Good day, welcome to the adidas Group conference call for the full year 2016 financial results. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Sebastian Steffen. Please go ahead, sir.
Thanks very much, Tracy, good afternoon, ladies and gentlemen, welcome to our full year 2016 results conference call. Our presenters today are Kasper Rorsted, adidas CEO, and our CFO, Robin Stalker. I guess we all know that we have a lot of topics to cover today, before I will hand over to the two gentlemen, let me quickly remind you that as always, first of all revenue related figures will be discussed on a currency neutral basis, all figures will refer to our continuing operations and will be discussed excluding goodwill impairment losses. Before I turn it over, just one other housekeeping item.
I mentioned that we have a lot of topics to cover today, given the amount of participants in the call today, I would ask everyone to limit your questions to two to give more people the chance to ask their question. Now over to you, Kasper.
Thank you very much, Sebastian, welcome everybody to our call for the fiscal year 2016, outlook 2017, also strategy outlook. I will speak about the 2016 highlights. Robin will take us through the financial results in detail, then we'll come to the outlook, both 2017 and longer term. Before I go so far, I want to immediately recognize Robin on behalf of the entire company for the outstanding effort that he has done during his long tenure at the company. He's been with the company for more than 20 years, been the CFO for more than 16, during that period of time, sales have more than tripled, earnings have more than fivefold, the company value has more than tenfold. I think we have to look very hard and long for finding another tech CEO that has been able to deliver those results.
On behalf of the entire company, Robin, thank you very much. To be more formal, Robin will, of course, still be around. He will be the CFO until our AGM on May 11th. There will be no change in that responsibility until May 11th. We'll have the AGM on May 12th. Harm Ohlmeyer will take over. Harm, we're very happy that we have been able to find an internal candidate. Harm is also, during different periods of time, been part of Robin's organization and has joined the management board with immediate effect. He's also participating in today's call, and those of you who can remember the transition between Herbert and I will have exactly the same transition between Harm and Robin.
That means that Harm is present today, will not take any questions, and the same will be the case next week in order to make certain that we have a very clear level of responsibility within the company. Of course, it's in our utmost interest that Harm will be introduced to the work that has been done on the board level, and Robin will take care of that very similar to what Herbert did to me. That is on a side note, but the side note is not thank you, Robin. Thank you very much, Robin. We'll have a chance to say goodbye to Robin, not only during next week, but also during several road shows following the end of the fiscal year, this fiscal or last fiscal year. Let me move on to the operational highlights of 2016.
It is clear that we have a strategy, Creating the New, that is delivering results. We're diligently executing upon that strategy now in the second year, particularly putting emphasis around four areas, Open Source, key cities, and speed, which are our strategic choices, also, of course, the cultural element of our company. How do we actually get people to perform up to the level that we want? The outcome is, of course, that we increase brand desire, i.e., the attractiveness of the brand. Not just for the attractiveness of the brand. We want to be able to see it in our numbers, the outcome should be top line and market share growth, gross margin expansion, and operating leverage. You will see that in 2016, we've been capable of delivering on all of those elements, very similar to what we set ourselves out to.
Let me take you through and give you some highlights of the progress we have made in our three strategic choices, speed, cities, and Open Source. It's clear that the more we can move our business to full price share of sales, the higher the margins will be. Right now, we've been able to increase that by 10%. The speed range is generating 20% of sales. We're capable of making certain that we deliver within season to our key partners across the board. This is only the beginning. Markets that will be onboarding will continue with North America and Greater China. It is getting a much more flexible and agile supply chain and being able to service our consumers at a much better level, while at the same time ensuring full price share through, which, of course, will give us a better margin.
When we move to our key cities, as you probably remember, we announced six key cities that are setting the trends and have immense impact on the overall evolution of the global markets we're active in. Two in Europe, London and Paris, two in North America, L.A. and New York, and two in Asia, Tokyo and Shanghai. We have seen it's starting to pay off. We're growing more than 30%, which is incremental to the group where the growth was almost 20%. We're seeing an over proportional improvement in our market share and also in our NPS. We are now almost done with implementing the first iteration of our organization in the key cities. This is, of course, an evolution that will take place over time and also evolve, but we are so far very happy with the progress we have done with our key city initiatives.
Moving on to Open Source. This is third strategic choice, and this is about whom do we partner with and how do we partner. It will be partnership with Kanye West that has driven enormous commercial success, and particularly brand heat, making our brand more attractive than ever. It's our partnership around Parley, where we deliver upon our promise in sustainability and really, having a very unique position. I'm unaware of any product, now of any company, where the product that they actually deliver is a fully sustainable product. The success we had commercially is only the beginning. We sold 50,000, or I would say differently, we delivered 50,000 pairs of shoes last year because we could have sold many more. Our plan will be to deliver 1 million this year and of course, dramatically scale that next year. It is really a huge contribute to efforts in sustainability.
Also our Futurecraft, where the upper is 100% biodegradable, will really cement our position as a leader within sustainability. On a very macro level, of course, we'll speak more next week, we are executing upon what Creating the New is about in the areas of speed, cities, and Open Source, which of course, is driving part of the success we're seeing today. When we look upon 2016 in a more balanced view, and I do want to just spend one second on the macro before I move to the detail. While we've enjoyed tremendous success in 2016, I think it's important that we also recognize areas where we can do better, because should that not be the case, it would be hard to deliver upon future promises.
This is not an impression of that things are failing, but it's a, I would say, much more an impression of or articulation of the areas that we need to improve in order to continue to improve our performance. Let me start with the positive elements. We have seen a very broad-based top-line momentum, which is extremely important, that we are not depending upon one single region, one single product franchise, but it's really been a broad-based top line momentum that we've experienced. We've seen market share and NPS gains in key categories and markets. Again, very similar. We made progress across almost all key categories and almost all key markets. Thirdly, we are seeing major progress in the U.S. with more than a 30% growth.
The U.S. is the largest sporting goods market in the world with more than a third of the total global market, it's one that is of immense importance for us as a company. Lastly, strong profitability improvements, which of course, is the consequence of the upper three, despite severe FX headwinds with the strengthening of the dollar throughout 2016. While we're very happy with the overall results, there are also areas where we believe we can do better. On our performance categories, not all performance categories grew at the same level, and we believe that there is still much more to be gotten by making certain that everybody really contributes. When it comes to Reebok, we've spoken about this following the third quarter call. The performance is still below the expectations we have to Reebok.
