Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the adidas AG full year 2021 conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Sebastian Steffen, Head of Investor Relations. Please go ahead.
Thanks very much, Nairobi, and good evening, good afternoon, good morning, everyone, wherever you're joining us virtually today, and welcome to our full year 2021 results conference call. Our presenters today are our CEO, Kasper Rorsted, and our CFO, Harm Ohlmeyer. We will kick it off in a second, as always, with their prepared remarks, and we will have enough time afterwards for your questions. As always, I would like to ask you that during the Q&A session, you limit your initial questions to two in order to allow as many people as possible to ask questions. Now, without any further ado, over to you, Kasper.
Thank you very much, Sebastian. Also from my side, I welcome everyone to our full year 2021 presentation. Before I start with the actual presentation, I'd like to address a topic which is on everyone's mind right now, and that is, of course, the current war in Ukraine. As I'm sure all of you have, I've been watching the events in Ukraine with great concern and dismay. My thoughts are with the people who are suffering, and I'm joining all those calling for peace. My and our concern is particularly for employees in the region. Their protection and safety are our highest priority. In addition, we provide immediate humanitarian aid to other people and communities on the ground who are in need of support. To provide help, we made a total donation, EUR 1 million, to refugees and children's charities. We've also donated clothing to distribute to our people in need.
Many of our employees are contributing as well as we as a company match their donation. It's hard to switch topics, but now let's turn to how the first year of our Own the Game strategy went. I can confidently say that 2021 was a much better year than 2020. On the back of successful vaccination campaigns around the globe, the worldwide economy started to recover. Sport returned to the global stage, creating huge excitement around the world. That said, the COVID-19 pandemic continued to impact lives and businesses across the globe. At adidas, we delivered strong results despite heavy disruptions in supply and demand that you'll hear more about during the presentation. Let me stay on the topic of sport because that's what adidas is all about. Sports defined our past, present, and the future. I'd like to mention three personal highlights.
For us, it was a great pleasure to host the German national team in the newly built home ground at our headquarters in Herzogenaurach in Germany. Hosting a world-class team on our premises during such a tournament was an industry first. I was happy to see our long-term partner and best football on the planet, Lionel Messi, finally winning a title with the Argentinian national team at Copa América. Finally, we had a fantastic year in running with more wins, more world records, and more podiums at major road races than all our other brands, all other brands combined. We continue to win consumers around the world with innovation, with innovative new products, exciting new store concepts, and great experiences. Again, let me just mention a couple of highlights.
Building on the success of the initial franchise, we launched the NMD S1, a new key lifestyle product, exclusively on our CONFIRMED app and achieved a 100% sell through with a demand ratio of 1:78. We further rolled out our CONFIRMED app to 22 countries at the end of last year as a go-to destination for sneakerheads. We made our most iconic shoe, the Stan Smith, green by bringing out versions with a series of high-performance recycled materials. We tapped into football culture and launched jerseys for our most important football partners such as Bayern, Real, Juve, Ajax, Arsenal, that won the hearts and minds of football fans around the world. Exclusive partner collection launches such as the 100% vegan football boot, Predator Freak, amplify the strong growth in our football franchises in line with our sustainability leadership ambition.
Talking sustainability, we opened our first two stores completely dedicated to our adidas Terrex outdoor offering in Shanghai and Munich. The stores are the most sustainable yet and serve as an emotional platform for consumers to join and support our sustainability journey. Let's now look upon our agenda for today. As you remember, we launched our new 2025 strategy, Own the Game, in March last year. I'll start with a strategic update. I will then follow with more information about our business performance in 2021 before Harm will give you all the details about our financials. I'll be back to provide you with an outlook for 2022, and in the end, we will of course open the floor for your questions. Let me start with a strategic update. Our strategy, Own the Game, starts with the consumer. The consumer is at the heart of everything we do.
Our industry is marked by five consumer trends: athleisure, betterment, digital, sustainability, and premiumization. All these five trends even accelerated through the pandemic and make the sporting goods industry a highly attractive one to be in. Our Own the Game strategy is based on these strong industry trends. As mentioned, Own the Game puts the consumer at the heart of everything we do. It is deeply rooted in sport. Our strategic focus is on increasing the credibility of the adidas brand, elevating the experience for consumers, and pushing the boundaries in sustainability. To successfully deliver on this strategy, we will invest consistently into our people, into innovation, and into our digital transformation. In essence, Own the Game is a growth and investment strategy that leads adidas into a successful future.
Let's now look at the key elements of our strategy and our key achievements in 2021 one by one, and I'll start with people because people always comes first at adidas. With the Coronavirus pandemic unfortunately being far from over in many parts of the world, securing the well-being, health, and safety of our own employees and those of our suppliers remained our first priority. We continued our journey to become an even more diverse and inclusive company and organized our second week of inclusion in September last year. We made significant progress in increasing the number of women in leadership positions. At the end of 2021, women made up 37% of our executive management positions, up from 35% in the prior year. We received great outside recognition for being an employer of choice with a clear focus on diversity, equity, and inclusion.
Our people are also the key force in our relentless strive for innovation. The number one priority remains driving brand heat with exciting product innovations across our strategic growth categories and is clearly paying off. The introduction of three new industry-leading midsole technologies in running led to strong double-digit growth in 2021 as our athletes took home more world records, wins, and more podiums in the top 50 road races globally than all other athletes combined. I'm proud to see the three stripes reclaiming credibility in technical running with the success of our groundbreaking Lightstrike Pro technology featured in the prominent Adizero franchise. At the same time, our success extends to all other platforms and franchises as we further diversify our running offer with the introduction of Repetitor, which just became available in our newly launched Adistar franchise.
Complemented by the multi-billion Euro Boost platform and the commercial scaling of 4DFWD, we're making running accessible to more people globally than ever before. Digital is also setting us up for success. Let me remind you that by 2025, the vast majority of our net sales will come from products that are created and sold digitally. We're making strong progress in digitizing our core processes across the entire value chain, which is helping us to build better products, react to trends faster, and engage more personally with consumers. I'll provide you with three tangible examples. First, we were able to shorten product creation time from six months to only a few weeks for certain new concepts in Originals and Training, which will start to have a meaningful impact on net sales in 2022.
Secondly, our D2C business model equips us with more and more consumer data, which will be levering to drive an increase in full price share for D2C inclusive launches for up to 70%. Third, we continue to significantly invest in digital tech and data analytics capabilities and then hired an additional 2,000 digital experts in 2021. Overall, digital is becoming a core competency and an end-to-end value driver for adidas as we're able to meet consumer needs even faster and more effectively. The ambition to create more direct relationships across both digital and physical touchpoint is fully embraced by experience as a strategic focus area. We always said that we'll become a member space first, and we're making strong progress towards this target.
In 2021, we've added 75 million new members to our digital ecosystem, which brings the total number of members to now 240 million. Let me reiterate, members are our most profitable consumers as they buy more than 50% more often and have a lifetime value that is more than 2x higher. We're not stopping there. Our seamless enhanced consumer experience also extends to our retail space as we added an additional 61,000 sq m net selling space throughout the course of 2021, including new brand halo stores in Dubai, Shanghai, Beijing, Berlin, and Hamburg. Adidas always had a unique and strong heritage in both sport and culture.
We're increasing our credibility by sharpening both edges of our brand, delivering inspiring campaigns, groundbreaking innovation in sport, and making women a company-wide priority and elevating Originals into premium lifestyle. We were loud on power as we launched our biggest brand campaign ever, Impossible Is Nothing. Communicating with one voice, we reached more than 1 billion views on social media. With Stay in Play, we activated more than 60 partners in a record-breaking campaign aimed at keeping more women and girls in sport. In Originals, I'm excited about the commercial opportunity as we start to scale NMD alongside our Forum franchise in 2022 with additional iterations, dedicated marketing, and exciting partnerships. Talking about scale, we're committed to create a comprehensive sustainability offer at scale. It is the right thing to do and continues to be on the top of consumers' mind.
