in our supply chain, and we hold on to inventory longer. That said, we have a clear understanding of all those moving parts and have a proven ability to mitigate them. Over the past 5 years, we have built a multi-billion euro e-com business from scratch, and we did it while increasing working capital efficiency. So we know exactly which levers to pull to mitigate the negative impact from the DTC shift on our working capital. We just need to accelerate them as the DTC shift accelerates. These levers span across the entire organization from marketing to finance and to global operations and supply chain management. I want to repeat one of Martin's examples here to demonstrate the crucial role of data and analytics. We will increasingly rely on machines that predict and restock our products. They will be fully automated and highly accurate. We will also be able to predict demand trends based on regional and economic data, which helps our teams transfer stock and maximize full-price [ outflow ]. As a result, we will not only keep our working capital under control but even increase its efficiency. In 2021, we aim to manage our average working capital down to below 20% of net sales. And in the years thereafter, we will drive this number down even further. Over the next 5 years, our business will not only continue to be highly cash generative. It will become significantly more cash generative than ever before as a result of Own the Game. The use of this cash is clearly prioritized. First and foremost, it is used to secure the financial stability of adidas. We use our operating cash flow to finance the operating businesses and to meet our cash and liquidity needs. We intend to keep a financial profile which enables us to maintain our current strong investment-grade ratings with S&P and Moody's. When it comes to investing for growth, our focus is clearly on organic growth. This has not changed. Dividends are a main element of how we distribute cash to shareholders. We continue with our proven policy of a payout ratio of 30% to 50% of net income from continuing operations. We will use additional excess cash for share buybacks, which we project will be significant over the upcoming 5-year period. Overall, we believe this approach is well balanced between growth investments and attractive shareholder returns. I will now provide a bit more detail on both topics, starting with our strong commitment to organic growth investments. We aim to continue to spend between 3% to 4% of net sales every year as capital expenditure. That is quite a lot for an asset-light business like ours. In combination, as we describe OpEx investments, it becomes clear that Own the Game is a growth and an investment strategy. Investments at our own retail stores will continue to make up the biggest part of capital expenditure. But the share of investments into digital, including e-com, continues to rise significantly. Note that especially when it comes to e-com, a lot of investments are OpEx investments. So just looking at CapEx does not fully show you how we drive growth in our most important channel. As Martin explained earlier, in total, we will invest more than EUR 1 billion into digital between 2021 and 2025. After securing financial stability and investing heavily into the business, we still forecast to generate significant free cash flow. This free cash flow will be almost fully returned to shareholders. The foundation is the annual dividend with a targeted payout of 30% to 50% of net income from continuing operations. On top of that, we will use additional free cash flow to buy back shares. The exact timing and amounts of buybacks will be communicated at a later stage. In total, we plan to return between EUR 8 billion to EUR 9 billion to shareholders through dividends and buybacks during the 5-year cycle of Own the Game. This is around twice as much as in the previous strategic cycle, and it does not yet include any proceeds from the planned Reebok divestiture. Let me sum up our ambitious targets for the 4-year period 2021 to 2025. Top line growth is our #1 priority. With an average currency-neutral net sales growth of 8% to 10% per annum, we will gain significant market share. Our e-com business will expand much faster and will grow to EUR 8 billion to EUR 9 billion by 2025. Our gross margin will increase to a level of between 53% to 55%. Our operating margin will expand to a level of between 12% to 14%. But what is more important, through the change to a DTC-led business model, our mindset shifts from relative to absolute profit and value creation. Consequently, net income growth is forecasted to be 16% to 18% on average per year and, with that, growing much faster than sales. This P&L ambition, a combination of sales growth and margin expansion, coupled with the increased cash returns through dividends and buybacks of EUR 8 billion to EUR 9 billion, will drive significant value creation. Let me summarize. Until 2025, adidas will outgrow the market globally and in all 3 strategic markets. The vast majority of our sales growth will come from our strategic priorities across categories, geographies and channels. We are committed to strong investments into our brand, into digital and into DTC. Despite these investments, adidas will be a more free cash flow-generative business than ever before. And almost all of the free cash flow will be distributed to shareholders through dividends and share buybacks. All in all, this results in significant value creation for us, as a company, all of its stakeholders and, of course, for our shareholders. With that, back to Kasper for his closing remarks. [Presentation]

We have one strategy that we're going to execute as one team, Own the Game. You've heard why we made those strategic choices, what we're going to do and how we're going to do it. Key to the successful execution of this strategy are our people and our culture. They will make our purpose, mission and attitude come to life; our digital-first approach that spans from the creation of our products all the way to the consumer; and our mindset of innovation, which we apply across the entire business. By 2025, we will have gone through a transformation, especially in our strategic focus areas. We will have gained even more credibility in both sports and culture. We are shaping the edges of both ends of the market. At the same time, we're tapping into the biggest opportunity at leisure by introducing sportswear as a new consumer proposition. We make women a company-wide priority and move to a successful cross-category women's business. And we'll focus on the 5 categories that matter the most: football, running, training, outdoor and lifestyle. By 2025, we'll have lifted the consumer experience to a whole new level. We transition for opportunistic communication with consumers through a deep relationship with our most valuable consumers, our members. We move from the traditional wholesale-driven business to becoming a DTC-led company with e-com as the most important store. And instead of winning in just 6 key cities, we'll double down on 12 key cities. By 2025, we will have pushed the boundaries in sustainability even further. We expand from strong stand-alone initiatives to a comprehensive consumer-facing program with a sustainable offering at scale. In 5 years, 9 out of 10 articles will be sustainable. So we have a plan. And just like an athlete when he goals, we have clearly defined what winning looks like. And here are the objectives you can measure us against. Sales growth of 8% to 10% currency-neutral, which means we'll gain market share globally and in all 3 strategic markets. This top line growth will translate into an operating margin of between 12% and 14% as well as 16% to 18% bottom line growth on average per year. We'll see a shift from relative to absolute profitability as we grow our e-com business to EUR 8 billion to EUR 9 billion, and DTC will account for around 50% of our business. Our growth is sustainable. By 2025, 9 out of 10 articles will be sustainable. As in our past, our shareholders will continue to participate in our success as we plan to return between EUR 8 billion to EUR 9 billion to them. The incentives of the Executive Board and the senior leadership team will be directly linked to those ambitions. So let me summarize. Over the next 5 years, we will put the consumer at the core of everything we do, reinforce sport as our heritage and identity and executing Own the Game, an investment and growth strategy that will lead adidas into a successful future. Thank you for your trust. [Presentation]

