Obligation Adidas AG 0.625% ( XS2224621347 ) en EUR

Société émettrice Adidas AG
Prix sur le marché 100 %  ▲ 
Pays  Allemagne
Code ISIN  XS2224621347 ( en EUR )
Coupon 0.625% par an ( paiement annuel )
Echéance 09/09/2024 - Obligation échue



Prospectus brochure de l'obligation Adidas AG XS2224621347 en EUR 0.625%, échue


Montant Minimal 100 000 EUR
Montant de l'émission 500 000 000 EUR
Description détaillée L'Obligation émise par Adidas AG ( Allemagne ) , en EUR, avec le code ISIN XS2224621347, paye un coupon de 0.625% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 09/09/2024







Prospectus dated September 4, 2020


adidas AG
(a stock corporation (Aktiengesellschaft) incorporated under the laws of Federal Republic of Germany, having its
corporate domicile in Herzogenaurach, Federal Republic of Germany)

500,000,000 0.000 per cent. Notes due 2024
500,000,000 0.625 per cent. Notes due 2035

adidas AG (the "Issuer") will issue on or about September 8, 2020 (the "Issue Date") 500,000,000 0.000 per cent.
Notes due 2024 (the "2024 Notes") and 500,000,000 0.625 per cent. Notes due 2035 (the "2035 Notes" and together
with the 2024 Notes, the "Notes"). The 2024 Notes wil not bear interest. The 2035 Notes wil bear interest from and
including September 8, 2020 to, but excluding, September 10, 2035 at a rate of 0.625 per cent. per annum, payable
annually in arrear on September 10 in each year, commencing on September 10, 2021 (long first coupon).
The 2024 Notes will mature on September 9, 2024 and the 2035 Notes will mature on September 10, 2035. The Issuer
may redeem all (but not some only) of the Notes at its option at their principal amount together with interest accrued to
the date of such redemption and in the event of certain tax changes as described in the conditions of the Notes (the
"Conditions of Issue") under "CONDITIONS OF ISSUE ­ § 5 Redemption". Upon the occurrence of a change of control
the holder of each Note (the "Holder") wil have the right to require the Issuer to purchase such Note at its principal
amount together with accrued interest as described below in "CONDITIONS OF ISSUE ­ § 5 Redemption". Furthermore,
the Issuer may redeem all (but not some only) of the Notes at its option at a date 3 months prior to maturity, for reason
of minimal outstanding amount and at the early call redemption amount (make-whole call) all as described below in
"CONDITIONS OF ISSUE ­ § 5 Redemption".
This prospectus (the "Prospectus") constitutes a prospectus within the meaning of Article 6 of Regulation (EU)
2017/1129 of the European Parliament and the Council of June 14, 2017 on the prospectus to be published when
securities are offered to the public or admitted to trading, as amended (the "Prospectus Regulation"). This Prospectus
together with all documents incorporated by reference will be published in electronic form on the website of the
Luxembourg Stock Exchange (www.bourse.lu), on the website of the European Securities and Market Authority
(www.esma.europa.eu) 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 of the Grand Duchy of
Luxembourg (the "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 not be considered as an endorsement of the Issuer or of the quality of the
Notes that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing
in the Notes. By approving this Prospectus, the CSSF does not give any undertaking as to the economic and financial
soundness of the operation or the quality or solvency of the Issuer in accordance with Article 6 (4) of the Luxembourg
act relating to prospectuses for securities dated July 16, 2019 (Loi du 16 juillet 2019 relative aux prospectus pour valeurs
mobilières et portant mise en oeuvre du règlement (UE) 2017/1129 - the "Luxembourg Law").
Application has been made to list the Notes on the official list of the Luxembourg Stock Exchange and admit the Notes
to trading on the regulated market "Bourse de Luxembourg" operated by the Luxembourg Stock Exchange which is a
regulated market appearing on the list of regulated markets issued by the European Securities and Markets Authority
(ESMA) pursuant to Directive 2014/65/EU on markets in financial instruments, as amended (a "Regulated Market").
The Notes are rated A2 by Moody's France S.A.S. and A+ by S&P Global Ratings Europe Limited.
The Notes are issued in bearer form with a denomination of 100,000 each. The 2024 Notes have been assigned the
fol owing securities codes: ISIN XS2224621347, Common Code 222462134, WKN A3H2X0. The 2035 Notes have been
assigned the fol owing securities codes: ISIN XS2224621420, Common Code 222462142, WKN A3H2X1.