As you know, we have a strong ambition that nine out of 10 articles offered will be sustainable by 2025, and I'm proud to report that we achieved a 69% share of sustainable articles in 2021. The target is complemented by other ambitious sustainability targets that got approved by the Science Based Targets initiative last year, which means that our targets are aligned with the 1.5-degree target. An improved sustainability product offering is essential to achieve these targets. After three generations of prototypes, we successfully commercialized Made to Be Remade concept with a rollout to additional franchises. Together with Allbirds, we created a performance running shoe with the lowest carbon footprint ever. We're also innovating with new business models and introduced Choose to Give Back in collaboration with thredUP, aimed at helping to extend the life cycle of sportswear, apparel, and footwear.
We've also invested into several strategic partners like Spinnova, Infinited Fiber, and Pond Biomaterials. Now, let's continue with the business update for 2021. I'll start with highlighting strengths and weaknesses. On the strength side, we saw broad-based growth across all regions, with strong double-digit increases in EMEA with 24%, North America with 17%, and Latin America with 47%. Those markets had operated without major disruption. Our focus on D2C is clearly paying off as our own channels in each of these markets grew strong double digits. Despite higher marketing investment and more than EUR 200 million of stranded costs related to the divestiture of Reebok business, our profitability improved significantly, and I'll come to the details in just a second. On the weaknesses side, of course, we also saw our set of challenges.
With the majority of Western markets being able to operate without major disruption, momentum remains subdued in Greater China and Asia Pacific as a challenging market environment and extensive COVID-19 related lockdowns weighed on demand in these regions. Unfortunately, supply chain constraints also continue to impact our sales trajectory with product outages and shipping delays posing a significant drag on our top line development. In addition, significantly higher supply chain costs and negative FX developments mask our underlying gross margin improvement, and Harm will comment on this in more detail later. We delivered a strong set of results in 2021. In total, we added almost EUR 3 billion to our top line in 2021, despite several external factors weighing on both demand throughout the year. Our gross margin increased by 0.7 percentage points to 50.7%, despite significantly higher supply chain costs and negative currency development.
Our operating profit increased by more than 150%, despite more than EUR 220 million of stranded costs related to Reebok. As a result, we increased our net income from continued operations by more than EUR 1 billion, despite nearly EUR 200 million higher marketing spend to drive brand heat. Coming to our strategic growth markets. Our North American business grew 17%, and we saw the strong growth also in D2C. Overall, the increase was driven by double-digit growth in lifestyle and football categories, while outdoor was up triple-digit. Our EMEA business grew by 24%, and we saw also strong growth in D2C with 20% year-over-year. From a category perspective, outdoor training and running, football and lifestyle all recorded strong double-digit growth. In Greater China, we grew 3%.
After a very strong start to the year, the challenging market environment weighed on our top and bottom line results. I'll talk about the current situation in China and the progress we're making with our action plan later in my outlook part. We see a strong growth momentum in undisrupted markets. To make it very clear, around 70% of our markets operated without major disruptions in 2021, and that reflected in a double-digit revenue growth in EMEA, North America, and Latin America. Taken together, these markets grew 23% in 2021, a clear proof for the strong demand for our brands and product. Seventy percent of the markets were undisrupted, and the growth of the undisrupted were 23%.
From a channel perspective, we saw an 18% increase in own retail, and that was again driven by exceptional growth in EMEA, North America, and Latin America. In e-com, revenue grew double-digit in EMEA and Latin America compared to 2020, despite the exceptionally high growth in the you know, prior period. In North America, we were able to increase our full price share in e-com to more than 70%, reflecting an increase of almost 20 percentage points. Overall, our e-com business grew 4% compared to 2020, reflecting an increase of 60% over the past two years. Let's have a closer look at the latest digital and D2C share of our business. In 2021, D2C, and that includes own retail as well as e-com, accounted for 38% of our net sales.
From this 38, own e-com accounts for roughly 50%. Digital, which includes own and third-party e-com, accounted for 34% of total net sales. Therefore, more than 50% are coming from our own dot-com. These figures clearly illustrate our progress made to address consumer-driven changes in our industry. Consumers prefer to shop with their favorite brands directly. Hence, the mono-brand part of the market is expected to grow twice as fast as the multi-brand. As consumers shop more and more online channels will be growing three times faster than offline channels and represent more than 40% of the industry by 2025. We're doubling down on the biggest opportunities in an already extremely attractive industry.
From a category perspective, running and training both grew double digits, thanks to the introduction of industry-leading midsole technologies in running, as well as women-dedicated training offer that spark consumer excitement. Football saw exceptional increase driven by jersey launches amid major football events such as the UEFA Euro, Copa América. Outdoor continued its excellent growth trajectory, mainly driven by footwear launches as the release of sustainable products such as the Terrex, MTBR Free Hiker drove credibility. Revenues in the lifestyle category also increased double- digits as we scale successful franchises such as the Forum and introduced new premium collaboration such as with Prada to fuel brand heat. Now I'll share more exciting news and upcoming product releases across all our strategic growth categories later. Before handing over to Harm for the financial update now, let me recap 2021.
First of all, we delivered our financial guidance for the year despite a negative impact of more than EUR 1.5 billion from external factors. Our top line growth was driven by increases across all strategic growth markets and categories, reflecting the success of our innovative products as well as an elevated consumer experience. We continue to focus on D2C. Our members first mindset brought unique and tailored experiences and products to consumers globally, both online and in stores. On the bottom line, we added more than EUR 1 billion to net income from continued operations while driving significant market investments into the brand. Taking it all together, 2021 was clearly a successful first year within our new strategic cycle. Now I'd like to hand over to Harm.
Thank you, Kasper, and also a warm welcome from my side. As always, we start with the market segments. Our top line development in fiscal year 2021 was still impacted by COVID-19 and heavy disruptions in global supply and demand, but this impact was different between the regions. You have heard it from Kasper. Wherever markets operated without major disruptions, we have experienced strong top-line momentum. This is reflected in high double-digit growth rates in western part of the world. Again, 70% of our markets grew 23%. EMEA, North America, and Latin America grew 24%, 17%, and 47% respectively, driven by strong double-digit increases in both D2C and wholesale despite the negative impact, effects from significant longer lead times, about which I'm going to talk about in a moment.
Furthermore, all of these markets just mentioned recorded an operating margin close to or above 20%. Particularly in the case of North America, this is a major achievement and the result of a dedicated effort to drive profitability in the market in 2021 to compensate the profit shortfall from China. Sales in Asia-Pacific were up 8%, reflecting the negative impact on demand from the extensive lockdowns in the region. In Greater China, the geopolitical situation, the resurgence of COVID-19-related lockdowns as well as natural disasters weighed on the top and bottom line. Given the situation, I'd like to give you some more information about Russia CIS. Of course, all our offices and stores in Ukraine are closed, and we do our utmost to ensure the safety of our employees. Kasper already mentioned our humanitarian aid.
When it comes to Russia, we fully support and strictly follow all sanctions imposed by the German and European government. We decided to suspend our own retail and e-com operations and stop shipping goods to Russia. We suspended our relationship with the Russian Football Federation. We also removed the ball of the UEFA Champions League final that was supposed to be held in St. Petersburg from competition and stopped selling the ball. With revenues of around EUR 500 million, the entire market represented around 2% of total revenues in 2021. 75% of these revenues are generated through our own D2C business, the 500 owned stores that we operate in the region as well through our own digital platforms. While D2C tends to be less flexible and more fixed cost-heavy in general, the situation is actually quite different in Russia.