Thank you for having stayed with us for the last 4 hours as we presented our new strategy, Own the Game, to you. Now please enjoy your break, and we also recommend that you refresh your browser. We will be back then here live from Herzogenaurach with our Q&A. See you then. [Break]

So welcome back, everyone, to the final leg of our 2021 Investor Day. After you've patiently followed our presentations for the last 4 hours, now comes the interactive part. The Q&A session with our CEO, Kasper Rorsted; our CFO, Harm Ohlmeyer; and Brian Grevy, our Board Member for Global Brands. Before we will kick it off, just allow me 2 remarks upfront. First of all, I would ask you to mute your computer or laptop if you ask a question over the phone. Otherwise, we're going to have a loud echo here and it's going to be impossible to communicate. And then, as always, I would ask you to limit your questions to 2 because we know that there's a lot of people who would love to ask questions on the last 4 hours. So we want to give as many people as possible the chance to ask a question. And with that, we're now ready to take all your interesting questions on Own the Game. And with that, over to our operator, Emma, who is going to lead us through this Q&A session.

[Operator Instructions] The first question comes from the line of Graham Renwick with Berenberg.

Thanks for a great set of presentations, very well delivered. I just have 2 questions. Firstly, just thinking about online Wholesale. How much do you think that will represent group sales by 2025. So in addition to the 50% DTC, how much do you think adidas will be online overall in 2025? And would you then aim to shift all Wholesale online business to an e-concession partner program model? And if so, can you talk around the economics of that because presumably it'd be a lot more profitable than ordinary Wholesale. And then secondly, just on margin, how should we think about the part of margin improvement in 2025? Should we expect a quick recovery back to 2019 margin levels, and then more moderate expansion thereafter? Or is there any front-loading of investment we should be considering? Or should we simply assume a more linear part from 2021 to 2025?

So thank you for your question. As you know that our overall DTC will be approximately 50%. And we've said we will have an online business of approximately EUR 8 billion to EUR 9 billion, and we believe that the digital partner sale will be approximately 25%. So you're going to see that the overall market is going to be really digitally driven. So we believe that the market will be approximately 40% online. So a huge part will come from the digital side. And that, of course, will expand over time. So that's how we see the digital part. We will continue to drive both. We'll be very aggressive in our own channels. But of course, it's in our interest to make certain that our digital partners, whether it's the pure players or the brick-and-mortar with the digital extension also will be around. And we'll continue to invest with them and within them. The second part?

When it comes to the operating margin, Graham, of course, the original plan was built to gradually improve every year. So it's not that we have a hockey stick to the end of the plan. So every year, we want to improve that operating margin. But given our hedging position going into '22, we still have a headwind from a hedging point of view in '21 compared to 2020 or compared to 2019. But as we all know, the last 12 months, the dollar was somewhat weaker, and we put our positions into '22. So maybe there's some acceleration in '22 happening already.

Okay. And just a follow-up. With the Wholesale online accounts, do you think that over the coming years, you will shift more or less to an e-concession model? And if so, what are the economics around that? Because I assume that would be a lot more profitable than beginning with them on Wholesale terms.

Graham, it's a great question. I wouldn't speculate it on it today. Right now, we put our strategy out in the context as I outlined today. Of course, if we believe that our models over time become more attractive, of course, we will move into those models. But right now, it's based on the current models and the current business model as we know. And in that context, we've articulated the targets.

The next question is from the line of Zuzanna Pusz with UBS.

I have 2 questions, please. So the first question is on your profitability outlook. I just wanted to check because it looks like given the top line growth and the outlook we have for 2021, excluding the kind of one-off costs related to still operating Reebok, your margin looks rather conservative, I would say, definitely at the lower end of 12%. So I just wanted to check if just maybe some sort of a changed way of thinking about the business where you're willing to reinvest any incremental sales growth above your expectations into the margin -- sorry, into the top line in order to drive an even faster top line? Or maybe simply the margin is conservative. And related to that, just a clarification. So the 16% to 18% net income CAGR, this is on the 2021 outlook. But I wanted to check, is this on the EUR 1.24 billion to EUR 1.45 billion net income, which includes the one-off costs of operating Reebok, or is it excluding that? Just to know what is the actual base? And the second question is on your strategy, kind of refocusing back more on sports. So I just wanted to check how big as a percentage of sales are these 4 sports you want to focus on? And also, does it mean that you're going to maybe somewhat kind of move away from the U.S. sports? I know that they've been a big part of the investment for the past years. So are you going to exit them? Have some of the contracts, it will be interesting to hear a bit about the U.S. sports because that's been historically a big focus of previous management teams. And I think that's a big change from today's plan.

So Zuzanna, it's a bit more than 2 questions. Let's try to make sure that we can answer it in a correct way. I will start slightly on the strategic direction, and then I'll hand over to Brian, who will articulate more on what we call credibility. We don't disclose -- we're not disclosing today the amount of sports business we're creating. But what we are doing is we are making certain that we're clear on what the ambition is. And our ambition is to get to a #1 and #2 position in each of the 4 categories we're doubling down on. And that, of course, means that there are certain categories like for the sake of the argument, field hockey that we're going to get out of to make certain that we really double down where it matters from the sports fan, and it matters from a commercial standpoint and from a brand standpoint. And that's why we've been very clear on the 4 sports that will make up the vast majority of our business. And I'll hand over to Brian who will articulate what it means from a sports credibility and also from a U.S. sports standpoint.

