Bond Addidas AG 0% ( XS2240505268 ) in EUR

Issuer Addidas AG
Market price 100 %  ▲ 
Country  Germany
ISIN code  XS2240505268 ( in EUR )
Interest rate 0%
Maturity 05/10/2028 - Bond has expired



Prospectus brochure of the bond Adidas AG XS2240505268 in EUR 0%, expired


Minimal amount /
Total amount /
Detailed description Adidas AG is a German multinational corporation that designs and manufactures shoes, clothing and accessories.

The Bond issued by Addidas AG ( Germany ) , in EUR, with the ISIN code XS2240505268, pays a coupon of 0% per year.
The coupons are paid 1 time per year and the Bond maturity is 05/10/2028







Prospectus dated October 1, 2020

adidas AG
(a stock corporation (Aktiengesellschaft) incorporated in the Federal Republic of Germany)
500,000,000 0.000% Notes due 2028
ISIN XS2240505268, Common Code 224050526, WKN A289Q8
Issue price: 99.410 %
adidas AG (the "Issuer" or "adidas") will issue on October 5, 2020 (the "Issue Date") 500,000,000 0.000% notes due
2028 (the "Notes") in the denomination of 100,000 per Note.
The Notes will be governed by the laws of the Federal Republic of Germany ("Germany").
The Notes will not bear interest. Unless previously redeemed or repurchased and cancelled, the Notes will be redeemed
at par on October 5, 2028 (the "Maturity Date").
The Issuer may, at its option, redeem the Notes prior to their respective maturity date on the terms set forth in § 5 of the
terms and conditions of the Notes (the "Terms and Conditions"). Upon the occurrence of a Change of Control (as
defined in the Terms and Conditions) the holder of each Note (the "Noteholders") will have the right to require the Issuer
to redeem its Note(s) at their principal amount on the terms set forth in the Terms and Conditions.
The Notes will initially be represented by a temporary global note in bearer form (the "Temporary Global Note").
Interests in the Temporary Global Note will be exchangeable, in whole or in part, for interests in a corresponding
permanent global note (the "Permanent Global Note" and together with the Temporary Global Note, the "Global
Notes") not earlier than 40 days after the Issue Date (the "Exchange Date"), upon certification as to non-U.S. beneficial
ownership.
This prospectus (the "Prospectus") constitutes a prospectus within the meaning of Article 6.3 of Regulation (EU) No
2017/1129 of the European Parliament and of the Council of 14 June 2017 (as amended, the "Prospectus Regulation").
This Prospectus will be published in electronic form together with all documents incorporated by reference on the website
of the Luxembourg Stock Exchange (www.bourse.lu) and on the website of the Issuer (https://www.adidas-
group.com/en/investors/bonds).
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier, Luxembourg ("CSSF") in
its capacity as competent authority under the Prospectus Regulation. The CSSF only approves this Prospectus as meeting
the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval
should neither be considered as an endorsement of the Issuer that is subject of this Prospectus nor of the quality of the
securities that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of
investing in the Notes.
This Prospectus will be valid until October 1, 2021 and may in this period be used for admission of the Notes to trading
on a regulated market. In case of a significant new factor, material mistake or material inaccuracy relating to the
information included in this Prospectus which may affect the assessment of the Notes, the Issuer will prepare and publish
a supplement to the Prospectus without undue delay in accordance with Article 23 of the Prospectus Regulation.
The obligation of the Issuer to supplement this Prospectus will cease to apply once the Notes have been admitted to
trading on the regulated market of the Luxembourg Stock Exchange and at the latest upon expiry of the validity period
of this Prospectus.
This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes in any jurisdiction
where such offer or solicitation is unlawful.