Global Coordinator and Active Bookrunner

HSBC

Active Bookrunners

Citigroup J.P. Morgan Mizuho Securities Standard Chartered Bank UniCredit Bank

Passive Bookrunners

BayernLB BNP Paribas BofA Securities Commerzbank Deutsche Bank DZ BANK AG




RESPONSIBILITY STATEMENT
adidas AG ("adidas", the "Issuer" or the "company", and together with its consolidated subsidiaries,
the "adidas Group" or "Group") with its registered office in Herzogenaurach, Germany, accepts
responsibility for the information given in this Prospectus including the documents incorporated by
reference herein.
The Issuer hereby declares that the information contained in this Prospectus for which it is responsible
is, to the best of its knowledge and belief, in accordance with the facts and that this Prospectus makes
no omission likely to affect its import.
NOTICE
This Prospectus should be read and understood in conjunction with any supplement hereto and with
any documents incorporated herein by reference.
No person is authorised to give any information or to make any representations other than those
contained in this Prospectus and, if given or made, such information or representations must not be
relied upon as having been authorised by or on behalf of the Issuer or HSBC Bank plc, Citigroup Global
Markets Europe AG, J.P. Morgan Securities plc, Mizuho Securities Europe GmbH, Standard Chartered
Bank, UniCredit Bank AG, Bayerische Landesbank, BNP Paribas, BofA Securities Europe SA,
Commerzbank Aktiengesel schaft, Deutsche Bank Aktiengesel schaft and DZ BANK AG Deutsche
Zentral-Genossenschaftsbank, Frankfurt am Main (each a "Bookrunner" and together the
"Bookrunners"). Each of the Bookrunners has not independently verified the Prospectus and does
not assume any responsibility for the accuracy of the information and statements contained in this
Prospectus and no express or implied representations are made by each of the Bookrunners or its
affiliates as to the accuracy and completeness of the information and statements herein. Neither the
delivery of this Prospectus nor any sale made hereunder shal , under any circumstances, create any
implication that there has been no change in the financial situation of the Issuer or adidas Group since
the date of this Prospectus, or, as the case may be, the date on which this Prospectus has been most
recently supplemented, or that the information herein is correct at any time since the date of this
Prospectus or, as the case may be, the date on which this Prospectus has been most recently
supplemented.
Neither the Bookrunners nor any other person mentioned in this Prospectus, except for the Issuer, is
responsible for the information contained in this Prospectus or any other document incorporated herein
by reference, and accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none
of these persons makes any representation or warranty or accepts any responsibility as to the accuracy
and completeness of the information contained in any of these documents. Each of the Bookrunners
has not independently verified any such information and accepts no responsibility for the accuracy
thereof.
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain jurisdictions
may be restricted by law. Persons into whose possession this Prospectus comes are required to inform
themselves about and observe any such restrictions. For a description of the restrictions applicable in
the European Economic Area in general, the United States of America and the United Kingdom see
"Selling Restrictions". In particular, the Notes have not been and wil not be registered under the United
States Securities Act of 1933, as amended, and are subject to tax law requirements of the United
States of America; subject to certain exceptions, Notes may not be offered, sold or delivered within the
United States of America or to U.S. persons.
MiFID I Product Governance ­ 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, each as defined in
Directive 2014/65/EU (as amended, "MiFID I "); and (i ) all channels for distribution to eligible
counterparties and professional clients are appropriate. Any person subsequently offering, sel ing 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, subject to the
distributor's suitability and appropriateness obligations under MiFID II, as applicable.
2