In fact, the share of variable cost is fairly high as most of the existing lease arrangements are linked to the revenue development. In addition, lease agreements in Russia are much more flexible and usually allow a termination within only a few months. One of the big benefits of operating a large D2C business is the flexibility when it comes to pricing. We can adjust prices quickly on a weekly basis, and we have already made use of this flexibility and increased our prices by more than 20% over the past two weeks to at least partly compensate the strong devaluation of the ruble. In addition, a relatively high share of D2C comes along with the limited risk related to receivables. The overall setup means that we can limit the impact on our profitability from the significant revenue decline we are assuming. Let's now turn to the company P&L.
You have heard it. The challenging market environment in China, COVID-19-related restrictions, and supply chain challenges reduced our top line for more than EUR 1.5 billion in 2021. However, we were still able to increase revenues by 16% currency neutral. Our gross margin increased by 70 basis points to 50.7%. I will come to the details in just a second. Other operating expenses increased 4% to EUR 8.9 billion in 2021, driven by higher marketing investments, mainly in EMEA and North America. We leveraged sport events to drive brand heat, and in addition, we supported the introduction of new products and drove consumer experience both online and offline.
Operating overheads increased slightly by 2% but would have been down if adjusted for the more than EUR 220 million stranded cost related to the divestiture of the Reebok business. Our operating profit increased more than 160% to around EUR 2 billion as a result of the strong top-line increase in combination with improved gross margin and lower operating expenses as a percentage of sales. Consequently, the operating margin increased 5.3 percentage points to 9.4%. Our net income from continuing operations improved by more than EUR 1 billion in 2021, also supported by a tax benefit in the fourth quarter related to the Reebok divestiture. I'm now going to take a closer look at the gross margin development in 2021, and would like to discuss the main factors in the composition of our gross margin development.
First, in terms of pricing impact, higher full price sales and selective price increases already in 2021 had a significant positive effect on our gross margin. Second, better inventory management and the non-recurrence of last year's purchase order cancellation cost impacted the gross margin development positively. On the negative side, we saw a normalization of the market and channel mix compared to 2020, with an overall lower contribution from China and e-commerce. Moreover, we experienced a significant increase in sourcing and freight costs that posed a headwind of around 1 percentage point to our gross margin in 2021. In terms of currency development, the significant negative impact continued in 2021 and remained a drag on our gross margin. Due to our hedging practices, this effect will only turn into a tailwind in 2022.
Now, talking about 2022, let's now take a closer look at the expected gross margin development this year. Starting from 50.7%, we expect gross margin to reach a level of between 51.5% and 52%. As you know, higher supply chain costs have weighed and will continue to weigh on our gross margin and pose a drag on the development also in 2022. The total cost per piece is expected to double in 2022 compared to last year. Moreover, air freight costs will further increase despite a significant reduction in our overall volumes. In order to compensate these higher costs, we are implementing significant price increases as we speak. In the first half of the year, these will be more limited to D2C exclusive products. The second half, we're increasing prices in a broad way by a mid to high-single-digit percentage on average.
In total, we expect this to largely compensate the headwinds from higher supply chain costs. On top of these developments, an improving channel mix as we continue to focus on driving our D2C business in general and e-com in particular, as well as the positive FX impact, will drive the significant gross margin improvement this year. I would now like to talk about our investments in 2021. Overall, we spent EUR 2.5 billion on marketing. The largest portion is spent on our unique portfolio of brand partners. With our partners, we employ an open source mindset to inspire fresh perspectives, and we amplify our credibility by leveraging the power, authenticity, and reach of our partnerships. To drive brand heat and create consumer excitement, we successfully launched several campaigns in 2021.
Impossible Is Nothing, which was rolled out in more than 50 countries, campaigns around the major sporting events, as well as campaigns focusing especially on women, like Stay in Play or Watch Us Move. Overhead expenses amounted to EUR 6.3 billion in 2021, with the biggest portion being spent on D2C to elevate the consumer experience across all of our touchpoints. Of course, a significant part of our operating overhead expenses went into logistics in order to fulfill consumers' and customers' needs when it comes to the timeliness and reliability of delivering our products. Now turning to the balance sheet. Inventories were down 12% currency neutral. This development mainly reflects the divestiture of the Reebok business. The strong sell-through of our product, successful inventory management, as well as the impact from industry-wide supply chain challenges also contributed to the decline.
Receivables increased 6% currency neutral at the end of December 2021, reflecting our strong top-line growth. Payables were down 6% currency neutral, mainly due to the normalization of payment terms as well as the divestiture of the Reebok business. Overall, average operating working capital decreased 5.3 percentage points to 20% for the full year, whereas 25.3% in 2020. Let's spend a minute to look at our inventory composition in a bit more detail. Due to the supply chain challenges in the last year, we saw a clear increase in lead times. At the end of December 2021, only around 60% of all goods were goods on hand. The rest was in transit. Comparing these numbers to the prior year, you clearly see a difference.
At the end of 2020, more than 70% of goods on hand and less than 30% in transit. In markets that are particularly impacted by the supply chain constraints, such as North America and EMEA, goods on hand were even as low as 50%. You can clearly see how much these two markets have been impacted by the lack of product. We expect the situation to improve significantly during the first quarter, and as a result, don't foresee any major impact from last year's lockdown in Vietnam anymore beyond the first quarter. I talked about the importance of investments into the brand and marketing before. Now, I would like to focus on our capital expenditure. In 2021, CapEx increased more than 50% to EUR 667 million.
Investments in new or remodeled own retail stores, our e-commerce business, as well as the broader IT infrastructure, represented once again the majority of the expenditure. This is in line with our company strategy, Own the Game, according to which we will focus on D2C and digital to ensure a seamless consumer experience. Another important part of our Own the Game are shareholder returns. Until 2025, we plan to return between EUR 8 billion-EUR 9 billion to our shareholders via regular dividend payments and share buyback programs. These EUR 8 billion and EUR 9 billion will be complemented by the returns from the Reebok proceeds. Let us go through this piece- by- piece. In 2021, we already returned EUR 1 billion to our shareholders via share buybacks, and EUR 600 million via the dividend payment, resulting in a total payout of EUR 1.6 billion.
Going into 2022, we already completed another tranche of our share buyback program in the amount of EUR 1 billion in January and February. In addition, the dividend payout we announced today will add another EUR 600 million. On top of that, we announced last week the launch of an additional share buyback program of up to EUR 1.5 billion in Q2 and Q3 to return the cash proceeds from the Reebok divestiture to our shareholders following the successful closing of the transaction. Again, this amount comes on top of the EUR 8 billion-EUR 9 billion from Own the Game. In total, we will be returning up to EUR 3.1 billion to our shareholders just in 2022. I mentioned the dividend proposal for 2021 already.
We will recommend paying a dividend of EUR 3.3 per dividend-entitled share to shareholders at this year's AGM. This represents an increase of 10% compared to the prior year dividend, where we paid EUR 3 per share. With that, I would like to hand over to Kasper for the outlook for the year.
Thank you very much, Harm. In talking about 2022, I want to remind everybody that we still operate in a very dynamic environment and heightened uncertainty. The war in Ukraine, a continued challenging market environment in Greater China, COVID-related restrictions, supply chain challenges, and inflationary pressures will be leaving a mark on our business also in 2022. Together with our committed team of employees around the world, we'll continue to tackle these challenges in a decisive manner. As a result, we will drive double-digit top and bottom line improvements also this year, and we remain optimistic about our long-term growth opportunities. In addition, our accelerating brand momentum, as well as our strong products innovation lineup, will help us gain market share. Let me now tell you how we'll get there. I've mentioned it before, Own the Game is a growth and investment strategy.