The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act") and subject to certain exceptions, the Notes may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons.
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the official list of the
Luxembourg Stock Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's
regulated market. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments
(as amended, "MiFID II").
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area ("EEA") or the United Kingdom. For these
purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article
4(1) of MiFID II; or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance
Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of
Article 4(1) of MiFID II. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as
amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail
investors in the EEA or the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA or the United Kingdom may be unlawful under the PRIIPs
Regulation.
Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their
exposure to risks and that they consider the suitability of the Notes as an investment in the light of their own
circumstances and financial condition. Investing in the Notes involves certain risks. Please review the section entitled
"Risk Factors" beginning on page 7 of this Prospectus.
Sustainability Bond Structuring Agent and Global Coordinator
J.P. Morgan
Active Bookrunners
BNP Paribas
Commerzbank
J.P. Morgan
Passive Bookrunners
BBVA
BofA Securities
Citigroup
Deutsche Bank
HSBC
Mizuho Securities
Standard Chartered Bank

UniCredit Bank


RESPONSIBILITY STATEMENT
The Issuer with its registered office in Germany accepts responsibility for the information contained in this Prospectus
and hereby declares that the information contained in this Prospectus is, to the best of its knowledge, in accordance with
the facts and contains no omission likely to affect its import.
The Issuer further confirms that (i) this Prospectus contains all relevant information with respect to the Issuer and its
consolidated subsidiaries taken as a whole ("adidas Group" or the "Group") and to the Notes which is material in the
context of the issue and the offering of the Notes, including all relevant information which, according to the particular
nature of the Issuer and of the Notes is necessary to enable investors and their investment advisers to make an informed
assessment of the assets and liabilities, financial position, profits and losses, and prospects of the Issuer and the adidas
Group and of the rights attached to the Notes; (ii) the statements contained in this Prospectus relating to the Issuer, the
adidas Group and the Notes are in every material respect true and accurate and not misleading; (iii) there are no other
facts in relation to the Issuer, the adidas Group or the Notes the omission of which would, in the context of the issue and
offering of the Notes, make any statement in the Prospectus misleading in any material respect; and (iv) reasonable
enquiries have been made by the Issuer to ascertain such facts and to verify the accuracy of all such information and
statements.
NOTICE
No person is authorised to give any information or to make any representation other than those contained in this Prospectus
and, if given or made, such information or representation must not be relied upon as having been authorized by or on
behalf of the Issuer or BNP Paribas, Commerzbank Aktiengesellschaft, J.P. Morgan Securities plc, Banco Bilbao Vizcaya
Argentaria, S.A., BofA Securities Europe SA, Citigroup Global Markets Europe AG, Deutsche Bank Aktiengesellschaft,
HSBC Bank plc, Mizuho Securities Europe GmbH, Standard Chartered Bank or UniCredit Bank AG (together, the
"Bookrunners").
This Prospectus should be read and understood in conjunction with any supplement hereto and with all documents
incorporated herein or therein by reference.
The legally binding language of this Prospectus is English except for the Terms and Conditions in respect of which
German is the legally binding language.
In this Prospectus, all references to "", "EUR" or "Euro" are to the currency introduced at the start of the third stage of
the European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May
1998 on the introduction of the Euro, as amended. References to "billions" are to thousands of millions.
Each investor contemplating purchasing any Notes should make its own independent investigation of the financial
condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. This Prospectus does not constitute an
offer of Notes or an invitation by or on behalf of the Issuer or the Bookrunners to purchase any Notes. Neither this
Prospectus nor any other information supplied in connection with the Notes should be considered as a recommendation
by the Issuer or the Bookrunners to a recipient hereof and thereof that such recipient should purchase any Notes.
This Prospectus reflects the status as at its date. The offering, placement, sale and delivery of the Notes and the distribution
of the Prospectus may not be taken as an implication that the information contained herein is accurate and complete
subsequent to the date hereof or that there has been no adverse change in the financial condition of the Issuer since the
date hereof.
To the extent permitted by the laws of any relevant jurisdiction, none of the Bookrunners, any of its affiliates or any other
person mentioned in the Prospectus, except for the Issuer, accepts responsibility for the accuracy and completeness of the
information contained in this Prospectus or any other documents incorporated by reference and accordingly, and to the
extent permitted by the laws of any relevant jurisdiction, none of these persons accept any responsibility for the accuracy
and completeness of the information contained in any of these documents. The Bookrunners have not independently
verified any such information and accept no responsibility for the accuracy thereof.
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None of the Bookrunners, any of its affiliates or any other person mentioned in the Prospectus makes any representation
as to the suitability of the Notes to fulfil environmental and sustainability criteria required by any prospective investors.
The Bookrunners have not undertaken, nor are responsible for, any assessment of the adidas Sustainability Bond
Framework or the Eligible Sustainable Projects (each as defined in the section "Use of Proceeds"), any verification of
whether the Eligible Sustainable Projects meet the criteria set out in the adidas Sustainability Bond Framework or the
monitoring of the use of proceeds.
This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such
offer or solicitation.
The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted
by law. Persons into whose possession this Prospectus comes are required to inform themselves about and to observe any
such restrictions. For a description of the restrictions see the section "Subscription and Sale of the Notes ­ Selling
Restrictions" below. In particular, the Notes have not been and will not be registered under the Securities Act and are
subject to United States tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or
delivered within the United States of America or to U.S. persons as defined in Regulation S under the Securities Act
("Regulation S").
For the avoidance of doubt, the content of any website referred to in this Prospectus, unless specifically incorporated by
reference, does not form part of this Prospectus and the information on such websites has not been scrutinized or approved
by the CSSF as competent authority under the Prospectus Regulation.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET: PROFESSIONAL INVESTORS AND ECPS
ONLY