We've initiated a turnaround plan that we call Muscle Up that we have spoken to most of you about, and that we spoke to everybody about in November. We're clearly executing upon some of the harder elements of the plan, like headcount, structures, locations, and retail, we still have a long way to go. We're happy with where we are, as I said, this is a three to four year turnaround plan, and you should expect that it will take that long. We will continue to report to you diligently about the progress we're making and when appropriate, also in detail. We are, when it comes to the U.S., unhappy about the market position. I just said we're very happy with the progress and those two statements go hand in hand.
We're very happy with the progress we've made in the last two years, it's clear that we're not happy with the overall market position. This is due to the past, so to speak, the last 10 years. It is not due to the last two years. It's unrealistic to expect that we'll catch up within two years. That's why we're saying we're unhappy with the position despite our satisfaction with the progress. That also sets the expectations that moving forward, we need to continue the current performance we see in the U.S. also in the future. Lastly, we did miss opportunities due to limited supply. This is on one side, a contribute really to the attractiveness of our products and brand at this stage. Of course, it also means we left money sitting with our consumers.
We were not capable of fully supplying the consumer demand that was particularly around our Boost products, which is where the demand has far outstripped the supply. We're working diligently and very constructively with our supplier on Boost, BASF, we're confident that over the coming years, that we'll have a supply situation that will match the demand base. I do think of two evils, we would much rather be in a position where we're more demand than supply than the other way around. Overall, as you can see, a number of things that we're immensely proud about, but also a number of areas that we can improve and make the company an even better company. That brings me to the major P&L development.
Revenue increased on an 18% level when it comes to currency neutral development and a 14% in nominal terms, moving the company's top line from more than EUR 16 billion to more than EUR 19 billion, a tremendous step ahead in 2016. Despite adverse development in currency, our gross margin grows 30 basis points to 48.6%. Which also was visible on the bottom line, where the operating margin improves 130 basis points to 7.7%. We are seeing not only on the gross margin, but also the operating margin, significant improvements. The net income for the first time in the history of the company surpassed EUR 1 billion and grew by 41% compared to previous years. Still a performance when it comes to operating profit. Moving on to the brand, it's clear that the adidas brand is really delivering upon its tremendous promise.
We're keeping up the momentum with a growth of 22% of the adidas brand, which has been an exceptionally strong year for our company. When you break it down to our two different categories, in our performance, we grew 13%, our performance category and in our lifestyle category, we grew 45%. Let me just spend just a couple of seconds on this and elaborate on it, because I'm sure there will also be questions. Those of you who have followed us for a long period of time, who also have seen the evolution of the growth both in performance and in lifestyle. We believe that the artificial or the defined difference between performance and lifestyle is somewhat artificial.
It's clear that within lifestyle we have a small part, which is very fashion driven, but the sporting part of it, a lot of our footwear and apparel, it is categorized as a lifestyle, but it's equally used as a performance product. We did this many years ago. We believe that to a certain extent it is becoming misleading because the difference between sport and lifestyle is frankly, very difficult to define at this stage. We are very happy with both growth rates, I want to iterate, we are a sports company, that is a very important step for us. We are not a fashion company. We are a sports company. Of course, we like to have fashionable products, but we are a sporting company. Reebok also made progress, grew 6% in the past year. All the growth came outside the U.S.
You can see we do not have a growth issue with Reebok. Clearly, we would like to grow more on a macro level. Our challenge with Reebok is around the profitability, which we are addressing. We need to ensure that we have the right growth profile, not just a growth profile, we're confident that that will come over time. From a growth standpoint, 6% is an acceptable growth for the position we have with Reebok today. Lastly, before I hand over to Robin, we saw an outstanding e-commerce growth, which was led by Harm Ohlmeyer and his team, 59%. For the first time, we surpassed EUR 1 billion. Clearly that is also helping the profitability of our company.
Much more important, it allows a direct interaction between us and the consumer and gives us much better feedback on how consumers shop, what they like, what they do not like, and it allows us also to streamline and also design our products much more to the likes of the consumers moving forward. This is the most strategic shop we have in the world. Before I leave it is not an isolated shop. It is clear that a lot of the initiatives we are doing, we are also doing that in interaction with our wholesalers today. It is not a conflictual message. The reason why this growth is coming at the level it is, this is how young consumers shop. We are not looking upon this as a conflict. It is complementary to our go-to-market route, but it is vital for us for success moving forward.
These were the highlights from 2016, and I would like to hand over to Robin, who will take us through the financial highlights of 2016. Robin, please.
Great. Thanks very much, Kasper. Thank you also very much for the kind words. Good afternoon, ladies and gentlemen. You have obviously seen a significant operational performance of 2016. My task now is really to put that into context of how that has worked through in the financial results. If we look at the top line, as Kasper said, this growth has been extremely broad-based. We have had in almost all of our regions, with the exception of Russia, a double-digit growth, and in fact, in the three most important regions of North America, Western Europe, and Greater China, a growth of over 20%. I think that is a fantastic confirmation what Kasper said, that our growth is broad-based.
If we look at it in a bit more detail, starting firstly with Western Europe, there you can see that revenues increased 20%, which was represented by growth across all of the various markets in Western Europe, with the adidas growth actually being 20% also, but that is on top of a growth of 18% already in the previous year. Now, this growth was largely driven by the performance running category and then obviously in the leisure lifestyle area, Originals and Neo.
For me, one of the big call-outs is that even though we didn't have the tailwind of the sales in the fourth quarter, that we had in the fourth quarter of 2015 for the UEFA Football Championship, we also were able to grow the football category and increase our market position in this and win back football leadership in the Western European market, which is extremely positive for us. The Reebok business also grew in Western Europe, up 18%, and this is led mainly by the training and classics categories. You know that Western Europe, obviously, the majority of our business there, we're selling in EUR. Of course, we source in USD, and so this is the region where the appreciation of the EUR and our inferior hedging rates 2016 over 2015 have had the most negative impact.
You'll see the gross margins down slightly over three percentage points. With the good discipline in the cost base and also the increasing leverage that we're getting here, we were able to limit the decline at the operating margin level to just two percentage points, bringing us to a strong operating result of 18% for the year. North America, this is clearly the region that is getting the most coverage, particularly in terms of the emotion related to us growing significantly again after so long in this important market. Up 24% for the total business with the adidas brand obviously leading the way here with 30%. Actually, at 30%, North America was the fastest-growing region for the adidas brand. That's coming from both Performance and obviously the Leisure Lifestyle segments, both increasing double-digit rates.