Our focus in 2022 is exactly that, investing into double-digit growth. This year, we'll invest close to EUR 3 billion into our brand campaigns, into our most important product launches, and into new partners, both in sport and in lifestyle, to accelerate our brand momentum. We double down on further growth in our two largest market, EMEA, North America, and we have a plan in place to accelerate our growth in China. We'll continue to build direct relationships with our consumers through digital and our own stores. In 2022, sport is back on the biggest stage with the FIFA World Cup, the UEFA Women's EURO, and the Winter Olympics that closed three weeks ago. adidas was and is front and center at all big sport events and moments this year.
Our pipeline of new innovative products is full and will be rolled out on a weekly basis throughout the entire year. Our focus is on our five categories that I'll speak about in just a second. We are leveraging our 5,000 brand partners across sport and lifestyle to showcase our products, our brand, and our attitude, Impossible Is Nothing. We will launch four key chapters of our year-long brand campaign, Impossible Is Nothing, featuring women, sustainability, adidas Originals, and football. Last but not least, I'm happy to share that we've appointed Alasdhair Willis as adidas's new Chief Creative Officer last week. In his role, Alasdhair will lead our design community to shape, define, and shepherd the future creative direction of the brand across performance, Originals, and Sportswear.
Alasdhair is an icon of the industry with a long-standing connection to adidas that dates back to 2005, most notably through his role in the concept and development of adidas by Stella McCartney in partnership with Stella McCartney. In terms of our brand momentum, we are off to a great start in 2022. We started the year with our biggest women's campaign ever, I'mPossible. It's running in all markets globally and has already reached more than 500 million consumers in the first three weeks since its launch. Our women's campaign came on the back of an already highly successful campaign to launch our new innovative sports bras collection that offers the right bra for all women and all types of sport activities.
This campaign alone generated more than 1,000 pieces of social media coverage and reached almost 90% positive sentiment across the entire social media ecosystem. We've clearly defined our most important categories, football, running, training, outdoor, and lifestyle. We just talked about training with our women's campaign and our bra revolution. Let's now look one by one into some of our highlights in the other categories. We'll start with outdoor because our Terrex outdoor range was front and center of the Winter Olympics in Beijing. We kitted out the entire German team that came second in the medal count.
We continue to see huge opportunity in this space for us and more and more consumers worldwide enjoy outdoor activities to stay fit and stay healthy. In the first part of the presentation, I've called out that our successful Adizero and Adios Pro franchise is driving credibility by securing marathon wins at the top of the pinnacle. At the same time, we're making running you know, accessible by diversifying and scaling our offer to every runner at more commercial price points. Our latest Solar Glide is available for EUR 140, and just the first of many product introductions across all price points. 2022 will be a great year for football, with the Women's European Championship being played in England this summer and the FIFA World Cup in Qatar at the end of the year.
This comes on top of the excitement around the UEFA, you know, Champions League and the various national leagues. Our portfolio of federations, clubs, and players is by far the best in the industry. Just think of national teams like Germany, Spain or Argentina, the clubs of Real Madrid, Bayern Munich, Juventus, Arsenal, Manchester United, to mention only very few. Messi, Müller, Pogba, Dybala, Vivianne Miedema , Jennifer Hermoso, I could go on forever. We'll leverage this competitive advantage all year long by launching innovative new football products and activations, and activating our clubs and our players. Next on the list is the launch of the official World Cup match ball at the end of this month. I have more exciting football news to share with you. Today, we're proud to announce that adidas and the Italian Football Federation will start working together as of January 2023.
We're happy about this new partnership, and we're very much looking forward to what the current European champion and adidas can achieve together. Without any doubt, this partnership makes our leading football portfolio even stronger for the years to come. Now let's switch gears and talk about our lifestyle segment. Here I'm equally excited about the leading portfolio of partners we can bring to the table. Yohji Yamamoto with Y-3, adidas and Prada, Kanye West and Yeezy, Beyoncé and IVY PARK. No other brand can draw on such a list of renowned partners that bring a unique proposition to our consumers worldwide. We'll not stop there, and we'll expand into new exciting collaborations in this space. Last year, we announced a partnership with Jerry Lorenzo. Under the leadership of Jerry, we will disrupt the basketball category.
In the meantime, Jerry and his team have joined our hub in our key city, L.A., and worked on the first products. In January, at Innersect in Shanghai, which is China's biggest streetwear fair, Jerry provided Chinese consumers with a first glimpse into how the product will look like. Long lines were building quickly in front of the exhibition, as is the excitement in anticipation of the launch of first products during this summer. 12 days ago, we launched our newest partnership at Milan Fashion Week, adidas and Gucci. Gucci and adidas Originals are joining forces in a new collaboration, which combines the heritage and the creative you know, codes of both brands. At the Gucci runway show, the adidas Gazelle model and our famous three stripes trademark were front and center, and the talk of the entire fashion world.
Media around the world picked up the news and called this collaboration the most exciting collaboration of the year. On the day itself, we recorded the highest number of sign-ups for a CONFIRMED app and recorded the most successful Instagram post ever. Our intent is very clear. As stated one year ago at our strategy launch, we want to premiumize adidas Originals, and it is collaborations with some of the hottest brands in fashion, such as Gucci or Prada, that will get us there. By extending adidas Originals into the premium segment, and at the same time sharpening the edges of adidas in sport, we created space in the middle for a completely new consumer proposition, adidas Sportswear. This summer, we launched the first adidas Sportswear collection, perfectly catering to the Gen Z consumer.
With adidas Sportswear, we're perfectly addressing the growing relevance of the athleisure trend towards sport-inspired leisure wear, and we will be able to capture the huge opportunity it presents. We are very confident about our innovation pipeline, and let me assure you that there is much more that's yet to come. In less than two weeks, we're opening to host our innovation day and cannot wait to welcome you here at our unique world of sport. Let me remind you that this event will be a physical attendance only due to the confidentiality of products that will be displayed. We're not only going to provide an exclusive and comprehensive preview of 2022 product highlights across our strategic growth categories, but we'll also offer a preview of our spring/summer 2023 collection.
Finally, you can look forward to multiple opportunities to engage with inspiring special guests and brand partners throughout the course of the event. We definitely hope to welcome many of you here in two weeks' time. Our strong and comprehensive innovation pipeline will also fuel the acceleration of our top-line momentum in strategic growth markets in 2022. Let's take a closer look. EMEA operated without major disruption in 2021, and we experienced an acceleration of our top-line momentum. We're building on this momentum across channels and categories and expect mid-teens growth in EMEA in fiscal year 2022. We'll drive an expansion of our membership program and market share gains with key alliance accounts.
Building on our Impossible campaign and our broader revolution, we will particularly increase the market share of our women's business by winning with key items and bringing the premium offer to life. In football, we'll leverage the major upcoming events, the Women's European Championship, the FIFA World Cup in Qatar, et cetera, introducing key football innovations and a new approach to team wear. In lifestyle, we'll strengthen momentum by scaling key franchises in Originals and with the help of Jerry in basketball. North America is a second strategic growth market where we can build on a strong top-line momentum from last year. For 2022, we once again expect mid- to high-teens growth driven by both D2C and wholesale.
In e-com, we'll drive personalization, scale membership, and leverage high products, while only retail will see an improved consumer experience through increased investments into the store fleets, as we'll open new Halo stores in New York and L.A. In wholesale, we'll significantly increase our market share with key alliance accounts in the market and look forward to continuing driving our business, in particular with Foot Locker, DICK'S, JD, Kohl's, and Nordstrom. In lifestyle, our collaboration with Jerry Lorenzo will leave its mark as we premiumize originals and reignite basketball. It will not surprise you that we see a huge opportunity in the mall, and the timing here could not be any better given the recent announcement. Now let's turn to Greater China. We continue to focus on things we can control as we are still operating in a challenging market environment.