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the
Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients
only, each as defined in MiFID II; and (ii) all channels for distribution of the Notes to eligible counterparties and
professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a
"distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject
to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or
refining the manufacturers' target market assessment) and determining appropriate distribution channels.
PRIIPS REGULATION / PROSPECTUS REGULATION / PROHIBITION OF SALES TO EEA AND UK
RETAIL INVESTORS
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the EEA or the United Kingdom. For these purposes, a retail investor means a
person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer
within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client
as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by the PRIIPs
Regulation for offering or selling the Notes or otherwise making them available to retail investors in the EEA or the
United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any
retail investor in the EEA or the United Kingdom may be unlawful under the PRIIPs Regulation.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to
purchase, any Notes (or any beneficial interests therein) from the Issuer and/or the Bookrunners the foregoing
representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its
underlying client.
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SINGAPORE SECURITIES AND FUTURES ACT PRODUCT CLASSIFICATION
In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the "SFA") and the
Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the "CMP Regulations 2018"), the
Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes
are `prescribed capital markets products' (as defined in the CMP Regulations 2018) and Excluded Investment Products
(as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice
on Recommendations on Investment Products).
STABILISATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, J.P. MORGAN SECURITIES PLC (THE "STABILISING
MANAGER") (OR ANY PERSON ACTING ON BEHALF OF ANY STABILISING MANAGER) MAY OVER-
ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE
NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER,
STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION ACTION MAY BEGIN ON OR
AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE
NOTES IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE
EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE
ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE
CONDUCTED BY THE STABILISING MANAGER (OR ANY PERSON ACTING ON BEHALF OF THE
STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES OF ANY
RELEVANT JURISDICTION (INCLUDING RULES AND OTHER REGULATORY REQUIREMENTS GOVERNING
ANY STOCK EXCHANGES WHERE SUCH NOTES ARE LISTED).
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. A forward-looking statement is a statement that does not
relate to historical facts and events. They are based on analyses or forecasts of future results and estimates of amounts not
yet determinable or foreseeable. These forward-looking statements are identified by the use of terms and phrases such as
"anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will" and similar
terms and phrases, including references and assumptions. This applies, in particular, to statements in this Prospectus
containing information on future earning capacity, plans and expectations regarding adidas Group's business and
management, its growth and profitability, and general economic and regulatory conditions and other factors that affect it.
Forward-looking statements in this Prospectus are based on current estimates and assumptions that the Issuer makes to
the best of its present knowledge. These forward-looking statements are subject to risks, uncertainties and other factors
which could cause actual results, including adidas Group's financial condition and results of operations, to differ
materially from and be worse than results that have expressly or implicitly been assumed or described in these forward-
looking statements. adidas Group's business is also subject to a number of risks and uncertainties that could cause a
forward-looking statement, estimate or prediction in this Prospectus to become inaccurate. Accordingly, investors are
strongly advised to read the following sections of this Prospectus: "Risk Factors" and "Description of the Issuer and
adidas Group". These sections include more detailed descriptions of factors that might have an impact on adidas Group's
business and the markets in which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not occur. In addition,
neither the Issuer nor the Bookrunners assume any obligation, except as required by law, to update any forward-looking
statement or to conform these forward-looking statements to actual events or developments.
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ESG RATINGS
The Issuer's exposure to Environmental, Social and Governance ("ESG") risks and the related management arrangements
established to mitigate those risks has been assessed by several agencies, including RobecoSAM, Sustainalytics and CDP,
among others, through Environmental, Social and Governance ratings ("ESG ratings"). Please refer to the section
"Description of the Issuer and the adidas Group - Sustainability" for further information.
ESG ratings may vary amongst ESG ratings agencies as the methodologies used to determine ESG ratings may differ.
The Issuer's ESG ratings are not necessarily indicative of its current or future operating or financial performance, or any
future ability to service the Notes and are only current as of the dates on which they were initially issued. Prospective
investors must determine for themselves the relevance of any such ESG ratings information contained in this Prospectus
or elsewhere in making an investment decision. Furthermore, ESG ratings shall not be deemed to be a recommendation
by the Issuer or any other person to buy, sell or hold the Notes. Currently, the providers of such ESG ratings are not subject
to any regulatory or other similar oversight in respect of their determination and award of ESG ratings. For more
information regarding the assessment methodologies used to determine ESG ratings, please refer to the relevant ratings
agency's website (which website does not form a part of, nor is incorporated by reference in, this Prospectus).
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TABLE OF CONTENTS
RISK FACTORS................................................................................................................................................................. 7
TERMS AND CONDITIONS OF THE NOTES .............................................................................................................. 17
USE OF PROCEEDS ....................................................................................................................................................... 36
DESCRIPTION OF THE ISSUER AND ADIDAS GROUP ........................................................................................... 38
TAXATION WARNING ................................................................................................................................................... 50
SUBSCRIPTION AND SALE OF THE NOTES ............................................................................................................. 51
GENERAL INFORMATION ........................................................................................................................................... 54
DOCUMENTS INCORPORATED BY REFERENCE .................................................................................................... 56