Yes. So if you come to the growth, where growth will come from, growth will come from running, training and outdoor. They're all sports and they're global sports, and running is the one that defines the sports brand globally. So that's one thing. Then the lifestyle partner represent around 50% of our growth, that we will address that with sportswear and originals. When it comes to the sports that we've chosen to stay in, we do them for authentication. And for the American part of the business, we are still in American football. We will still be in baseball. And as you heard with Jerry Lorenzo, we have a very disruptive basketball plan to make sure we're capitalizing on the culture that generates into our business. And that applies both to American business and our China business.

Just on the profitability, to be very clear, Zuzanna, we believe we have an ambitious plan also towards 2025. That plan also on the net income CAGR on 16% to 18% is based on the guidance that we gave on '21. And of course, it will also be based on whatever we deliver in '21 as we segment our strategy into 2 parts. One is what we deliver in '21. And then secondly, the next 4 years, '22 to '25. And the growth in '22 to '25 will be based on what we do in '21. When it comes to the stranded cost, again, we are fully integrated with Reebok in our business. And I'll give you 2 examples. If you look at the warehouse right now, the percentage of what Reebok is going through our warehouses and we have fixed costs in the warehouses, it's the same as in retail stores. And of course, we will grow into these costs with the adidas brand and give them our growth plans that we have. So it's not really considered as onetime costs. We will grow on these costs, and that's why we are so confident to move these costs relative to the net sales in '22, and that will be fully eliminated from a ratio point of view in '23. That's the direction that we're going to go. But also, we will spend the next 10 days with Sebastian and Kasper and myself on a virtual roadshow to explain more details, and that is probably not for today.

Excellent. So sorry, just to clarify. So 16% to 18% CAGR is on EUR 1.25 billion to EUR 1.45 billion net income for 2021, right?

That is correct. That is correct.

The next question comes from line of Piral Dadhania with RBC Capital Markets.

I appreciate all of the effort in putting together today's Capital Markets Day and all the details. If I could go to the revised brand architecture that you're planning to move towards with 3 clear articulations of the adidas brand, could you perhaps help us explain the motivation for this change and how you're expecting consumers to respond to that? Is it an attempt to better differentiate between sports performance and lifestyle in terms of your segmentation? And then at the back end, is there any internal reorganization required in terms of product development, merchandising, marketing? And then secondly, just on product strategy, if I may. Innovation has always been a key strength at adidas, and you guys spent a lot of time talking about that in today's presentation. But could you perhaps elaborate on any changes you're making in terms of your commercialization strategy and go-to-market strategies, particularly in relation to your hype drops, the platforms you already have and then maybe around lifestyle franchises, which was perhaps a little bit less well addressed in the presentation?

Good. So thank you very much for the question. When it comes to the brand architecture and the choice we've done, it's very clearly that when we go to the differentiation part of it, it is to allow us to have a much more distinct and clear purpose and message of what we create and how we will communicate that. So the batch of -- when it comes to the sports part, the way we define that is always inside the lines. It's to make sure the teams that works on that is creating the best products for the athletes. It's the product you perform the best in. Then you go to the original side of our business, that is where we want to sharpen the edges. We want to create new frontiers of culture, and thereby also new distribution avenues for us in that segment. When it comes to the middle of sportswear, we have had a very fragmented approach to that mid section. We have allowed categories to have their approach into it, thereby a very unclear brand message into that space. And that's what we're addressing now. It allows us to differentiate the channels. It allows us to play with uniqueness. And when it comes to it, it allows us also to capitalize on the biggest stages in sport, in sportswear. And what I mean with that specifically is we will have products on the sidelines. We'll have products to and from that helps us to showcase those products on the biggest stages and really bring them alive in the sportswear sector. They have to look good as one. When it comes to how we want to differentiate our innovation, I think there were some more questions in that. So let me just elaborate on the 3 things I took out. Innovation is key for us. Every time we innovate, we'll innovate along 2 lines. Either it's a purpose of intent where we want to be first, we want to be best. And that is then where you start to build the scalability behind that; or it is innovation for scale from the get go, and that is also how we're setting up our innovation engine. When it comes to our hype-to-scale model, it's the same thinking we have in here. We will have lots of drop that has scarcity in it. That means limited distribution, limited volume, really for the sneakerhead community, really to create hype up here. And parts of those drop will then scale out for commercialization in a much faster pace than we've done before. And of course, we are organized around the prices we have to make this happen.

The next question comes from the line of Jurgen Kolb with Kepler Cheuvreux.

Two questions from my side. First one, maybe on, again, the sportswear category. Maybe you can share with us where is the difference to -- you had a similar -- I shouldn't say similar, but you did have a brand called neo, which was also targeted a special customer group, so where do you see the differences between the former approach on neo, which was then, I think, handed over to the Wholesale partners, and your sportswear partner. And in this connection, you're also planning to have a dedicated sportswear retail chain so that you have dedicated line of products. And then secondly, on the marketing side. I think you indicated that the actual marketing to sales ratio will probably stay unchanged going forward also to 2025. Considering that you do more business online, one could assume that the efficiency of the marketing spend increases. So how do you think the -- will the compilation of the marketing spend in terms of spending for campaigns or spending for sports assets going into advertising and promotion? Or is that going to stay about a 50-50 level here?