We developed a detailed action plan which is thoroughly executed, and that's why we're confident to achieve mid-single- digit growth in Greater China. Let me give you the details. We have strengthened brand heat and signed several new athletes to our roster of partners, such as Su Yiming, just before the start of the Winter Olympics. He's the first Asian snowboard medalist in Winter Olympic history. New athletes like Su are also part of our localized Chinese New Year campaign that created more than 1 billion impressions and views. This was not the only campaign in China year- to- date. We invested in double-digit million euro amount and had a total of three campaigns in the first two months, allowing us to connect with the Chinese consumer in an unprecedented way and sparking their excitement around the brand.
This is complemented by a significant ramp-up for China product creation. More than 30% of products will be Chinese-specific in 2022, which will lead to more commercial impact. As a result, we've already achieved a markdown reduction of 15 percentage points in e-com in Q4. Our investment in digital capabilities start to pay off as we improved our range and activation plans and realized exceptional sell-through of new hype releases. When a product is telling a story, it works extremely well with Chinese consumers, and there is many stories that can be told around Jerry Lorenzo, Gucci, just to name a few. Ultimately, we're making strong progress in transferring significant product volume into other markets to ensure that we're well prepared to start growing again in Q2.
Of course, as I said, we are aiming to achieve mid-single growth in 2022 after growing 3% in 2021. We're excited, you know, that our team in Shanghai will be led by Adrian Siu, who have been appointed as Managing Director of adidas Greater China. Adrian Siu succeeds Jason, who assumed the new role of Senior Vice President of Global Franchise. Adrian Siu has a long and successful track record with adidas. He joined adidas back in 2002 as Sales Director in Hong Kong and later assumed the role as Managing Director. Until 2019, Adrian Siu was our Senior Vice President for commercial for Greater China, being based in Shanghai. Since September of 2019, Adrian Siu has been successfully leading the transformation of a local apparel brand, Cosmo Lady, as CEO based in Shenzhen.
We're convinced that Adrian, together with the Chinese team, will ensure we return to growth in the short term and leverage the attractive opportunity this market provides in the long term. It's particularly important to mention that Jason not only knows the market well, our team well, but of course, all our customers extremely well in China. We will also continue to double down on D2C and digital, bringing the consumer experience to the next level. We have more than 20 Halo store openings planned for 2022. Halo stores are the top of our retail pyramid. These stores are true brand builder, thanks to exclusive products, enhanced consumer experiences, and members-only areas. They also help us understand what resonates best with consumers in our global key cities.
You know, the creation of seamless, enhanced consumer experiences is central to how we approach D2C, and we invest into the next generation of concepts and digital capabilities across our entire retail store fleet. This consumer-first mindset also extends to the online space, and membership continues to be a strategic priority. Going forward, we are rebranding our membership program to expand the adidas value proposition. adiClub will mark the next step of this journey. We'll introduce new program mechanism to unlock even higher consumer lifetime value as members will be able to redeem points for exclusive drops and special events in the future, another industry first. Summing all of this up, we have four strong growth drivers in place to continue growing both our top and bottom line at a double-digit growth amid heightened uncertainty in 2022.
Let's now turn to the financial outlook for 2022. Currency-neutral revenues are projected to increase at a rate between 11% and 13%. This growth assumption reflects a risk of up to EUR 250 million or around 1 percentage point of growth in our Russian CIS business due to the war in Ukraine and reflects the suspension of our retail e-com operations in Russia. Our gross margin, you've heard from Harm, is expected to continue to increase and reach a level between 51.5% and 52%. Our operating margin is expected to increase significantly to a level between 10.5% and 11%. In addition to the higher gross margin, lower operating expenses as a percentage of sales will benefit the company operating margin in 2022.
This development will be supported by the non-recurring of approximately 7% of Reebok-related stranded costs, which accounted for more than EUR 220 million in 2021. Driven by the strong top-line growth in combination with the margin improvements, net income from continuing operations is projected to increase to a level between EUR 1.8 billion and EUR 1.9 billion in 2022. Let me provide you with additional detail regarding the quarterly phasing of our top line guidance. While we continue to experience very strong demand in EMEA, North America, and Latin America, these markets will be impacted by the even more pronounced supply shortage in Q1. Approximately EUR 600 million in Q1 versus the EUR 400 million we saw in Q4 last year. As of Q2, we do not expect any significant supply shortages to weigh on our business in these markets anymore.
While we expect first quarter revenue to be down mid-single digits as supply shortages will reduce our growth by more than 10 percentage points, we project a significant acceleration you know, in Q2. This growth expectation is backed by an extraordinary strong order book, even if adjusted for more aggressive ordering patterns we have seen from wholesalers in light of the current supply shortages. To sum things up, we performed well in a challenging market environment in 2021 and delivered a successful first year of our new strategic cycle. We added almost EUR 3 billion to our top line. We invested almost EUR 10 billion into OpEx and CapEx to drive brand heat progress in our strategic priorities, digital and D2C.
In 2022, we'll build on this momentum and continue to grow our top line by around EUR 2.5 billion, and we'll return up to EUR 3.1 billion to shareholders via dividend payments and share buyback throughout the course of the year. Own the Game is a growth and investment strategy, fully executed across the entire company. I look forward to a successful 2022 as we'll drive continued top and bottom line growth together with our more than 60,000 employees. As I mentioned at the beginning of this presentation, the health and safety of our employees is and always will be our first priority in these unsettling times. Now, let's take your questions.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making a selection. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Graham Renwick from Berenberg. Please go ahead.
Hello, good afternoon. Thanks for taking my two questions. Just firstly on North America, I just wonder what your view is on the general health of the U.S. consumer so far this year, and also looking ahead across 2022. There have been some concerns on U.S. consumer spending this year, particularly given the tough comparatives due to stimulus last year, sharply rising inflation, et cetera. The U.S. sports retailers have been a bit more cautious on 2022 recently, all guiding to like-for-like sales declines, whereas you have a much more encouraging guidance of mid- to high-teens growth. Just wanted to understand what's bridging that gap and what is giving you the confidence in the U.S. against that tougher backdrop. Secondly, just on the supply disruption from the Vietnam closures and the impact to sales.
Of the EUR 1 billion net sales impact in Q4 and Q1, should we be thinking that those sales have essentially just remained on order books and are delayed into Q2 and beyond, when supply normalizes and wholesale partners restock? We've had EUR 400 million of sales that has been carried over from 2021 into 2022, and then there'll be a EUR 600 million shortfall in Q1, but that's gonna be made up later in the year? You know, those EUR 1 billion sales, are they largely lost sales and adidas could have delivered even higher revenue this year if it wasn't for those Vietnam issues? Just trying to get a better understanding of those dynamics. Thank you.
Hi, Graham. This is Kasper. I'll take the first question, and Harm will take the second. Let's, you know, start with North America. We see a huge opportunity for market share growth in the U.S., this year and the years to come. In the past two years, we have focused on getting a more balanced position between growth and profitability. If you remember back, we had a profitability around 6% in North America, now it's 20%. This year, clearly, we're gonna start accelerating our revenue and capture market share. We do not see a big setback from a consumer standpoint at all.
We think that demand has been out, you know, outweighing the supply, and you've seen the supply chain issues that we've had, and I think that has had a very negative impact, particularly on the Q4 revenue numbers. We're very bullish on that. If you look upon the portfolio of, you know, partners we have now lined up in the U.S., the latest one being Jerry on the basketball side, of course, Gucci on the fashion side, we're quite bullish in North America, and that's why we're guiding the way we are and having around the right balance between profit and top line. I think you'll see a strong opportunity for us in North America in 2022. That's why we're very bullish around it. Then maybe lastly, I think we have a big opportunity with key wholesale partners in the U.S.
Right now, we've been the fastest-growing brand with Kohl's. As I said in my presentation, whether it's JD or Dick's or Foot Locker, huge opportunity, and we'll push that very aggressively. Hans?