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RISK FACTORS
The following is a description of material risks that are specific to adidas and/or may affect its ability to fulfil its
obligations under the Notes and that are material to the Notes in order to assess the market risk associated with these
Notes. Prospective investors should consider these risk factors before deciding whether to purchase Notes.
Prospective investors should consider all information provided in this Prospectus and consult with their own professional
advisers (including their financial, accounting, legal and tax advisers) if they consider it necessary. In addition, investors
should be aware that the risks described might combine and thus intensify one another.
Risks relating to adidas AG and the adidas Group
The risk factors regarding the Issuer are presented in the following categories depending on their nature with the most
material risk factor, based on the probability of their occurrence and the expected magnitude of their negative impact,
presented first in each category:
1. Risks related to the Issuer's business activities, industry and competition
2. Macroeconomic and external risks
3. Organizational risks
4. Legal and regulatory risks
1. Risks related to the Issuer's business activities, industry and competition
Risks related to the coronavirus outbreak
The global spread of the novel coronavirus (named SARS-CoV-2 / COVID-19) is closely linked to risks in global
macroeconomic developments which have had and could continue to have negative effects on the Issuer's business. If the
rapid spread of the coronavirus continues, it could further adversely affect the global economy and financial markets,
resulting in a prolonged economic downturn and reduced consumer spending. In most countries, governments have
reacted with stringent social distancing policies, including curfews, travel restrictions and the closing of retail stores,
restaurants, schools and universities. These policies have resulted in a material decrease of overall discretionary retail
sales, as the online channel can only partially compensate for the broad-based closures of physical stores in most consumer
sectors. Furthermore, even after the reopening of the company's and its independent partners' stores, there can be no
assurance as to the time required to return to normalized business levels as workers' return rates as well as the speed of
recovery in consumer spending and retail traffic remain uncertain. The coronavirus could also substantially impact the
Issuer's supply chain and administration, for example as a result of disruption in material supply or product manufacturing,
restrictions on the global movement of people and goods or prolonged closures of its own offices or distribution centers.
Any disruption or downturn in the global credit markets and economy would typically affect the Issuer as well, both in
respect of operational performance and its ability to fund intended business growth. Any economic downturn in
combination with an increase in unemployment levels could contribute to slower growth in household disposable income
and higher savings and thereby further emphasize these risks. The coronavirus outbreak may continue to, either directly
or indirectly, impact adidas, its consumers, retail partners, suppliers and investors as well as credit markets.
As a result of the coronavirus outbreak which has spread globally during the first half of 2020, almost all stores in Europe,
North America, Latin America, Emerging Markets and parts of Asia-Pacific, representing more than 70% of the adidas'
global store fleet, were closed at the high point of the worldwide lockdown measures in April. By June 30, 2020, 83% of
the Issuer's stores had been reopened, albeit partly with reduced hours. As a result of the large number of store closures
as well as a pronounced traffic reduction within the parts of the store fleet that were reopened, adidas recorded a material
revenue decline in its physical distribution channels during the first half of 2020. Furthermore, the operating result
development in the first half of 2020 was significantly impacted by several coronavirus-related charges. These mainly
consisted of product takebacks in Greater China, purchase order cancellations, the increase in inventory and bad debt
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allowances as well as the impairment of retail stores and the Reebok trademark with a combined negative effect on the
first half 2020 operating result of adidas in an amount of around 500 million. The delay of major sporting events such
as the UEFA EURO 2020 and the 2020 Olympic Games in Tokyo to 2021 may also negatively affect brand momentum,