Good. So thank you for the question, Jurgen. If I start with neo in relation to the journey neo's been on, neo was created, first and foremost, as a value proposition. It was literally built to cater for the value parts of the markets. If you would go through today, when we build sportswear, sportswear will be a good, better, best proposition. That means we will have all the way from premium products all the way down the channels. When you come then in a look-see, would we have spaces defining sportswear? Absolutely, yes. That's a clear plan for us. That could be stand-alone stores. That will be, of course, sector and our halo stores. But it will have a stand-alone proposition with a very clear design, DNA and tonality to it. When it comes to the marketing spending and you look at it. If you look at the overall spend we will have over the next 5 years, the incremental spend we will have will go -- majority will go to our digital side of the business and to campaign and content. And that means we will double down in the big parts of the campaigns we want to deliver on. What we are doing in the back and what we've done over the last year really to optimize that, we've created something we call marketing excellence to really deploy more money away from the back end of content creation on efficiencies into a much more effective front end investment.

The next question comes from the line of Warwick Okines with Exane BNP Paribas.

I'd like to understand your strategy in China a bit more, please. What would you say the key changes that you're making to your approach in China will be as part of the strategy '25? And the channel shift from franchise to DTC is obviously one of the things you mentioned. Perhaps you could just talk about where you think that the mix of DTC is today? And where do you think it will get to by 2025, please?

So as you know, we've been exceptionally successful in China. We doubled the business during the last couple of years through the creating the new consistent high-growth rates and also gain market share. In the last 2 years, the growth has slowed somewhat down. We're still running double-digit market shares. What we are seeing in China is a market change towards a more DTC-led model. So you're going to see a consistent expansion, not only of our own stores but also on our own digital activities, whereas before, we are very engaged within the Chinese ecosystem. So you're going to see a channel shift mix. And within the digital channels, you're going to see also a shift towards owning it end-to-end than we've done before. That will, we believe, accelerate the growth because it will allow us to execute more consistently and better in this stage. We'll still have a great relationship with our biggest partners in China. We continue to expand and build bigger and probably better stores. We have expanded our footprint of our stores in the last couple of years. And we've taken back, as you know, a lot of the factory outlets to make certain that we determine the clearance. So it's going to be owning more of DTC. And within DTC, owning more of the digital engagement end-to-end. And when it comes to product, I'll hand over to Brian who will speak a bit about that. We still feel very, very confident about the journey we are in China. China will be immensely attractive for us also in the future. And as you can see, this year's guidance, we're guiding 20% to 30% growth in China. So China will continue to be not only a profit driver for us but also a growth driver.

When it comes to product, it's no -- there's no question that we want to be a global brand in China, but we also understand the local relevance that is required. And thereby, we have built a creation center that we will utilize to add and complement to our global collections to make sure they are local relevant or reverse seasonality, Chinese New Year, et cetera. And of course, we want to make sure we have rapid creation, meaning reactive capabilities for trends within the Chinese market, which is growing both in influence and the way they are responding to trends out there. So I think that's a key enabler for us to really bring the global plan alive and make sure we are local relevant at the right times across the markets and in the key cities.

Next question comes from the line of Erinn Murphy with Piper Sandler.

Two questions for me as well. First, I was hoping you could speak to the women's strategy a bit more. You talked about mid-teens growth. Can you share kind of how linear that growth will be across the plan? Is it fairly balanced? Or is it more back-half weighted? And what categories will you be leaning into or tapping into to really develop that? And then my second question is just following up on the 12 key city strategy. It is similar to a competitor of yours, but there were 2 cities that were really unique to adidas, both Moscow as well as Dubai. Can you just share a bit more about the importance of these cities?

Let me start with the 12 key cities. Actually, I think it was the other way around. We were the first one to introduce 6 key cities, but it really doesn't matter. We have seen an over-proportional growth rate and market share development in the 6 key cities in the past, and that's why we expanded to 12. We believe, and this is, of course, when we go through it. We looked upon a number of expansion opportunities, and we want to make certain that we do it in the most appropriate way. We believe Dubai, which is, if not the largest travel destination in the world then the second largest, is immensely important, also moving forward as a commercial and also a brand moment. And that's why we chose Dubai as one of our destinations. We probably have the most known athlete in the Middle East with Salah, football player, and really having a very strong starting position in a destination that's one of the largest commercial destinations in the world, combined with 1 biggest or most known football players in the world was for us very obvious why we chose Dubai. Russia because Russia has been a home ground for us for many, many years. Russia, we have an exceptionally strong position in Russia as the #1 brand. We've grown as a retail business, expanded it into a wholesale business? And we still believe that Russia in the long term, and we are long on this. We believe Russia in the long term will continue to be very attractive for us. And it's doubling down and protecting our brand in a country with 130 million people and a very, very rich round around Moscow. So these were the reasons why we picked those. And of course, we'll -- ongoing, we'll also look forward and say, should there be others. But right now, we have 6. We're expanding another 6. We need to make certain we double down on those. But also go back and improve what we've done in the past, maybe New York, that's the last one. We opened the first really large brand center in the west in New York. And of course, we need to go back and make certain that, that has a fresh view. The other question was?

Women's strategy.

So I think there was still...

On the women's strategy.

Yes. Good. So what would be different for the women's strategy this time to win her to our brand. Firstly, it's a holistic plan. It's not build in isolation by the different categories. It has a holistic view. It has horizontal view to it. I think that's the first one. The second thing is that the way we're going to talk to her and have dialogues with her will change substantially over the next 5 years. And you're seeing that already with the proof point this year. We just launched "Watch Your Move." It's a fully engaged, fully brand campaign, which we prepared last year. We have 2 game-changing innovation launched already in the first quarter of this year with promotion. You had the maternity range, and then we're coming with stay in play later. Is it a linear growth? I would say no. It's preparing the foundation right now, and we have much more innovation coming to her already in '22. And of course, that gives us the bedrock for growing as we go into the back half of the plan.

The next question is from the line of Geoff Lowery with Redburn.