Running up 40%, a call-out here, U.S. sports actually up 25% in the period. No surprise that the Reebok sales are down one percentage point. That is also reflecting the ongoing challenges we have here. Kasper's already mentioned the efforts that we're taking to improve the situation in not just the U.S., but particularly the U.S. On a top-line basis, actually the fourth quarter showed that we were growing again in North America under the Reebok brand of 7%. There's still a lot of work to do, and we've already guided for 2017 about the efforts there that will cause the revenues to decline. Gross margin for the region of North America increased 1.1 percentage points. We're still a long way away from the profitability of some of the other regions. At the operating margin level, a 3.8 percentage point increase was significant.
We're still only at 6.3% as profitability in that region. Greater China, I've often said that this is the star region. This is the one that has been growing so significantly in the last several quarters and continues to grow, continues to deliver superior profitability. Yes, ladies and gentlemen, this growth is continuing. We're up another 28% again for the full year, so it's the fastest-growing of all of our regions for the total business. That's coming here from both adidas and Reebok. adidas up 28% here, Leisure Lifestyle, but also Performance growing significantly with Running up 40% and also Football up 22%. You may be aware that we're collaborating with the Chinese Ministry of Education to help them promote Football in this market, and attracting here a lot of the new generation of football players.
Reebok, however, is also benefiting from the whole approach in China to healthier living, more emphasis on sport and fitness in general. This general sports trend has helped Reebok grow 17% in the year under review, and that's not just Classics. This is Training and Running in the Reebok brand. I think this is, together with the improvement, again, at the gross margin level of the 40 basis points and a slight improvement of 10 basis points on the overall profitability, more reason to believe that this significant performance in Greater China is sustainable, and we now have an operating profit in China of 35.2%. Latin America, another double-digit growth region for us, although it's fair to admit here that the Brazil market only grew at low single digits with the other ones growing double digits in the other major markets there.
I think that's particularly impressive if you consider the financial and economic challenges that some of the big markets in South America have had over the last several months. The adidas brand up 19%. Here, Football, Running, Training, but also Originals and Neo key drivers there. Reebok up 1% only for the total year. You might recall that we were repositioning and also changing the business model for Reebok at the beginning of the year. In the third and fourth quarters, we were getting back to a more normalized growth rate of 4% and 13%, respectively. Obviously here, Latin America also suffered from those headwinds with the increased FX costs.
We're able to offset a lot of these with the pricing channel and product mix, we ended up with a pretty stable gross margin in Latin America and an operating margin that's only down 10 basis points to 13.1%. Other business is that bucket of various other non-adidas and Reebok businesses that the group has, led obviously by the TaylorMade-adidas Golf segment, but also including CCM Hockey and some of the other centrally managed businesses such as Y-3. In total, everything up about 1%, but that hides a good development of Y-3, a double-digit growth there with, however, a sales decline at TaylorMade-adidas Golf of 1%. CCM was also down at 13%, obviously as a result of that very challenging North American hockey market.
From a margin point of view, this was an area, as we had guided to at the end of last year, that we were expecting a good positive development, and it's come in total gross margin, up 3.6 percentage points to 37.5%, driven largely by that significant uptick in the TaylorMade-adidas Golf business. We were able to improve operating margin by five percentage points. Obviously because of the lost nature of the TaylorMade business and the CCM business, we still ended the operating profit in a negative territory. In terms of the total P&L, I think the biggest call-out here is our success in the gross margin. Fourth quarter up 1.6 percentage points, largely because the FX pressure in that quarter was a lot lower than it had been in the previous quarters.
We were able to end the year up 30 basis points to 48.6%. If you look at it in terms of the details beneath the gross margin, throughout the year, we've had significant hedging headwinds, almost four percentage points here. The increase in prices, the increase in the favorable mix of our product, of our channels, and also of the country mix, that has helped us to overcompensate for that and actually end up with a 30 basis point improvement. Going down further, the rest of the P&L. Other operating expenses grew 13% in the year. That's due in many cases to the increased expenditure on POS and marketing investments, but also higher overheads as we grow.
A lot of those other overheads were related specifically to the investments in our strategic business plan, Creating the New, and also our success has meant increased bonus payments, et cetera. Some of the restructuring costs that we've identified over the year for TaylorMade and also Reebok are obviously playing a role there. Nevertheless, in total, we were able to get a leverage here operating expenses of 30 basis points. That together with everything that's happened through the rest of the P&L, has enabled us to come in with an operating profit of EUR 1.5 billion, representing a 1.3 percentage point increase on the operating margin to 7.7%. You'll know that there were several non-recurring items in the P&L for 2016. They had, however, both a negative and also a positive impact. On this chart here, I've tried to summarize for you the key impacts of them.
With the summary being that actually, it was a pretty much plus minus zero. Although we had two very positive, extraordinary one-off gains in 2016, specifically the termination of the Chelsea Football Club contract, and also the divesture of Mitchell & Ness. We also, against that, as we had communicated last year, said we're taking all the proceeds of the sale of Mitchell & Ness and putting that into further investments into Creating the New. We financed the Reebok restructuring, and we've also financed the improvements in the TaylorMade business as well in this period. Therefore, as you see, in total, our success in 2016 can very honestly be related to the significant improvement in the underlying operating business. Further down through the P&L, we have net financial expenses being, in net, a little bit more than we had in 2015.
Here that is simply because we don't have the benefit that we had in 2015 of some positive exchange rate effects. In total, that has left us with an income before taxes of just over EUR 1.4 billion. Our tax rate came in at 29.5%, better than previous year, obviously. That means that we were able to end the year over the EUR 1 billion for net income. First time in our history, an increase of 41% compared to the prior year. All that translated into diluted earnings per share of €4.99. Just look briefly at the balance sheet with me. Here, yes, we've had an increase in our inventories supporting the strength of the business and our demand for product in the coming year, up 19% here. Counteracted by the increase in the payables, obviously also directly related to that.
A very managed increase in receivables of only 7% meant that we had a good improvement, again, in our operating working capital to rate at the end of 2016 at 20.2% of sales. I think a pretty healthy level. Not surprisingly, we've continued to generate a good amount of cash. We've been able to decrease our net debt position again over EUR 350 million this year, and that's despite financing further share buybacks at the period under review here. We would have had another EUR 250 something out of the third tranche financed by the end of December. We're also benefiting from the start of bondholders starting to actually convert their bonds from the convertible that we issued some years ago. The other thing on this slide that you should recognize is that our equity ratio remains at a very strong 42.6%.