consumer excitement and as a result have a negative impact on the Issuer's financial performance.
The sales of adidas in certain product categories are seasonal and, therefore, revenues and attributable earnings may vary
within the financial year. In prior years, sales and earnings tended to be strongest in the first and third quarters of the
financial year because these coincided with the launch of the spring/summer and fall/winter collections, respectively.
Because of the coronavirus pandemic in the first half of 2020, the related revenue decreased. Although adidas expects to
launch new collections later this year as planned, shifts in the share of sales and attributable earnings of particular product
categories or in the regional composition of offerings may occur throughout the year as a result of the coronavirus
pandemic.
A continued disruption of the global economy as a result of the coronavirus outbreak may adversely affect the Issuer's
business, reputation, financial condition and results of operation.
Risks related to the competitive and retail environment
Changes in the competitive landscape and the retail environment could impact adidas' success, in particular in the medium
to long term. Strategic alliances amongst competitors and/or retailers, the increase in retailers' own private label businesses
and intense competition for consumers, production capacity and promotion partnerships between well-established
industry peers and new market entrants pose a substantial risk to adidas. This could lead to harmful competitive behavior,
such as sustained periods of discounting in the marketplace or intense bidding for promotion partnerships. Failure to
recognize and respond to consolidation in the retail industry could lead to increased dependency on particular retail
partners, reduced bargaining power and, consequently, margin erosion. Sustained pricing pressure in key markets could
threaten adidas' financial performance and the competitiveness of adidas' brands. Aggressive competitive practices could
also drive increases in marketing costs and market share losses, thus hurting adidas' profitability and market position. The
inability to adjust its distribution strategy in a timely manner to a changing retail industry, which is experiencing increasing
substitution of physical retail stores by digital commerce platforms as well as increasing connectivity between physical
and digital retail, could result in sales and profit shortfalls for adidas. A decline in the attractiveness of particular shopping
locations such as shopping malls could lead to sales shortfalls in adidas' customers' and its own stores, higher inventory
in the marketplace, increased clearance activity and margin pressure.
Inability or failure to anticipate and adequately react to such unfavorable changes in the competitive and retail
environment could have a material adverse effect on adidas' business, financial condition and results of operation.
Risks related to consumer demand and product offering
The Issuer's success largely depends on its ability to continuously create new, innovative footwear and apparel products.
Consumer demand changes can be sudden and unexpected, particularly when it comes to the more fashion-related part of
adidas' business. Therefore, the Issuer faces a risk of short-term revenue loss in cases where it is unable to anticipate
consumer demand or respond quickly to changes. In addition, creating and offering products that do not resonate with
consumers and adidas' retail partners is a critical risk to the success of its brands, especially considering its strategy to
reduce the number of footwear models, placing a stronger focus on key product franchises, including in its key markets
Asia-Pacific and North America. Even more critical in the long term, however, are the risks of continuously overlooking
new consumer trends, failing to introduce new product innovation and failing to continuously generate consumer
excitement with its product offering and marketing activities. The speed with which new product technologies and fresh
designs are brought to the market is decisive for maintaining a competitive advantage. If the Issuer fails to maintain a
pipeline of new innovative products over a sustained period, it could suffer a significant sales decline.
If adidas fails to identify and appropriately respond to shifts in trends or consumer demand as early as possible, this could
have a material adverse effect on its business, financial condition and results of operation. Likewise, if adidas does not
continuously create new, innovative products, its business, financial condition and results of operation could be materially
affected. adidas considers these risks most relevant in its key markets Asia-Pacific, Europe and North America.
8