Thank you for all the detail today. A lot to think about. Two questions really. The first is, can you talk a bit about what the shift in China from the franchise model towards DTC means? I appreciate that DTC directionally is profit-positive in the total contribution sense, but your margin in China is obviously very high already. So what does more DTC in the mix mean there? And just a slight part 2, on China, how comfortable are you with your inventory position there? And then the second big picture question was, you obviously had a long-term incentive plan that historically has been tied to absolute net income. Can you give us a flavor of what any new long-term incentive plan will be targeted on? And apologies if I missed it in the annual report today.

Yes. We've had a long-term incentive plan in the previous cycle that was completely tied into the targets of creating the new which I think actually worked quite well besides the last year, but that was for all of us. What you'll see is in the new incentive plan, which is going to be hopefully approved at the upcoming AGM, there's going to be 2 main components. Conceptually, it is going to look the same as you know today. But the difference is we're going to add an ESG component to it, and I think it would not be wrong to reveal that. Of course, the ESG component is going to be the component that we've spoken about today, and that is to have a long-term target for '25. 9 out of 10 of our articles will be made of sustainable materials. The other one will be net income. It will be conceptually the same with some certain changes to it. But we are trying to make certain that the external targets that we have that you build your models around, and we are in line or you are in line with the same as we do. So conceptually, it's going to be the same, but moving from one target to a second target and ESG is going to be the second target. I'll hand over to Harm to speak about the 2 questions around China.

Yes. Thanks, Geoff, for the question. So the first thing is, of course, we built a plan understanding the consumer. The consumer is moving to online in China as well. And again, as we build our member base, we want to capture more of this consumer in our own ecosystem and our own dot.com. That's we were changing in China. But as you refer to profitability, we are highly profitable already in China, and China will not be the market that is driving the overall company profitability going forward. They will not improve from where they are. And that's what we always said. It will probably slightly decrease given the relevance of local sponsorships as well, rents will go up, but it's still a highly profitable market for us. From an inventory position point of view, we're happy where we finished at the end of 2020. And we expanded our factory outlet network as well. And Kasper mentioned that earlier, we are using it now to clear some of the inventory. We are largely done with this in 2020. And absolutely happy where we are from an inventory position point of view. So no worries on this one going into '21.

The next question comes from the line of Edouard Aubin with Morgan Stanley.

So 2 questions for me on DTC. So on DTC, you have clearly ambitious objective, but so have your competitors. Do you think higher DTC penetration will translate to higher profitability for the industry overall? Or you think it could be, to some extent, competed away, for example, in the form of higher advertising and sponsorship spend? So that's my first question. And again, related to DTC, some would argue that DTC lowers barriers to entry, and that's why maybe a number of smaller players like Brooks, HOKA, whatever, have been gaining share, for example, in the U.S. in the past few quarters and years. Your view on that, I'd be curious to have your views on -- is it increasing or decreasing barriers to entry?

So I'll take the second question. Harm will take the first. When it comes to barriers of entry, I think, at least in our mind, we look upon it in a greater context because we're building an integrated ecosystem, which is very much related to our digital infrastructure also. So we believe our front end, so to speak, our retail stores, are only effective or mostly effective when we can tie them completely into our digital ecosystem. I don't think that, that lowers the barriers. I would say, over time, it actually increases the barriers because a lot of your brand exposure, the way you run campaigns, the way you distribute products, the way you select products to certain consumers, whether it's through the physical or the digital store, actually, I think it becomes a much more sophisticated model. And over time, the more capital and the more capability you have, the more you actually raises the bars. I think you saw in Roland's presentation, the latest store we just opened in Dubai with more than 60 new digital touch points. You're only capable of doing those if you have substantial capability within your own organization. So of course, at the end of the day, it depends on how you define a store. You can find a store, we open a store with no digital touch points. We don't believe that's sticking to the brand. And that's why we believe, from a long-term standpoint, actually the DTC and the store and the integrated environment is a huge driver for our brand. And in that context, we believe the barriers are higher, not lower.

On the DTC profitability, Ed, you've got to dissect DTC, first and foremost. We always said that e-commerce is already accretive to our corporate profits, and e-commerce will continue to be accretive to our corporate profits in the Own the Game strategic cycle. When it comes to the physical retail, you've got to differentiate between factory outlets and our concepts to our fleet. And the concept stores could be branded commercial stores, but it could also be flagship stores with a different profitability. So overall, e-commerce is accretive to our profitability. We are a fantastic e-com player already. And also on the physical retail side, there is still a long way to go to improve it. We'll continue to do that, but you need to really dissect the overall DTC business. And secondly, what's really important, what you heard today during the day that we run our operating model differently being a DTC-led business we can [ water later ], we read more data. We can make it more profitable going forward compared to where we are today, and that is really the opportunity for us going in the next strategic cycle.

Yes. So sorry, no one argues that it's not good for you. I think you made a very strong presentation today, and it's quite clear. But again, to what extent do you think it's going to lead to a higher profitability for the whole industry or not?

If I may, I think it's -- if you -- forgive me for saying, I think it's the wrong answer, I think, how do we get to a higher profit pool, and I think that's going to be the issue or the bigger challenge and say, can we expand growth and drive more absolute profitability out of that model? And I think that's going to be the really key answer because there's no doubt that you can drive your profitability up higher in a DTC model because you can use your DTC more and more in your brand exposure. I think the key point is how do you find the right balance. And the right balance is going to be between us and 1 or 2 competitors and see that, but the way the sporting goods industry really -- or the way you are successful in the sporting goods industry is through market share gains, and that's why it's the absolute. Eventually, that's more important than the relative, in our opinion.

The next question comes from the line of Cedric Lecasble with Stifel.

I have 2. The first one on product made to be recyclable. Just to have your view on how you compare to peers in the industry. How advanced do you believe you are on this subject? And at what version can these products, depending on price points, go mass market? That's the first question. And the second one is on your sportswear launch. Is it reasonable to believe that it could incrementally improve profitability because marketing investments might be lower than in the 2 other categories. And probably you can build already on what you did in lifestyle. So do I have it wrong? Do you have a learning curve which is more advanced here?