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 European Economic Area ("EEA") or the United Kingdom ("UK").
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
2016/97/EU, where that customer would not qualify as a professional client as defined in point (10) of
Article 4(1) of MiFID II; or (i i) not a qualified investor as defined in the Prospectus Regulation.
Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended,
the "PRIIPs Regulation") for offering or sel ing the Notes or otherwise making them available to retail
investors in the EEA and the UK has been prepared and, therefore, offering or selling the Notes or
otherwise making them available to any retail investor in the EEA and the UK may be unlawful under
the PRIIPs Regulation.
The language of the Prospectus is English. For the purpose of issuing the Notes under German law
the German language version of the Conditions of Issue shall be controlling and legally binding.
This Prospectus may only be used for the purpose for which it has been published.
This Prospectus may not be used for the purpose of an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such an offer or solicitation.
This Prospectus does not constitute an offer or an invitation to subscribe for or purchase any
Notes and should not be considered as a recommendation by the Issuer or the Bookrunners
that any recipient of the Prospectus should subscribe or purchase any Notes. Each recipient
of the Prospectus shall be taken to have made its own investigation and appraisal of the
condition (financial and otherwise) of the Issuer.
The validity of the prospectus wil expire 12 months after its approval as of the date hereof. The
obligation to supplement a prospectus in the event of significant new factors, material mistakes or
material inaccuracies does not apply when a prospectus is no longer valid.
The information on any website included in the Prospectus, except for the website www.bourse.lu in
the context of the documents incorporated by reference, do not form part of the Prospectus and has
not been scrutinised or approved by the CSSF.
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).
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
3



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
"General Information about adidas AG 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.


4



TABLE OF CONTENTS
Page

Risk Factors ........................................................................................................................................... 6
Risk Factors regarding adidas AG and adidas Group ........................................................................... 6
Risk Factors regarding the Notes ........................................................................................................ 11
Conditions of Issue of the 2024 Notes ................................................................................................ 14
Conditions of Issue of the 2035 Notes ................................................................................................ 36
adidas AG as Issuer ............................................................................................................................ 60
Taxation Warning ................................................................................................................................ 70
Subscription and Sale of the Notes ..................................................................................................... 71
General Information ............................................................................................................................. 74
Documents Incorporated by Reference ............................................................................................... 75
Comparative Table of Documents incorporated by Reference ........................................................... 75
Availability of incorporated Documents ............................................................................................... 76
Names and Addresses ........................................................................................................................ 77


5



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.
RISK FACTORS REGARDING ADIDAS AG AND 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 overal 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 wel , 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 global y 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
6



order cancellations, the increase in inventory and bad debt 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 mil ion. 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 col ections
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 al iances amongst competitors and/or retailers, the
increase in retailers' own private label businesses and intense competition for consumers, production
capacity and promotion partnerships between wel -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, especial y 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,
7



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.
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 eventual y 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 wel as lower sales. Unethical business practices or improper behavior
on the part of business partners could have a negative spil -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 wel
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 pil ar 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 wel 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 wel as reduced liquidity due to higher operating working capital requirements.
Similarly, a sudden increase in demand can lead to product shortfal s at the point of sale. In this
8



situation, adidas faces the risk of missed sales opportunities and/or customer and consumer
disappointment, which could lead to a reduction in brand loyalty and hurt adidas' reputation. In addition,
the Issuer faces potential profitability impacts from additional costs such as airfreight in efforts to speed
up replenishment.
If adidas fails to adequately assess consumer demand and plan production, respectively, its business,
financial condition and results of operation could be material y affected.
2.
Macroeconomic and external risks
Business interruption, safety, security and hazard risks
adidas is exposed to external risks such as epidemics, climate events, fire, accidents and malicious
acts. Those events may cause physical damage to the Issuer's own or its suppliers' premises,
production units, warehouses and stock in transit, result in business interruption and substantially
impact sales and profitability. In addition, any such event could threaten the safety or security of adidas'
employees. Epidemics such as the recent outbreak of COVID-19 or extreme weather conditions such
as tornados, hurricanes, heavy rain or lengthy periods of heat could be connected with the closing of
retail stores and decreases of retail sales, impact consumers' shopping behavior, and therefore
adversely affect the Issuer's business, financial performance and results of operation.
Macroeconomic, sociopolitical, regulatory and currency risks
Growth in the sporting goods industry is highly dependent on consumer spending and consumer
confidence. Economic downturns, financial market turbulence, currency exchange rate fluctuations and
sociopolitical factors such as military conflicts, changes of government, civil unrest, pandemics,
nationalization or expropriation, in particular in regions where adidas is strongly represented, therefore
could negatively impact the Issuer's business activities and top- and bottom-line performance.
Currency risks, for example, are a direct result of multi-currency cash flows within adidas, in particular
the mismatch of the currencies required for sourcing products versus the denominations of sales.
Furthermore, translation impacts from the conversion of non-euro-denominated results into the Issuer's
functional currency, the euro, might lead to a material negative impact on its financial performance. In
addition, substantial changes in the regulatory environment (e.g. trade restrictions, economic and
political sanctions, regulations concerning product compliance, environmental regulations) could lead
to potential sales shortfal s or cost increases.
Unfavorable changes in the macroeconomic, sociopolitical and regulatory environment as well as
foreign currency exchange rates could have a material adverse effect on the Issuer's business,
financial condition and results of operation.
3.
Organizational risks
IT and cyber security risks
Theft, leakage, corruption or unavailability of critical information (e.g. consumer data, employee data,
product data) and systems could lead to reputational damage, regulatory penalties or the inability to
perform key business processes. Key business processes, including product marketing, order
management, warehouse management, invoice processing, customer support and financial reporting,
are all dependent on IT systems. Significant outages, application failures or cyber security threats to
adidas' infrastructure, or that of its business partners, could therefore result in considerable business
disruption or impact to business-critical data.
Should adidas not be able to quickly identify and adequately respond to unavailability of critical
information and systems as well as cyber security incidents, this could have a material adverse effect
on its business, reputation, financial condition and results of operation.
Project risks
To effectively support further business growth and improve efficiency, adidas continuously invests in
new projects such as the creation, implementation, expansion or harmonization of IT systems and
distribution centers or the construction of office buildings. Ineffective project management could delay
the execution of critical projects and lead to higher expenditures. Inadequate project planning and
9