Business partner risks
adidas interacts and enters into partnerships with various third parties, such as athletes, creative partners, innovation
partners, retail partners or suppliers of goods or services. As a result, the Issuer is exposed to a multitude of business
partner risks.
Injuries to individual athletes or poor on-field performance on the part of sponsored teams or athletes could reduce their
consumer appeal and eventually result in lower sales and diminished attractiveness of the Issuer's brands. Failure to
cement and maintain strong relationships with retailers could have substantial negative effects on adidas' wholesale
activities and thus its business performance. Similarly, failure to maintain strong relationships with suppliers or service
providers could negatively impact the Issuer's sales and profitability. Risks may also arise from a dependence on particular
suppliers, customers or service providers. Business partner default (including insolvency) or other disruptive events such
as strikes may negatively affect adidas' business activities and result in additional costs and liabilities as well as lower
sales. Unethical business practices or improper behavior on the part of business partners could have a negative spill-over
effect on the Issuer's reputation.
Underperformance, misconduct or the complete loss of critical business partners as well as business interruption at a
critical business partner could have a material adverse effect on the Issuer's business, reputation, financial condition and
results of operation.
Risks related to media and stakeholder activities
The Issuer faces considerable risk if it is unable to uphold high levels of consumer awareness, affiliation and purchase
intent for its brands. Adverse media coverage of its products or business practices as well as negative social media
discussion may significantly hurt adidas' reputation and brand image and eventually lead to a negative sales impact.
Activism from non-governmental and governmental organizations or other stakeholders, including the pressure on the
Issuer to substantially adjust operational practices or strategic initiatives, could cause negative media coverage as well as
reputational damage and result in additional costs, a disruption of business activities and, hence, a negative impact on the
Issuer's reputation, its financial condition and results of operation.
Risks related to expansion of own-retail business
The continuous expansion of adidas' own-retail business, which is a key pillar of the Issuer's sales and distribution strategy
and comprises its directly operated brick and mortar and digital stores bears significant risk. New own-retail stores require
considerable up-front investment in furniture and fixtures as well as ongoing maintenance, while the expansion of own
digital sales solutions requires significant investment in technology or the adjustment of logistics processes. In addition,
own-retail activities often require longer-term lease or rent commitments. The Issuer also employs significantly more
personnel in relation to sales in its own-retail channels than its wholesale business. The higher portion of fixed costs
compared to the wholesale business may cause a larger profitability impact in cases of significant sales declines. Success
in its own-retail business is predominantly related to the skills and performance of the Issuer's employees. High turnover
of staff as well as a lack of the required skills and qualifications of employees could negatively affect sales and
profitability. In addition, poorly executed store operations, both in physical and digital stores, could lead to sales shortfalls
and also negatively impact brand image.
If adidas is not successful in sustainably expanding its own-retail channel, this could have a material adverse effect on the
its business, financial condition and results of operation.
Inventory planning risks
As adidas places initial production orders around six months in advance of delivery, it is exposed to inventory risks
relating to misjudging consumer demand at the time of production planning. A sudden decline in demand has the potential
to cause excess inventories. This can have negative implications for the Issuer's financial performance, including higher
levels of clearance activity and inventory obsolescence as well as reduced liquidity due to higher operating working
capital requirements. Similarly, a sudden increase in demand can lead to product shortfalls at the point of sale. In this
situation, adidas faces the risk of missed sales opportunities and/or customer and consumer disappointment, which could
9