The last question. You have to repeat last question, Cedric, please?

Yes. So question is with this new segment in sportswear between sports and the Originals. The question was, does the launch and the development of this new segment, all things -- the potential launches in new sports, et cetera. Do you believe this new segment can be one of maybe incrementally profitable to the average of the group because it requires maybe less marketing investments, sponsorships, partnerships? And you already have a quite long learning curve with your lifestyle experience.

So Cedric, let me start with the first one. Before I go there, of course, the financial model that we have presented today encompasses everything. So we've not shown anything where we don't believe it's spill into the model just from a financial standpoint. I think that's the important part. We look upon our overall position in sustainability. We actually believe we have a very strong position. We think that we're probably -- along with maybe Allbirds in the USA, leader in this industry. I think that part of it, which we've done substantially better in the last 18 months, has been around communicating it. So we believe we have a leadership position. As you probably know, we have a relationship that we announced approximately a year ago with Allbirds, and you'll start seeing some of the first products coming out in the near future. And the quicker we can scale it, we actually believe it's a competitive advantage. We don't see any of our larger competitors having the same focus on sustainability when it comes to product content and also, I would say, maturity of the product. And that's why we also announced that the fully recyclable shoe will now, in its version 3, come out. And of course, while we do that, we parallel accelerate the overall expansion of our use of sustainable products within the rest of the articles. So we believe we are a leader. We think that along with the relationship with Allbirds, we can drive the leadership further, and also go into other areas where our products where we can differentiate further. So we're very comfortable with our position.

So when it comes to the question around sportswear, if that is sitting on a higher margin than our performance product, the answer to that is yes. The marketing expenditure going behind sportswear is mainly being to utilize our partnerships, meaning the big clubs, our athletes, and of course, incubating partners on top, like we've done in other areas of business like with Stella McCartney or Beyoncé in other parts. So you can say it will derive and feed of everything we do in true sports on the field of play with our athletes, where we take them not only in the sports, like I articulated, for the category, we bring them up as brand ambassadors and will help to showcase them in the light outside the world of sports.

The next question comes from the line of Erwan Rambourg with HSBC.

And congratulations on the presentation. I thought it was quite impressive in terms of financial projections, but also sustainability, very convincing. So first question is on online versus physical stores. I'm just wondering if you can maybe comment on the short and the long term. In the short term, what happens when the world reopens? Theoretically, that should put a bit of a cap in terms of the contribution of online versus physical. But then longer term, are you expecting to have a more limited physical fleet? And as such, will you have a more limited number of units potentially on a 5-year view? The second question is just going back, sorry, on China on your low double-digit guidance on average on that '22 to '25 view. I understand there's a shift from wholesale to directly operated retail. I understand there's online as well. What is the role of wholesale accounts, i.e., I think you had a store count close to 12,000. Is that going higher? Or lower? Or will that be stable? What do you do with that big fleet that you have with partners?

So Erwan, I'll take the first question, and Harm will take the second. If you look upon the DTC, DTC in '19 was approximately 33%, and in '20, it was 40%. So what we expect, of course, is when the stores open up, you're going to see "deceleration" probably of online when that happens because there is simply a tendency and a desire to go back and shop. I will, however, say the following. Europe is closed down. Most of the world is opening up. What we have seen is we've seen lower traffic. But there's no doubt that we're going to see a temporary slower growth in e-com, simply because people want to go out there. It doesn't change the strategic picture. And that's why we're quite comfortable with the 50%. But you might see -- and that's what we're seeing, you might see a slower growth online when the stores open up. What the upside is, though, that over the last 12 to 18 months, we have gained a number of new consumers that are much more active in shopping online than they were before. We've implemented apps. We have 150 million -- 160 million members in apps right now, 3 years ago we had 0, so to speak, going towards 500 million. So we have built a base that will allow that to take place but the point is also, you're probably not going to see a linear growth on e-com because the initial reaction is people are going to say, "Thanks, God, I can get out of my house again." But it doesn't change the long-term trajectory of it.

On our growth in China, Erwan, we believe is our low double-digit growth in China, we are taking market share during the next strategic cycle. And of course, we are reflecting there also the shift from the offline to the online business. But at the same time, the fleet that we have with our franchisees, we will have bigger stores but fewer stores. And as we said for many, many quarters already that the scale growth is definitely slowing down in China, and it's becoming more a comp growth proposition going forward. That's why we've got to work with our partners to do the right merchandising, to bring the right products that resonate with the consumers. But it will be fewer stores, bigger stores and less scale and more comp business. But again, with the guidance that we gave with low-double digit, we believe we will take market share in China.

Just a follow-up on the first question on online versus physical stores. On a 5-year view, a bit like in China, would you have fewer stores outside of China as well, fewer physical stores? Possibly bigger but fewer?

Probably. But overall, you would assume and we assume that also that we are growing our overall retail business. So that's why we look upon and say, what is the right structure of the store and that is a dynamic one, of course. We're not going to [ let us ] down and be dogmatic about it. But overall, retail business will grow, but probably our number of stores will go down. And you'll see -- and we spoke about the key cities, key city will have more than 1 store. There may be 20, 30, 50 stores depending on where you are. So you're going to have a bigger footprint in those stores, either specialized or just in pure size.

The next question comes from the line of John Kernan with Cowen and Company, LLC.

Great presentation. That was very insightful. Can you talk to the North American recovery? When do you see the business getting back to fiscal '19 levels? Does that occur in 2021? And then you pointed to a mid-single-digit overall growth rate for that market, your growth rate at adidas being well above that. I'm curious what categories you see as the biggest opportunities for share gains in North America?