Yeah, Graham, on your second question, very straightforward, you know, answer. You can largely assume that the EUR 1 billion that we lost is really lost. It's not shifting, you know, into the next quarters or whatever. Everything that we're seeing in Q2 and going forward is a fresh order book. This is not a delay from, you know, Q4 or Q1. It's really a fresh order book with fresh products. Unfortunately that sales is, you know, lost as the, you know, factories couldn't compensate it, you know, for the future. We are running at full capacity, so it's a fresh order book going forward.
That's very clear. Great. Thank you very much.
Thanks, Graham.
The next question is from the line of Piral Dadhania from RBC Capital Markets. Please go ahead.
Hi, good afternoon. Thank you for taking my questions as well. I'll stick to two. The first is just on price increases. You know, you guys have flagged for a number of months that you'll be taking mid to high-single-digit pricing for autumn/winter 2022, which you're confirming again today. Just wanted to understand, it's been many years since we've seen this level of pricing in this industry. Just what gives you confidence that the volumes will remain where they are or how do you think about the demand elasticity for footwear in particular in this industry, in this kind of consumer environment, if you're gonna push pricing that high?
Do you expect to see any volume drop off and sort of what sort of feedback are you getting from your wholesale partners as you present these higher price points to them? Secondly, I just wanted to ask on sort of the guidance, revenue growth guidance for the year 11%-13%. You know, a few questions we've been getting today is, you know, it's fairly ambitious and confident in its sort of pitch, if you like. To what extent does it factor in any slowdown in the macro or consumer environment, particularly as we progress through 2022?
You know, at worst case scenario, well, a negative scenario, you know, if things are not perhaps as helpful as they are today, you know, could you still feel confident you can land towards the lower end of that guidance range? Just wanted to understand the sort of flex within that and how confident you are that you'll be able to deliver that within the context of the macro, going forward. Thank you.
Yeah. Piral, let me tackle the first question, then Kasper will, you know, answer the second question. On the price increase, you're absolutely right. I mean, it's mid- to high-single-digit in the second half of the year. We really believe we are confident about it. We really believe that the consumer on the one hand is ready for it. Inflation is here to stay longer than we probably would have anticipated. That's why we believe the consumer is ready for that. We have a clear strategy of premiumization, as you saw with our, you know, collaboration with Gucci and other partners. We have that, you know, opportunity.
Quite honestly, we have a lot of experience with that one, whether it's in Argentina or Turkey or what we're doing in Russia right now with the flexible pricing that we execute there. We are definitely confident that this will not lead to volume reductions. This is a true price increase that will compensate the, you know, product cost increase that we have and the freight increases that we are seeing.
When it comes to the guidance, of course, we've taken this very, very serious. You know, we still think it's a hugely attractive industry. If you take, you know, 2021 into account, where a lot of regions and countries have actually been impacted, you know, and slowed down the growth, we managed to grow 23% and 7% of the market. Very strong growth. We think that the underlying demand for our products remain high, number one. We have, you know, great innovation coming into the market, point two. I do wanna remind us that sometimes we need to look upon the assets and liabilities at the same time. I don't think anybody would have said that we could grow 4DFWD 7% in Latin America last year, and we did so. We think it's an appropriate guidance of this year.
You should also remember that the vast majority of our products are sold in a price range between $50-$200. It is an affordable luxury that people can get access to. We, at this stage, we remain, you know, we're very confident that this is the appropriate and correct guidance for the year and getting all regions to continue to grow, albeit at a lower level than 2021. In 2021, we grew at 16%, and we think that this is an appropriate and also guidance within the current context.
Okay, thank you very much.
Thanks, Piral.
The next question is from the line of Warwick Okines from BNP Paribas. Please go ahead.
Yeah, good afternoon. Thanks for taking my questions. My first question is on visibility of the order book. How far do you have visibility into H2? When you talk about the order book, are you also including orders that should have been delivered in Q4, Q1 but have not yet arrived? My second question is on China. Could perhaps you give a bit more detail about your consumer campaigns? What sort of customer reaction are you seeing? What are the green lights you'd need to see before you start to use influencers again? Thank you.
Let me start with China, and then I'll hand over. You know, the influencers have moved from entertainment to sport, and that's what we're doing. We're continuing to change the portfolio of influencers from entertainment to sport, because that is where the direction is. Of course, when we look upon the reaction over the campaigns, its number of views, its reactions that we're looking at. We grew, as you know, 3% last year, so it was not a environment that we didn't grow. We did increase the number of sports partners by 30% compared to 12 months ago. We continue to invest very heavily into, you know, the market. We think that the opportunity remained unchanged high, and we also believe that over time you will have a more normalized market environment.
I do wanna remind everybody, we're actually growing the market and we'll continue to grow. I think getting back to a double-digit growth is a long-term ambition for us, which we've stated in our strategy. Getting a stability in and making certain we continue to grow in this, you know, second, third and fourth quarter after a negative first quarter, which I said, I think is the important part, and we're quite confident that's gonna happen. We think also the market sentiment will over time probably be more moderate, you know, change moderately.
might take longer than we thought, but we think that will happen because the demand for Western products in all other categories than sport right now remains extremely high, whether it's automotive, electronics or luxury goods.
While we're on the order book visibility, of course, we have, you know, a solid visibility into the Q4. There's some assumptions on reorder in Q2. There's some assumptions on reorder business in Q2 as well. We have partial visibility into Q3, especially when it comes to back to school in North America. That's why I believe the visibility is, you know, pretty good. Do not expect there's a lot of phasing happening from Q4 into Q1 and that there are delayed orders. Most of these orders have been phased into the right, you know, quarter, so that's part of it.
We have also cleansed the order book to what we believe is a reasonable order book. Because, you know, we all talked about that retailers might order too much, but we definitely looked at every account and what should be the right order book. Based on the cleansing effect, we're still very confident on the order book that we are seeing. Of course, when we go, you know, into Q3, you know, a lot of customers have not seen what we're doing with Jerry Lorenzo, what we're doing with Sportswear, what the impact of Gucci will be. There's a lot of fresh product coming that many retailers haven't seen yet. That is also an additional opportunity in the second half that we're looking into.
It's not just the order book and wholesale, it's all the momentum that we want to drive in our D2C business that comes on top of it.
Got it. Thank you.
The next question is from the line of Jürgen Kolb from Kepler Cheuvreux. Please go ahead.
Yes, thank you very much. First of all, thanks guys for such a precise guidance given the challenging environment, and it has even gotten more difficult compared with 2020 as it feels, at least. Thanks for that. First question on China. You mentioned that now 30% of the products are done and designed by the local team. Where do you think that can go? How far of this autonomy of this specific market can you give to the team around Adrian going forward? And secondly, all the new products you're announcing with Lorenzo, with Gucci, you know, hype drops, but also the new corporations and collaborations, how much sales contribution will that or might that actually have in 2022? Thank you.
On the China side, I think the important part is we need to find the right balance between it being a global brand and of course a Superstar remains a Superstar or Ultraboost remains an Ultraboost and the same with the NMD as one. You might have Chinese iterations of it, but it is important that we really get the strength of being a global company come to full fruition. I very often say, if you work for BMW, you sell the 3, the 5, and the 7 series across the world. That will remain, I would say, the majority of it. But we will still have, and right now we have around 30%, and whether that will slightly increase is to be seen.
We need to make sure that particularly in markets where you might have cultural differences, that we have the relevant markets, not only in the product but in the storytelling. What you can envision is that on global products, you might have a more relevant local product now in our storytelling. We're not trying to put a, I would say, you know, lid on and say you can't do more than the 30%. I think the important part is that we leverage our global franchises because a lot of the marketing is global. When a Kanye or when a Jerry does something in L.A., it does resonate in Shanghai.