Ladies and gentlemen, all the results that Kasper and I have just shared with you, but also our confidence in the continued growth in 2017, and indeed even further, gives us the confidence to recommend to the shareholders in May, that we should again increase our dividend payout. This time a full 25% to a nice round EUR 2 per share. That will represent then, the midpoint of our strategic dividend payout policy range of 30%-50% at a ratio of 39.6%. Ladies and gentlemen, it's a quick gallop through the financials, and now I'd like to hand back to Kasper to share the outlook for 2017.
Many thanks, Robin, for giving us the insight into the details of 2016, which you can clearly see has been an extremely strong financial performance, but also in terms of market share and NPS, a very strong performance. Let me speak a bit about 2017 and also beyond 2017. I do want to just stop here for a second and then reiterate a statement that I made in November. When a new CEO comes on board, of course, you have the option to change the strategy, but that can only be if there is a necessity to change the strategy. As you can see from the numbers that we've taken you through, both from a highlight standpoint and from a detail standpoint, the numbers deliver outstanding results. That's why, of course, we will continue to execute upon Creating the New. We'll add different elements to it.
We'll have more emphasis on certain activities, there is absolutely no reason why we should deviate from the current plan we set ourself out to. You will see that first now in our 2017 picture, but of course also when we start articulating what we are going to do in order to accelerate Creating the New towards 2020. For 2017, we expect the key performance in lifestyle categories to drive top-line expansion. We continue to see strong growth momentum in our key categories, and we also expect double-digit sales to increase in our key markets. When we break that down to our categories, and let's start there.
Our target is to cement our market share leadership position in football, we will see by the end of the year, in the fourth quarter, the first positive impacts coming from the World Cup from 2018. What we're also seeing, which I did speak about a bit before, how the stadium to the street trend is further strengthened. That means that how you take sports products and move in to more lifestyle-oriented products. We are seeing that from the football side also, where you see great football boots or cleats really being redesigned and from an optical standpoint, look exactly the same but with a very different sole, and thereby you have a quote-unquote "off the court" shoe. In running, it's important that we further strengthen our market share and build that position with a strong focus on the franchise across all price points.
I think this is an important strategic point. Some years ago, I believe also rightfully so, we were criticized for not being competitive at all price points. This is definitely not the case before. We are extremely strong with the offering across all price points, I think you'll see that also moving forward, this is one thing that we have been able to address successfully. We'll continue to expand our women's business, as also alluded to in Creating the New, because it is still a smaller part of our business than the male business and represents a huge opportunity, not only in terms of revenue, but of course also profitability. When it comes to training, we'll focus on our apparel franchises, we believe also here we can get further traction with the female athletes.
It's key that we'll continue to leverage collaborations like a Karlie Kloss or James Harden. James Harden, as you know, is right now the hottest NBA player in the U.S. and will probably most also win the award of being NBA Player of the Year. A very key athlete that we have under contract. On the Originals, our brand heat will continue, it's important that we see further rollouts of our franchise portfolio. We expect still a very strong growth in our Originals business. Also, as I said before, because it's very difficult really to segregate Originals from the overall performance business. We're also seeing a very new evolution. We're seeing a new chapter we call Nostalgia. We're taking the Boost technology, which is a very hot, very unique technology, and we're bringing that to one of our oldest franchises, the Iniki shoe.
We're combining old and new and getting a great franchise on the market. A lot of interesting, I would say, initiatives and launches within our different categories. From a category standpoint, we're quite comfortable that we'll see very attractive growth rates from the categories I just spoke through. If you then flip the coin and get to the regions, you will see Western Europe, North America, and Greater China, we expect all of them will enjoy double-digit sales growth. As we've seen in the previous year, but we are in different positions in the different markets. Let me just go through them one by one.
In Europe, we have a very strong position, and it's important that we really defend and strengthen our leadership position across the board, but also that we recognize that Europe is becoming much more of a one market, and we start driving higher levels of process harmonization across the entire region to ensure that we get the scale benefits that we have not always gotten in these territories. Whereas in North America, we're in a different position. We're very happy with the progress, but we're not happy with the position. That means we need to ensure the continued momentum, but then also, while we invest very heavily in North America, focus on operational efficiency. The investments that we do in infrastructure, in systems, in processes, and in facilities, that they will allow us to continue to increase the margin that Robin already spoke about.
The more scale we get, of course, the better return we have to enjoy. In China, which, to use Robin's word, has been the star of our company, we need to focus on the footwear to complement our leadership in apparel, but also expand our brand-led retail business. We continue to see strong growth rates in China, and we still have high expectations for China also in 2017. For Latin America, we're seeing a different picture, and this is, I would say, almost irrespective of which company or industry. We continue to see ongoing macroeconomic uncertainties, whether it's the economic crisis in Brazil or also challenges around currencies in other countries across the board. Despite that, we do believe that we'll have single-digit sales growth.
It's clear that we need also to adjust the structure in our Brazilian business to the actual size through the high level of economic crisis that Brazil has experienced in the last four years. Clearly, our financial results in Brazil are not satisfactory, and we're taking the appropriate actions to ensure that we have infrastructure matching the top line also for the future. You can see we're looking at probably in different dimensions, and if you take and put the dimension on the top, the outlook brings us to a sales rate increase of approximately 11%-13% in currency-neutral terms, a gross margin increase of approximately 50 basis points to a level of 49.1, and an operating margin to grow between 60 and 80 basis points to a level of 8.3-8.5, which will be a substantial step in the right direction.
The consequence of that is that the net income from continued operations will continue to grow at a rate between 18% and 20%. That means in real money, between EUR 1.2 billion and EUR 1.2 2 5 billion. Again, a very attractive growth scenario, not only on the top line, but particularly on the bottom line, where we're starting to see some of the scaling benefits that we should be seeing with the size of the company that we have. That brings me to the strategy acceleration. Where are we, and what are the key messages we want to bring across today without going to a great level of detail? Because we want to make certain that we spend the day next week with you and try to answer your questions in an appropriate way. As I said before, Creating the New is the foundation for our strategy.
Of course, it's built around Open Source, cities, and speed, and one very important element, our culture in the organization. Because if there's one thing that drives different performance in an organization is if you get an aligned, very performance-oriented culture. Let me just spend a couple of minutes of that. Before I go there is, that the belief we have in our company and the belief we are also transmitting to our constituencies is that through sport, we have the power to change lives. We actually have a meaningful belief that people relate to and makes us meaningful with our consumers, but also makes us a very meaningful and attractive employer of choice that allows us to hire the right caliber and the right competence into our company, which brings me onto our culture of a company.