Well, first of all, North America, I mean we guided this high single-digit growth for '21 and again, it all depends on the recovery. It is a year that is still volatile given the global pandemic but again, we are not ruling out that there is potential to go back to 2019 levels already in North America. But again, the guidance is high single-digit growth in North America in 21%. On the other hand, I mean there will be all categories. I mean we said at our strategic categories, running is definitely one of the growth drivers, it is. Training. So all the key strategic categories that we have mentioned. Roland also mentioned how we're getting prepared through the MLS, and that's the right base. On the soccer side as well, as we call it in the U.S. And these are really the categories that will drive the growth very much like in other markets as well. There's nothing specific. And then from an authentication point of view, we are committed to American sports as well, whether it's American football or baseball. And of course, our new proposition with Jerry Lorenzo on basketball will be one of the probably interesting and more disruptive place for North America. And you will see the first impact at the end of '21 on this.

John, I think there's one thing that's important to mention, which is relevant for North America, but for pretty much the world. We are ingraining sport along probably with one other competitor more than anybody else. And we believe that there is a huge pent-up desire that people want to go to sports games again. When you go to a sports game, you want to buy a hoodie again. You want to buy a jersey again. And the quicker that can be reinstalled and with U.S. being ahead when it comes to vaccines, the likelihood that U.S. is going to fill the stadiums before somewhere else is probably high. And we think that's going to be -- when you look upon what are some of the growth profiles, we've had very little growth in our -- in what we call our team wear business, if we're to call that way. That correlates, of course, to the impact of the virus. The moment the stadiums fill up, the true sports brands will benefit fundamentally for this because people, when I speak to everybody, want to go out back to sport, they want to go to the stadium, again, they want to buy the hoodie again, they want to buy the jersey again. And that -- when that opens up in North America, probably with the trajectory that you on, is going to do that before Europe, and that's going to just drive a merchandising or sportswear business that has been, I would say, fairly low, if I'm very, I would say, conservative in my expression, very low in the last 12 months, and that's going to explode when that opens up.

Understood. We all look forward to that. Maybe one more follow-up. Just on the innovation in the supply chain that's enabling the business to move to 50% DTC. You talked about the speed that you're putting in the business, the local relevancy. Can you just talk to the investment in supply chain and the innovation there that's enabling the business to move to that mix?

Yes, the starting point is what Martin talked about earlier. It's the digital creation, where we have advanced significantly. It's enabling products to be sourced faster with our speed initiative, and this is really catering to the different DTC-led business, and that's what we really need to go after. And then, of course, on the tech side, it needs to be supported by the probably up to 1,000 engineers that we're hiring across tech and also our digital setups that we have. And that all in combination will enable faster go-to-market for a DTC-led business. But most of these investments have happened as part of creating new and build the foundation. And again, there's more to come with the in-sourcing of many engineers and enabling actually the speed article to be sourced faster given the DTC-led model.

Emma, we have time for 2 more questions, please.

The next question is from the line of Andreas Riemann with Commerzbank.

Two questions. One, again, on growth versus profitability. Going by the targets, it seems that there's a stronger preference for growth over profitability. Would you agree with that thesis? And the second one, categories, you mentioned football, running, training, outdoor lifestyle as growth drivers. What would be the order in terms of growth contribution? Or which 2 or 3 would you call out as most relevant categories for the next 4 years?

So the way we worked upon the model is a comprehensive data model that looked upon market size, growth drivers per category and also profitability per category. And I'll -- when we come later in the question, I'll hand over to Brian, who will speak about the different categories. What we look upon it, we came from 11.3% profitability in 2019. We believe that within the 12% to 14%, we still believe there is room. We think that the important part is to grow market share, but to do it in a sustainable way. And we also believe that from a scaling standpoint, we should get the benefits. And that's why it's not an either or. We think that right now, with the current market dynamics, we believe that the optimal -- I would say, profitability optimization in absolute terms is the balance that we have here is, and that's the 8% to 10% growth, meaning we consistently grow market share. And we are, along with the market leader, more or less on the same profitability. And the rest aligned below. But we should have scale benefits in what we do. We have scale benefits when it comes to manufacturing, to digital investments, to marketing, that's why we have scale benefits. So the 12% to 14%, along with above market, we believe, is the right one. Of course, if it changes, we'll look upon that. But we think that's the optimal one. So there is no preference 1 or the other. We try to see what is optimal for the outcome, and that is delivering the optimal outcome from the shareholder over a longer period of time. What I do want to say because sometimes, I think there was a perception, have we saved too much? If I look upon the Route 2015 during that period of time compared to Creating the New, including the last year, we've invested EUR 15 billion more in CapEx and OpEx during Creating the New than we did in Route 2015. So it was definitely an investment period. We will invest double digit, more than EUR 10 billion more now in the next 5 years compared to Creating the New. So we are driving investments in because we believe investing is a strategic advantage we have compared to some of the smaller ones, and that will help us drive more growth and drive more market share and eventually returns to shareholders.

Good. So when you come to why we have chosen the categories, they are all chosen because they are part of an either growth part of the segmentation in the market or actually from a viewership point of view. And let me just articulate it in the right order. The reason why football is a priority for us. It is the #1 global sport. It is the sport with the biggest viewership around the world, meaning connecting the world behind one sport. Just to give you 1 stat. For the World Cup in 2018, there was 1.2 billion people watching the final. Football is used to invest and elevate the brand to the biggest stage. It means it's not just a category conversation. When it comes to the 4 credibility sports we have chosen to double down on, running, we're already up and running. We have seen double-digit growth over the last year, and we'll continue to do so. The innovation pipeline is in place for us to do so. So you should expect acceleration continued in running. Training, like I said before, we're starting last year preparing, building and now we're accelerating into that space. It's a -- if you can say, it's the business with the lowest barrier for entry. And we believe that, that business will grow significantly. And outdoor, if you look over the 5-year period, we are building capabilities to really elevate our game. So in outdoor, we're anticipating a steeper growth in the back end of the plan, simply by building the capability of seeing. And when it comes to lifestyle, it is the biggest market segment from growth. And what we have done here, the choice of having a very clear brand architecture to deliver against that growth across the channel landscape, allowing us to sharpening the edge of Originals and also going more to luxury segment and literally double down on a segment we have not been fully penetrizing in the last cycle with sportswear across wholesale.