We need to make sure we have that on our side because if we only try to do Chinese products in China, then we become, you know, a 100% competitor to the local Chinese, and we don't have the global scale, the global benefit that we have as our company. We think probably staying in the balance we have right now, whether it's 30 or 35, doesn't make a difference, is the right one. The important part is we win with the consumer in product and storytelling.
Yeah. Jürgen, to your question on, you know, Jerry and Gucci and all the other collabs that we have, of course, we want to build them for the long term. This is not just, you know, one season. They will be meaningful in the second half, but this is not, you know, like, you know, the Kanye we have today or, you know, half of our growth or whatsoever. It will contribute to the growth in the second half. More importantly, you know, this will pay into the brand, especially when you look at Gucci or Jerry Lorenzo. These are definitely things that will, you know, generate brand heat for us, not just now, but also in the second half.
Of course, we wanna scale that into 2023, where we want to grow again, you know, significantly as part of our Own the Game strategy. Again, on Jerry Lorenzo, we will not, you know, disrupt the basketball, you know, business in the first season, right? It's we wanna leave a dent, you know, in the second half of the year and then build on this one. That is really the strategy. It will be meaningful, but it's not, you know, defining our growth pattern in the second half.
Very good. Thank you, and all the best.
Thanks, Jürgen.
The next question is from the line of Geoff Lowery from Redburn. Please go ahead.
Yeah. Hi, team. Just one question really please, and it's a slightly bigger picture one. Sitting here a year ago, your EBIT margin expectations for 2021 were probably quite similar, give or take a bit, to what you delivered. Yet at that time, logically, you wouldn't have had the China situation in your plan. You wouldn't have had Vietnam closures. You wouldn't have the degree of air freight and distribution costs. Yet you still delivered at a margin level very similar to where we probably were. I guess my question is, has that required you pulling forward the self-help that you had identified for outer years in the U.S. and Europe, and so now you're more sensitive to market developments or sales developments from here?
Is it that you have found more in the business by way of, sort of long-term opportunity that you've been able to access, but there are still significant opportunities ahead?
No, we didn't pull anything forward, if you were to put it that way. I think what we're doing is we're running a more, I would say, disciplined business model. You can look upon the increase in the margin that we found as we made more progress in the U.S. than we anticipated from a margin standpoint. I wouldn't say that. We feel very confident with the progress we are making, and we need to get the company back to the level it was in 2019, where the margin was 11.3% with very high marketing spend. We think we have a scalable business model. We think that the more we drive top line in, the more expansions we will get.
at the same time, there's always room for improvements in every single element of our P&L, and that's, I think, is what you saw last year that despite certain things that went against us, that happened. I also wanna say sometimes things go for you, and then we very often look upon all the things that goes against us. Some of the things went also our way, and that's why we're capable of capturing, you know, or maintaining the margin guidance that we had despite certain headwinds that we hadn't seen.
The important part is to get the right balance between the top line and the margin and not saving ourselves to beauty because, you know, our strategy is based on growth, and it's clear to everyone, you know, within our company and within the senior leadership, the value creation happens through the top line. Through the top line in a way whereby over time we also will increase the margin. It's a top line-driven business that we have.
Understood. Thank you very much.
Thank you.
The next question is from the line of David Roux from Bank of America. Please go ahead.
Good day, gentlemen, and thanks for taking my question. My question relates to the gross margin outlook. There's that slide 29 in the presentation, and most notably the guidance for the sourcing headwind. I just wanted to know whether this estimate on the sourcing headwinds gross margin assumes some sort of normalization of input costs as the year progresses, or is it marked against what you see as of today? I think just leading on from that, could you also remind me how much forward visibility adidas has in terms of finished goods costs for the year? I.e., how far forward does it order? Thank you.
Yeah, we're definitely not assuming that, you know, freight costs first and foremost will ease in 2022. I believe that is something we're gonna wait for in 2023 then. Of course reflecting some of the raw material increases already in 2022, which we also believe based on the contracts that we have in place with our suppliers, you know, are well planned for 2022. We do not expect, you know, significant easing in 2022, neither on the input cost nor on the freight. We have some visibility going into 2023, but in 2023 we have visibility, but there's still flexibility in how we, you know, calculate and get our FOBs under contract with our suppliers. The visibility is there, but we haven't finalized, you know, all the agreements yet going into 2023.
I would assume that, you know, freight rates are to some degree normalizing, otherwise I wouldn't believe in the, you know, market dynamics anymore. From an inflation and cost pressure point of view on the FOBs, it's probably another year where we'll see some increases that we need to work through and, you know, fully continue to work on the price increases as well. If you look at the price increases, what we do in the second half, you know, 2022 will of course, you know, benefit, you know, the first half of 2023 as well, because we haven't done that in spring/summer 2023. That's really how we should look at the gross margin, and it needs to be managed in a volatile environment, there's no question.
Okay, thank you very much.
Thanks, David.
The next question is from the line of Elena Mariani from Morgan Stanley. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. I have two as well. The first one is on your gross margin development. So it was very useful to have all the buckets that you have provided, but there are two that I haven't seen in the gross margin progression into 2022, so I just wanted to ask you about these factors. The first one is about a potential return of some broad-based discounting activities. I mean, 2021 has been a very special year, and many of your peers but even tons of retailers have seen big, you know, reordering happening, and they've talked about the likelihood of a more promotional environment. How do you think about this, and could this be another negative for your gross margin?
As part of this question, can you comment about the geographical mix and the effect that we might see? The second question is a more generic one on the guidance. Back in Q3 2021, you had given a sort of preliminary outlook, talking about 8%-10% growth for 2022. Now, if you exclude Russia, I think about what you were supposed to guide before the conflict emerged, it's about 12%-14% growth. What explains the delta between the, you know, preliminary outlook of 8%-10% and the new 12%-14%? Is it about the product innovation, your confidence on that? Is it about you having more visibility on the order book? Understanding this would be very helpful. Thank you.
Elena, let me, this is Sebastian speaking. Let me take the second question here, because I wanna be very clear that what we did provide in November was not a guidance, and what we actually said is that we expect at least 8%-10% growth. Already back then, you know, we were expecting growth that will be higher than the 8%-10%. We just didn't quantify what it exactly is. Yes, you know, we, you know, with four more or five more months under the belt, you know, we're clearly even more confident in our top line development in 2022. It's not like, you know, our assumption would have been 8%-10% in November, and it would have immediately changed to 12%-14% in March. Just to clarify that, and now I'll hand over to Harm for the gross margin question.
Yes. Thank you. Very clear.
Yeah, on the gross margin, I mean, very clear that the first half is still short of putting the market. We are very confident that the first half is a non-promotional, you know, environment. We also said that we have cleansed the order book to be reasonable in what we are shipping in based on the sell-through that we are seeing and the inventory that our accounts, you know, are carrying. Then, of course, in the second half, the combination of having, you know, enough supply again and raising prices, we are not assuming that the industry is necessarily getting smarter. I said that many times. There will be enough product. We now just got to stay disciplined on, you know, sell-through, staying in a pull model and not moving in a push model.
It's important that we stick to our strategy as well to have a higher share of D2C, where we have a better grip on the prices and a better control on the pricing mechanism in the market as well. That is really important. There will be some markets or some accounts that will potentially not win in the second half or in the fourth quarter towards the holidays, and there might be some promotions going on. That's something we got to manage and stay disciplined. Again, pushing our D2C strategy is the right thing to do to get, you know, the right control over our pricing for the benefit of the long term.
Thank you.
Thank you, Elena.
The next question is from the line of Cedric Lecasble from Stifel. Please go ahead.