As I said before, the culture, in my opinion and also in the opinion of our management team, is really where you can make a huge difference when it comes to performance. We have an extremely strong team, but it doesn't mean that we can't do better. I think that one of the challenges or one of the opportunities we have ahead of us is to unify the culture and get everybody to pull even more in the right direction. Let me speak about five different elements that are important for us. When it comes to diversity, we've done a very good job as it relates to the passport. We're an extremely international organization at all levels of the organization that reflect the businesses that we have in our countries that we can be very proud of.
We have not done a similarly good job when it comes to female leadership. We are an organization where approximately 50% of all our employees are female. Of our top 300 people, approximately 17% is female. That's where you can see there is room for improvement. That we'll work diligently on moving forward because we also believe that among other areas where we can be much better is in the entire women's path. Of course, with a higher share of females at the top of the house, that should help us. Improved talent management. We received approximately 1 million applications in the past year, and if you correlate our revenue growth to application growth, that would mean that we'll get between 1.1 and 1.2 million applications for 2017.
You can see it is not the problem of getting the right people on board, but we need to do a much better job in our talent management, ensure that we have the right talent at the right place with the right competence, and be more strict and also be more rewarding early on in the career so we can get the best out of our people. This is up to the senior management of the organization to really ensure that we have the right capabilities in the organization. Moving the company with the speed we're doing right now, it is changing tremendously over a two to three-year timeframe. That is why it's paramount that we really take this in our own hand and ensure that we don't hire externally for key positions, but we predominantly, not exclusively, but predominantly can deliver upon the requirements we have within.
In that context, it's important that we have a more outspoken performance culture. What do I mean by that? I mean by celebrating success, we should celebrate success, but they have the courage to speak about problems and performance that is not satisfactory and deal with that. In terms of promotion, in terms of salary, and also in terms of leaving the company. We will not be a hire and fire company, but we will be a company that will overly reward people that does an overly good job. I think that is in the interest of the company, that's in the interest of our employees, and that is also in the interest of our shareholders. Which brings me to the next point.
We will imminently be implementing an equity-based compensation system for the 300 top leaders in our company, that means that the share price evolution over time will be the currency that rewards people. People will hold shares in our company, and of course, with the increase in share price that we would like to see, assuming it corresponds to our results, people will make money when the company does well. I want to stress, this is an LTI program. This is not about what the number is in 2017 or 2018. You will get allocations in one year, and you have a holding period. We want to make sure that all our leaders are equally incentivized to deliver upon the long-term ambition of the company, the 2020, as they are on the short term.
We're very confident that this will be a well-appreciated program, not only within our organization, but hopefully also among all of you who've dialed in today. We are in the process of refining our leadership structure, making clear to all in our company who the key leaders are and communicating in a very direct and uncomplicated manner with these. Approximately two months ago, we defined our top 20 leaders in our company. By the end of this month, we will define and announce the next top 100, and we will ensure that those leaders will be very tightly integrated in the way we run the company.
They understand the process setting that we have, we ensure consistent execution on what we're doing to ensure that we get the scale benefits we can get and don't act as a company with 10 subsidiaries where we reduce our size from big to small. We've also developed what we call an acceleration plan because we believe that there are things that offer more opportunity for us and will generate more value for the company moving forward. I'll speak very briefly to each of the four elements today, but of course, at greater level with my colleagues next week. I'll start with the portfolio. The overriding message is that every member of the portfolio has to contribute to the profit of the company. It is not acceptable if a brand or legal entity or country does not deliver to the overall profitability of the company.
That does not mean that each member has to deliver the same amount or the same %, but it means that there's a clear expectation that everybody will have an active contribution to the positive number of our company. We also see when it comes to growth that North America, Western Europe, and China will continue to contribute above average to our new ambition. Also, when it comes to the actual contribution of profit. In North America, we are on the right track, but we only have two years behind us, and we have a lot of years ahead of us. We'll continue to invest, particularly in people infrastructure and marketing that allow that we can develop our business strongly moving forward. We also need to step up our representation in digital and key accounts.
We're seeing very positive feedback from key accounts like Foot Locker and Dick's Sporting Goods, we're still very early on. We did approximately EUR 3.5 billion in the U.S. last year. The market represents a much bigger opportunity. We need to do it in the right way and in a sustainable way. We should not shortcut the progress in North America for the sake of short-term margin, but we should, along the lines, the rough outlines, look for sustainable improvement in our margin while we see a sustainable improvement on our market share and our NPS score. One added is, this means that we're building a scalable enterprise. We need to ensure that across the board that we improve our effectiveness and increase our efficiency, and we'll do that through standardization and harmonization of processes.
Whether it's definition of processes, it's systems, it's use of shared services or further optimization, generalization. We believe this represents a very large opportunity for us as a company, building a scalable enterprise. It requires a very high level and focus of execution. This is a long-term transformation of our company to ensure that we start acting as a global company and not optimizing locally. I'm certain that this will be a very exciting project, it's also one that will take time, at the same time deliver scalable and sustainable benefits to our company. Which brings me to the last part of our acceleration plan, which is digital. We are convinced as a management team that digital will revolutionize our industry. It will also revolutionize our company. Whether it's in the way we design products, manufacture products, deliver products, or engage with consumers.
We spoke about speed in manufacturing. We spoke about 3D creation and product production. What it also is, it is the aggressive drive of e-commerce to ensure that we capture what the consumer is about and the way we engage with consumers. This is, as you probably will know, margin accretive. The quicker we can grow our digital business, the more we'll grow our overall margin. You saw we enjoyed 59% growth last year, bringing it to EUR 1 billion, and that is only the early days. At the same time, we also see the opportunity to connect our digital activities with many of our key partners. It's not going to be an either/or scenario. Let me just go briefly to the portfolio. What is our plan?
We've announced the sale of TaylorMade, and that process is still ongoing, and we'll report when the transaction has been completed. We have announced as of today, that we'll separate ourselves from our CCM business, which is our hockey business based out of Canada, and we are looking for a divestiture. Our Five Ten business, which is a smaller business on outdoor, we will take that, close it down, and integrate the Five Ten brand back into our adidas Outdoor, so it will become a similar sub-brand as a Stan Smith. The adidas Golf business, that today is an integral part of TaylorMade, we will separate from TaylorMade and integrate back into the adidas core organization. On Reebok, we have, as we've defined, a turnaround plan that we are executing upon.