The final question from today is from the line of Omar Saad with Evercore.

Thanks for the very good virtual investor presentation. It was very useful. My first question is on pricing. I'd love to hear your comment on how -- if and how your assumptions on pricing play into the long-term sales algorithm. And whether it's good, better, best trading the consumer up, price/mix or you're planning price increases over time, that would be helpful to understand. And then also lastly, on the shared inventory program with some of your Wholesale partners, can you dive in deeper there, where you stand on that? How big of an opportunity is that as the landscape -- channel landscape changes? And what are the key advantages to pursuing that strategy in your Wholesale business?

Just on the pricing, as I mentioned, Omar, it's part of the gross margin improvement as well. And it comes from different angles. First of all, DTC-led, of course, we have better pricing there and higher ASPs as we move to a DTC-led business model. Then, of course, as Brian mentioned earlier, the premiumization, especially on the Originals side, will definitely contribute to that as well. And as we are controlling more the DTC business that we are running, whether it's e-commerce or on the physical retail side, we get more data, we make better decisions, we understand better price elasticity, and there will be less -- more full price sell-through and less promotions that are in this business as we control it better towards the brand. That is really what's driving the pricing.

So Omar, on the second point, on the shared inventory, I think it's important to understand the following. The first challenge is around systems, that the system has to be interconnected that they actually work. And the second part is around common range because if you don't have a common range, basically, you don't have common inventory, which is an important part. We're still early days, particularly where we've seen probably the most successful engagement has been with Zalando, where we fairly -- far down the line, we've done it for close to 3 years now, and that's where it's really scaling. So still early days. We think it will play a profound part moving forward because it will help us increase the churns. Of course, it will be able to control promotions in a much more effective way than before and full price sell-through will go up. So we believe it's a big opportunity. It's still early days. But we have seen a profound impact on the business we have with Zalando over the last 2 to 3 years. So that business that's coming from our DTC model is very, very balanced in our -- as a total of the current business. So quite optimistic about what it would bring us.

Great. Thanks very much, Omar. Thanks very much, Kasper, Harm and Brian. So ladies and gentlemen, this concludes our Q&A session. It does not yet conclude our Investor Day. So please don't run away yet. Before I will hand over for Kasper to officially close this event, I want to take a moment to thank all of our colleagues around the world across all functions and markets that have helped us over the last 1.5 years to craft this strategy and also to bring this strategy to life. So thanks to everybody also here in the room and all of the teams. It was a great team effort. I also want to thank you. We know that this was a day packed with content that started early for some of you, and that is now ending very late for others. We're very much looking forward to being in touch with you over the next couple of weeks. You've heard it from Harm that Kasper, Harm, myself, the IR team will be on the road. Unfortunately, only virtually by now, but we definitely look forward to continuing the discussion that we started today. If there's any more questions over the next couple of days, you know how to track us down. Please don't hesitate to reach out to any member of the IR team. And with that, thanks very much again. And over to Kasper.

So again, thank you for joining today. I know it was a long day. We are super excited, and so is our 60,000 team around the world. Some of them are already starting to look upon it tonight. So the first run of the events will start here at 6:00 European Time and then tomorrow. So people are very excited about what's to come. We believe we have pulled a very good strategy together in the last 12 to 18 months, which is clearly a growth strategy. And the important part over the next 5 years is to come out of the gate running. And that's why we're guiding, as you know, mid- to high-teens growth this year. In the first quarter, we are seeing very good trading, strong double-digit growth. So we will come out -- we'll have a very good year despite the current setup. It's also important to understand that our strategy is rooted in sport. We are a sports company, and it is rooted in sport, and it's rooted very much also in what the consumer thinks and what they're doing. And it's brought to life by our team. We have a great team, and we'll continue to upgrade that team, and I was saying recently to a journalist, the coach's role is to continue to make sure that we have the right players to make certain that we win the games. And the games will continue to be more and more challenging moving forward, but we have a very, very good team. The focus will be on increasing the credibility of the adidas brand, which is why we're taking the overall brand investment up by EUR 1 billion over the next 5 years. Elevating the consumer experience, whether it's in the physical store or online, and online, of course, through the apps that we're building, and I'm certain you've seen, we have now rolled out the CONFIRMED app also in Europe. And pushing the boundaries in sustainability. Not only because it's the right thing to do, but it's also a great business case for us as a company to differentiate us moving forward and do the right thing. Our strategy is about execution, and that's where we bring our people into and make certain that they understand what to do. That we invest in our marketing, we invest in the digital transformation, and we invest in the capability of our people. It's a growth strategy and its an investment strategy and will enable us to continue to grow and gain market share in a super attractive industry to make certain that we've built significant value to all our stakeholders, including our shareholders. And we're convinced that by '25, we'll be a very different company. We'll be stronger, we'll be more sustainable and we'll be more digital than ever. I think if you look back over a 10-year period, we're coming from an analog wholesale business model to a digital DTC business model. And that is the transformation you're going to see over the next 5 years. We're super excited about it. We believe we have the right product pipeline. And we look forward to having a very successful '21 as a kickoff to our 5-year strategy. With this, thank you very much for joining today. Harm and I and Sebastian and the rest of the IR team look forward to see you over the next coming days and weeks and, hopefully, answer your questions as well as we can. We hope you enjoyed the day. And we hope that you'll continue to follow us and invest in us also in the future. Thank you.

Thanks very much.