controlling as well as executional mistakes could cause inefficiencies, delays or business disruption,
resulting in higher costs and sales shortfalls. Inappropriate project governance, prioritization and
oversight of the project portfolio may lead to suboptimal resource allocation and undesired project
results.
Ineffective project management and delays in project execution could have a material adverse effect on
adidas business, financial condition and results of operation.
4.
Legal and regulatory risks
Risks related to tax and customs regulations
Numerous laws and regulations regarding customs and taxes as wel as changes in such laws and
regulations affect the Issuer's business practices worldwide. Non-compliance with regulations
concerning product imports (including calculation of customs values), intercompany transactions or
income taxes could lead to substantial financial penalties and additional costs as well as negative
media coverage and therefore reputational damage, for example in case of understatements or
underpayments of corporate income taxes or customs duties. Changes in regulations regarding
customs and taxes may also have a substantial impact on the Issuer's sourcing costs or income taxes.
Customs and tax authorities are taking increasingly aggressive positions in audits. Therefore, adidas
also creates provisions in accordance with the relevant accounting regulations to account for potential
disputes with customs or tax authorities.
Should adidas fail to comply with tax, customs and import regulations, its business, reputation, financial
condition and results of operation could be adversely affected.
Compliance risks
As a global y operating company, adidas is subject to various laws and regulations. Non-compliance
with such laws and regulations could lead to penalties and fines and cause significant reputational
damage. For example, non-compliance with laws and regulations concerning data protection and
privacy, such as the EU General Data Protection Regulation, may result in substantial fines. In addition,
publication of failure to comply with data protection and privacy regulations could cause significant
reputational damage and result in a loss of consumer trust in adidas' brands. The Issuer also faces the
risk that members of top management as wel as its employees breach rules and standards that guide
appropriate and responsible business behavior. This includes the risks of fraud, financial
misstatements or manipulation, anti-competitive business practices, bribery, corruption, discrimination
and harassment at the workplace.
If adidas fails to ensure compliance with laws and regulations and does not take appropriate action to
prevent, detect and respond to non-compliant or fraudulent activities, this could have a material
adverse effect on its business, reputation financial condition and results of operation.
Legal risks
As popular consumer brands which rely on technological and design innovation as defining
characteristics, the Issuer's brands are frequent targets for counterfeiting and imitation. Counterfeiting
and imitation can lead to losses of sales and the potential damage to brand reputation. Legal action
taken against the Issuer because of the use of technologies or other intellectual property that are
claimed by a third party may result in the loss of rights to use those technologies or rights, imposed
royalty payments, withdrawal of a product from the market, legal costs and reputational damage. In
addition, legal action taken against adidas because of an employee or agent's actions, in-actions,
products, services or other events could cause financial loss, higher costs or reputational damage.
Such legal action may also be the result of a breach of contract by the Issuer.
Counterfeiting, imitation or legal action taken against the Issuer could have a material adverse impact
on its business, reputation, financial condition and results of operation.
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