That means right now, out of the EUR 19 billion revenue, we have EUR 3 billion that are, so to speak, in the workshop. We believe that we have tremendous opportunities in working on these five assets in different directions to create additional value for our shareholders and for the company overall, by ensuring they get the appropriate attention or a better owner. That brings us to where do we see the new targets, compared to the initial ambition. I need to be now very specific. We guided very clearly in 2017. What we are showing today as financial ambition is looked upon in the same context as our initial ambition. It's within the context of 2015 to 2020. I'll speak you through the different line items.
What we originally guided on when this was announced, the Creating the New strategy, was a currency-neutral growth of high single digits for the period 2015 to 2020. We're now guiding a growth rate between 10% and 12% for the period 2015 to 2020. We guided originally for the same period, a net income growth of 15% on a CAGR. Now we're guiding a range between 20% and 22%, and we guided e-commerce business to the tune of EUR 2 billion. Now we're guiding to the tune of EUR 4 billion. Let me now go through the implied numbers. If you run through and said, what are the implied absolute number if you take our initial ambition? With a high single digit, you will get to a net sales of approximately EUR 22 billion, and you will get to an implied margin of approximately 9.9%.
In the new ambition, you will get it to a net sale between EUR 25 billion and EUR 27 billion. In EUR 25 billion and EUR 27 billion, these numbers do not include CCM, nor do they include TaylorMade. The reason why there's a variance is, of course, that we expect currency losses throughout this period of time that we cannot project at this stage, and we expect an implied margin of 11%. I want to go back and say the key performance indicators are our sales growth, the 10% to 12% versus high single digit. The net income, 20% to 22% versus 15% before. I did articulate what we believe are the implied consequences of what we're doing, which are the EUR 22 billion before in revenue terms, and now EUR 25 billion to EUR 27 billion, and the operating margin of 9.9% to 11%.
E-commerce, of course, is an absolute number we're striving towards, and it's in the range of 4. Whether it's 4.1 or 3.9 is not really important, but it is the 4 we're striving for, because we believe it will make a substantial difference to our business, the profitability we have and the way we engage with consumers. That gets me to the end of the presentation. Subsequent to that, of course, Robin and I will be happy to take your questions and maybe answer them. Summary. We are in a highly attractive industry. We are in a growth industry, which we will be very fortunate about. Creating the New is the right strategy. We're using that as a foundation and accelerating the execution of Creating the New and putting specific emphasis on certain areas.
We believe we achieved exceptional results in 2016. We expect strong top and bottom line growth in 2017, with bottom line growth of approximately 18%-20%, which is, I would say, leading our industry. We plan to accelerate to grow revenue and profit even faster than initially projected. That is what we presented. We'd be happy to take your questions, but of course, we do want to also leave a lot of detail for next week. Forgive us if we push some of the questions or maybe answer them shorter than that might be to your liking. Sebastian?
Thanks very much, Tracy. We're now ready for the questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will now take our first question from John Guy from MainFirst. Please go ahead.
Good afternoon, gentlemen. Thank you very much for taking my questions. Robin, wishing you all the best for the future and welcome to Harm. Maybe if I could start with digital, please. Kasper, you've doubled the initial target to EUR 4 billion. If we think about the richest gross margin distribution channel for you, it probably is digital, with a gross margin of in excess of 60%. When you are guiding to an 11% operating margin for 2020, how much incremental, or I guess extra gross margin are you effectively reinvesting into the business? Because a EUR 3 billion target on my estimates would drive roughly 90 basis points of incremental EBIT margin. At EUR 4 billion, you could be looking at 12%-13% EBIT margin.
Maybe you could just give us an idea of how much you will have to reinvest in the business to drive those top-line expectations. Then maybe just around price mix opportunities versus growth. You have guided in 2017 to a gross margin of up to 50 basis points. If we think about the higher full price sell-through, which is probably running at close to 50% now, the higher evolution of the e-commerce sales, and of course, the unhedged position on Russian ruble and Argentine peso, et cetera, that tailwind running through into 2017. Aren't you being a little bit conservative? Thank you.
Let me just give you some details, but of course not all. It is clear that the dramatic expansion that we are expecting in e-commerce does also require substantial more investments in systems and infrastructure and the way we run the business. It has a different OpEx profile. Not only does it have a different OpEx profile, but it has a substantially different CapEx profile. We need to build new warehouses, we need to have different systems, and we are in the process of doing that. It is going to be, I am not saying a flush because of course there is no reason of doing it, but it does require substantially higher CapEx than we have seen before, and that is really what I want to leave it at. Right now, we are guiding EUR 1.1 billion CapEx expense in 2017.
You can see we are investing very heavily to ensure that we can actually deliver upon consumer expectation. But of course, it does have an accretive impact for us. It does carry upfront some costs that we do not have in the system today because we have a different business model. That is pretty much at the level I want to leave it at because I do not want to go down and reveal something further I cannot comment on your model, rightly or wrongly.
John, the question about gross margin development and price mix. Yep, we are very confident we're still increasing the amount of our business that we're getting at full price. We've still got a long way to go, however, and don't forget also that despite the tailwind of the unhedged portion of the Russian ruble and the Argentine peso, as you mentioned, we've still got for the total year 2017, an inferior hedge rate compared to 2016. It's not as bad as obviously we had from 2016 over 2015, we're still a few points behind that, and that will also put pressure on the gross margins.
Thanks, Robin. Just one very quick follow-up. Kasper, you mentioned just at the end with regards to the EUR 25 billion-EUR 27 billion turnover target, that that excluded TaylorMade and CCM Hockey. You also talked around some unforeseen FX, which I appreciate. When I was looking at my calculations on that 10%-12% growth, you should be getting around EUR 27.9 billion-EUR 30.5 billion. Are you basically factoring in roughly 2% negative FX a year just to be on the safe side? I mean, the actual shortfall of around EUR 2.5 billion basically would take out the TaylorMade element, CCM, and also Reebok. I'm just wondering whether or not I'm on the right track or thinking about something different.
No, not at all. Basically, what we said is it's completely unpredictable four years out, and if we build a model, when we look backwards, everything is reported, and if we then say everything going forward, we have no currency loss, we don't believe that there will not be a currency loss. We've made a call, which is very similar to what you're looking for. It's very much a management call and say, what do we think is a realistic number looking upon history and some forwards, and that gets us to that range. I think the most important part was we're driving the EPS as the primary range, we wanted to convert the EPS into a meaningful revenue figure, and that was why we give this range. That's where it is. I just want to stress, for us, it's more important to drive the EPS.