Cedric Lecasble from Stifel. Thank you very much for taking my questions. I have two. The first one is a follow-up on China. Could you maybe comment on the underlying trend at market level you are seeing in China? Regarding your guidance, does it imply that you regain some market share versus local competitors in particular, or stabilization of market share? How do you see the market going with the macro, which has been pretty weak over the last few quarters? The second one is on the latest problems you might have in terms of disruptions. You are saying Vietnam is easing, everything is going more smoothly, except in Russia. How do you see Asia-Pacific going on, and how do you see the COVID situation evolving? Do you expect anything more positive on when? Thank you very much.
On the China situation or the China market, there's the guidance we've given. We believe that growth will probably be more or less in line with the Western competitors in the market. We still think that the local Chinese competitors will grow at a higher rate than that. That's over time why we have to make certain that we are perceived more as an in-China, for-China relevant brand. With this, we foresee that the local competitors with, I would say, the market forces right now in China will still favor the local competitors, and they will grow at a higher rate. Compared to those, we will lose market share.
Of course, over time, it is our very outspoken, explicit desire to regain market share in the market under more normal market circumstances. We're first stabilizing and getting back to a more stabilized growth following the 3% growth in 2021 and a bit higher growth in 2022. Harm, regarding the remaining part of Asia.
Yeah, on Asia-Pacific, it's a good point. First and foremost, we are starting with a you know, pretty low base, you know, given all the restrictions in 2021. We are still in a restrictive environment in Asia-Pacific, but we believe it's easing to some degree in the second half. We're also not counting that tourists are coming back significantly.
We all know that in key cities like Tokyo and Seoul, it's a majority of the you know sales in these markets, whether it's in Japan or in Korea. It's still, given the relative low base and some opening up and easing in the second half, gives us confidence that also Asia-Pacific will contribute to our growth profile in 2022. Again, they are somewhat behind the Western markets, I would say, from an opening point of view and from COVID-19 restrictions. Second half should look much better.
Thank you.
Next question is on the line of Grace Smalley from JPMorgan. Please go ahead.
Hi. Thank you. Two questions for me, please, both on China. Firstly, on the guidance for mid-single-digit growth this year, how should we think about the shape of growth? In particular, in the first quarter, should we still expect double-digit revenue declines, similar to what we've seen in the back half of last year? More broadly on the competition, do you attribute sort of the market share losses you've seen towards the local brands solely due to kind of the consumer trend and the local pride trend? Or do you think also the local brands have improved their product innovation and product quality and that's a structural improvement in the market? Thank you.
Thank you very much. Yeah, you've seen the guidance that, you know, for the year, we expect double digit decline in the first quarter, and then we expect a normalized growth coming up over the coming quarters that will get us to the guidance. There's no doubt that we see very strong growth opportunities, particularly with our entry into basketball around Jerry. We feel confident around the position in China and also the store fleet we have. I've seen, you know, recent videos. For obvious reasons, I can't be in China, you know, and I see the quality of the store fleet is exceptionally high. I will say in a politically correct tone that the competitive environment in China is different to others, which is favoring local competitors versus Western competitors.
We assume over time that consumer trends will revert to a more normalized environment like it has done in all other industries in China, whether it's phones or cars or luxury, as I said, or clothing. I think that will then normalize the competitive environment. You can also see with the guidance we are giving, we're not anticipating that will be the full case throughout the entire year.
Thank you.
Next question is from the line of James Grzinic from Jefferies International. Please go ahead.
Yes, good evening. Thank you. I have two quick questions. First one, perhaps, Harm, can you just remind us of what sort of US dollar tailwind you've locked in contractually for gross margins in 2022? What sort of basis points lift you get from that? And secondly, Kasper, I guess more broadly when you look at DTC shifts, would you expect perhaps the U.S. to be different in the coming year? Feels like a lot of your wholesale customers will be in need of more product, given what Nike is doing. Are you seeing that as an opportunity to step into that or not? That'd be very helpful to hear your thoughts on that. Thank you.
Thank you very much. I'll take the second part. There's no doubt that our DTC strategy is a universal one that we'll implement. There's also no doubt that particularly with some very high quality partners in the U.S., like Foot Locker, DSG or Kohl's or JD, we do see opportunities to drive growth with those quality partners. You might see a quote unquote abnormal development in the U.S. you know, I would say shorter to medium term. It doesn't change the overall direction. I think what you're gonna see is you're gonna see a consolidation or increased consolidation around the high quality partners in the U.S., which offers an opportunity for us, you know, this year and probably the years to come. That is not in contradiction to our DTC strategy, but it is an opportunity. Harm?
Yeah, just on our hedges, of course, we're not gonna, you know, disclose the details of our hedging positions, but, you know, rest assured it's, you know, better than, you know, 2021. That's why after two years of headwind, we finally have tailwind going into 2022. Also assume it's significantly better what the current spot rate is. And then certainly, you know, of course, that's why we are, you know, so confident about our gross margin. It will improve the gross margin over 2021 and the hedging position primarily of course in Europe, you know, US dollar to the euro will contribute to that gross margin improvement. That's where we are.
Thank you. Harm, can I just perhaps push you on that point? Am I crazy on thinking 100 basis points?
You can clearly try to push us, James. You know, we're not getting pushed here, but we're also not necessarily, you know, overly concerned if you mention numbers like that.
The point is it's a positive element in 2022, but we also are running a company for longer time, right? It's something we've got to manage. We're not gonna gamble on these things. There's also a hedging position in 2023 and 2024 again, right? But let's enjoy what we have in 2022.
Very clear. Thank you.
Thanks, James. Nairobi, we have time for one final question, please.
Our last question is from the line of Anne-Laure Bismuth from HSBC. Please go ahead.
Yes. Hi. Thank you for taking my question. I have two questions as well. The first one is, can you provide us some indication about the sensitivity to the increase in oil derivatives on your gross margin, which is most likely to impact 2023, but it would be great to have that kind of sensitivity. My second question is about the impact from the World Cup that is embedded in the top line growth guidance for this year. Would it be fair to assume that it would account for two percentage points, or is it, yeah, if you can provide some details on that? Thank you very much.
Anne-Laure, this is Sebastian speaking, so I'll take the second question again. I think we've spoken about the importance of events quite frequently in the past, and you know, that's quite different when it comes to the commercial relevance compared to you know, 10 years ago, where we were you know, a completely different company. These kind of platforms are clearly important for us to present ourselves as a brand. There will be quarters where you know, we will introduce the official match ball, where we will introduce the jerseys, where it will also have a meaningful impact on our top line development. You know, the assumption that you were just describing is definitely overemphasizing the importance in commercial terms of what the World Cup could make up for.
Yeah. If I understood your question correctly, it was a question around, you know, oil price increases into our FOBs or material cost, you know, in 2022. I mean, the increase that we're seeing are more on other materials, whether it's, you know, cotton or some of the sustainability efforts that we're doing to replace some materials with more sustainable materials. That's where the increases are coming from. When it comes to oil prices, that is more something that we look into for 2023, if these would stay where they are. Definitely for 2022, that is not a significant impact for our FOBs.
All right. Thanks very much, Anne-Laure. Thanks very much, Nairobi. Thanks very much, Kasper and Harm. Also thanks very much to all of you. Ladies and gentlemen, this concludes our full year results conference call. As always, if you have any further questions, I'm sure there's going to be still a few, be it today or over the next couple of weeks. Please feel free to reach out to any member of the IR team or myself. Actually, we're looking very much forward to meeting with some of you over the next couple of weeks during our upcoming roadshows, be it virtual or be it physical. This is clearly not the only thing that we're excited about and looking forward to.
As you've heard from Kasper, our innovation day is just around the corner, and we're thrilled to welcome many of you. We have already almost 100 people signed up. We've talked quite a bit today about what is going to drive the growth in 2022, so I can only tell you if you're interested in that question, come to Herzogenaurach and experience it yourself. With that, thanks very much for your participation. Have a good remainder of the day. Stay safe. All the best. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.