Of course, in the context of driving market share also, we're not going to drive EPS up and then lose market share. Getting the balance right, and that gets us to that EUR 25 billion-EUR 27 billion number. Whatever the currency will then be, will always matter in 2020.
That's great. Thank you very much.
We will now take our next question from Antoine Belge from HSBC. Please go ahead.
Yes. Hi, it's Antoine at HSBC. I usually ask a few question, but I will only do two this time. The first is regarding your marketing investment. If I remember correctly, in the previous plan, I think the first two years, so basically in 2015 and 2016, we're supposed to be seeing a sort of dilution on margin from marketing and then, as from 2017, some kind of leverage on marketing. I think you've announced your willingness to be sustaining the growth in the U.S. market, and also the development of e-commerce, which may require some investment. Could you maybe guide towards how the marketing-to-sales ratio is supposed to be evolving from 2017? My second question relates to the U.S. market.
Have you done some analysis of what could be the consequence of, on the one hand, the implementation of some kind of border tax, and then, maybe on the positive side, if the tax rate was going to be declining in the U.S.? Thank you.
I'll answer the latter, Robin will answer the first. Of course, we've done considerations, if you start having tax barriers, it will hit the entire industry. If you start having different tax breaks, you can say it might benefit some of our competitors if they're paying the primary tax rates in the U.S., it will also, I would say, drive high levels of consumer spends. We've looked upon it, we have not modeled it, because I believe that the current planning or the current outlook for the U.S. regarding those two scenarios are so uncertain at this stage that it makes very little sense for us actually to model it. I think there could be an upside should you have a tax cut at both levels. Even at individual level, also corporate level, because corporate level eventually will get into the market.
On borders, we've not done it because everybody will be in the same boat. Robin.
Antoine, that's correct. We said that we will continue to invest heavily in marketing. We believe that that's also one of the reasons why we're being so successful at the moment in America particularly. Actually, what's happened in 2016, because the business has grown so much faster than we'd initially anticipated, the actual percentage of marketing as a percent of sales has actually come down somewhat. That level we should be able to maintain. Maybe it'll be a little bit less than that in 2017. Don't be concerned. We continue to invest strongly in marketing. The absolute will continue to go up, we've guided also last year, I think, to the change in where we are putting the weighting on our marketing spend to get more of our total spend into the activation of it.
Therefore, somewhat less than what we've previously had, 50% of our marketing spend being on sports marketing, to have that somewhat under 50% as we go through towards 2020.
Maybe just from a qualitative standpoint regarding marketing, and related to the sort of step up in digital. What would be the share of that budget dedicated to digital, and how could it be by 2020 versus today?
Good question, Antoine. We don't go into that detail. What you can definitely take from all of the comments that we've had over the last few quarters, and what Kasper said today as well, we are investing heavily in digital. Over the last various quarters, more and more of our communication with our consumers has in any case been digitally led. Away from the traditional activation, more into the digital platform. That's common, I think, not just in our industry.
Thanks. See you next week.
Yep. Thanks.
We will now take our next question from Simon Irwin from Credit Suisse. Please go ahead.
Simon?
Sorry, can you hear me now?
Yep. Now we hear you.
Okay. Could you just talk a little bit about Originals? Obviously, with lifestyle up 45% and footwear up 21%, there are some very big drivers here. In the past, I think you have given us volume numbers for the key franchises. Can you do that again? Is there any thought that at some stage you may need to slow down the growth in some of these key franchises in order to not overexpose them? Just a second question, which is on your digital. Are you expecting all of this digital to come direct, or does that include using other online platforms?
The EUR 4 billion is expected to come direct. We will of course, in parallel, also work with other platforms, and we've had great experience with working with a partner like Zalando here in Germany. We believe that offers an additional opportunity for us. Of course, we have partners like a Zalando, a Dick's Sporting Goods or Foot Locker that all represent opportunities for further really exploring the digital space. The number we put out here was the number that we can directly influence, which is the EUR 4 billion. We believe that the partnering model will evolve over time, and of course, the digital element of the partnering model will become more and more important also for our traditional retailers.
Wholesalers. Robin, do you want to just comment on the Originals?
Yeah. Thanks, Kasper. You're right, Simon. At various times over the few years, we might have mentioned a volume of a particular product or so, but it's not something we do regularly, and we're not going to turn any volumes today. I think the most important thing to know is that I think we're managing the exposure here to a fashion or lifestyle trend, I think extremely well. As Kasper said, in any case, the border between what is performance and what is lifestyle is very blurred. For us, in terms of the product that we've been very successful with under the lifestyle branding, is including now a new product that is being used also for sport or can be used for sport.
We have, in the 2017 year, about a 50/50 split between what you might know as the iconic Originals product, and that would be the Stan Smiths and the Gazelles and the Superstars, what have you. 50% would be, however, also these new franchises of NMD and similar product. I think here it's important that we are managing now much better these franchises over the life of those franchises, and thereby managing our risk in this area.
Okay. Sorry, Robin, could you just explain to that when you talked about 50/50 split between the two, are you saying that in last year, the newer franchises made up 50% of sales within, say, Originals or lifestyle?
No, I'm not saying that. I'm saying from year 2017 onwards.
All right.
Our offering is 50/50. Yeah.
Okay. That's great. Thank you very much.
Welcome.
We will now take our next question from Piral Dadhania from RBC Capital Markets. Please go ahead.
Good afternoon, gentlemen. Thank you for taking my questions. If I could just go back to A&P, could you confirm that the corridor as a % of sales remains at 13%-14%? I appreciate you've come out towards the lower end of that corridor in 2016 as a result of the increase in the sales base. If I think about the market environment and the fact that competitors are performing perhaps not as well as you, the expectation could be that they might step up marketing spend. I'm just curious to understand why you might take the foot off the gas in 2017. That was my first question, and then my second question just relates to your CapEx guidance. Should we expect this level of spend, EUR 1.1 billion, to be the go-forward rate from 2018 onwards, or is this more of a one-off? Thank you.
The first question is about the marketing spend. Yep, you're right. We had guided around the 13%-14%, we've definitely come into the lower end of that, and I think over this medium term, you should be expecting somewhere more between the 12% and 13%. In terms of CapEx, the significant uptick in the CapEx here has a lot to do with our investment in our direct-to-consumer. Kasper called out digital previously, don't forget also, we have about 2,700 of our own shops, and these need to be refurbed in the new formats of our presentation to consumers, such as the wonderful stadium concept we have in our new shop in New York.
Within that CapEx budget, we have further investments in our systems, IT, but also investments in our infrastructure, in some cases, warehousing, but also here on our headquarter locations in Herzogenaurach in Germany, significant investments in new buildings. Over the next year or two, I think you'll still see this around this level. The future guidance that you'll have to wait for a future period, that would depend very much on our investment in retail.
Thank you.
We will now take our next question from Adrian Rott from Deutsche Bank. Please go ahead.
Hi, good afternoon, everyone, and congratulations to Robin and Harm. Firstly, one on the limited availability of product that you've called out. I guess this relates to Boost first and foremost. Where's the bottleneck currently? Is it the supply of raw material from BASF, or is it capacity constraints at Yue Yuen and the likes? I'm quite sure you've managed to convince your partners to scale up, but how do you incentivize them, and what's the timeline for the Boost capacity ramp? Secondly, one on Russia, where you expect double-digit growth in 2017 after 3% in 2016 and a negative exit rate. Just wondering what's the latest from Russia. Any anecdotes that point to an inflection, that would be helpful. Thank you.
Let's start with the Boost. It is capacity constraints at BASF. We have a great relationship with BASF in this context, and I would argue that before it's an impossible problem to have. I'm happy that we don't have the other problem. We expect it will take another 18 to 24 months before we get the full capacity up. We are working towards a moving target. What I mean by that is that through every meeting we've had with BASF every quarter, we've asked for more supply. They have helped us get more supply, but we've asked consistently of taking the number up. It would be wrong to point the finger in a certain direction.
Where we can point the finger is that it has been an immensely successful market take-up, and that's why the demand continues to grow for it, and that's why we're in supply constraint position. We believe it's, of course, it's not the ideal position, but it's a better position to be in, and we have a very strong and very productive relationship with BASF, and I can only praise their flexibility. The reason why they're interested, you asked the question, is because they make more money. That is like anybody would be. They're here to make money, and the more they sell, the more they make. I don't think it's more complicated than that. When it comes to Russia, let's start with the overall company guidance, because I think that is the most important one. On the overall company, we're very confident with the guidance we put out.
Russia today equates to approximately 4% of total revenue. In the heydays, it was more, 9%-10%. You can see there's a very big difference between the heydays and now. When it comes to profitability, Russia has been able to, through making its cost base much more flexible and variable, really to adjust to a different market environment. We've seen that through the last two to three years. As you know, the Russian crisis didn't come around yesterday and won't go away tomorrow. While we might get challenges, depending on how the market situation will evolve in Russia, we don't see that impacting our overall guidance. We actually also are pretty convinced that the profit contribution that we should be getting from Russia, we might get a different growth profile. Frankly, that is, at this stage, far too early to expand upon.
You can see that, of course, the Russian currency could further weaken, you're also seeing a strengthening of the oil price. There's a lot of moving parts. This is with the current size of Russia from a revenue standpoint, the stability we've been able to derive from an earnings standpoint, not one of our key concerns for 2017.
Understood. Great. Thank you, and see you next week.
We will now take our next question from Geoff Lowery from Redburn. Please go ahead.
Yeah. Hi, team. A couple of questions around China, please. Can you help us understand the performance of top-line in terms of you and your partners adding space, e-commerce growth, price, and volume? How are you managing to sustain these sort of sales numbers? Second, we've sort of long been waiting for the China margin to fall, and it's another year of stability despite the growth and the investment. What would be your sort of three-year guesstimate of margin trajectory for Greater China?
Okay, Geoff, thanks. Yeah, you're right. China continues to be extremely strong. The good news right at the start of this answer is that we see nothing that would suggest that that is weakening at all. I mean, the brands that we have there are being very well received. I think we've got an extremely solid management in China with great experience in communicating with the consumer very credibly. There are positive trends for our overall industry with what the government is doing in terms of encouraging healthy living and sport generally. That plays into our hands, obviously, and that's why you see also significant growth in sports categories such as I got out in my comments, the 22% increase in football. I think we have a solid base of franchise partners. We have over 10,000 mono-branded franchisee shops in China at the moment.
I think here we've worked probably better than our competitors with our franchisees on helping them understand how they can be very more profitable also in their own franchise stores. For one of our key franchisees, we manage several of the product purchasing and other operational items for them, and they can see that those areas are more profitable than some of their own ones. At the moment, I can't give any guidance on longer term operating margin, but I can only repeat that we're very confident this operating margin is more sustainable than we had thought. Although at that sort of level, I still believe it's still a very high percentage.
I think what I've always guided to is as we grow our absolute business and continue to grow our absolute business in China, it could well be that the operating margin percent comes down, but it's still at that sort of level fundamentally accretive to the group and helps us improve the overall group operating margin. That's our view at the moment.
Thanks very much.
We will now take our next question from Andreas Inderst of Macquarie. Please go ahead.
Hello, everyone. I have two questions. The first one on your speed program. You made excellent progress in 2016, reaching now 25% speed capability. That's actually a tick better than you initially guided at 20%. How comes that you have been faster here? What has been the impact on the gross margin, actually, from better full price sales? Is the 50% target to reach 50% of sales on the speed program by 2020, is that still a valid target or could we reach that earlier? That's my first question. The second one on cash flows. Very strong in 2016. Well done. You will use or reinvest some in CapEx as you have guided for the next one, two years. What else are on the agenda, particularly given you might get some triple-digit cash inflows from the two, three disposals? Maybe you can elaborate on that.
What is the plan here? Thank you.
Andreas, thank you very much. In terms of speed, I think I just need to correct a couple of the numbers. I can confirm, yep, we still believe it's 50% of our offering that we want to get on this shortened lead times or the speed programs. It is not 25%, so there's 25% of what we are offering at the moment. Now, what we're expecting is 20% uplift on our full price sell-through. We haven't articulated exactly how much of our product is on full price sell-through at the moment. It clearly report it's improving. I can't give you a specific breakdown of what that has had as an impact on the gross margin, clearly it is a positive, and that's one of the reasons that we've been able to compensate for the negatives on the FX.
Good news on the speed, I think the details we've shared with you. In terms of cash generation. Yep. We've been able to generate good cash for some time now, I've had to reconfirm, we're not expecting to do anything with this cash in terms of acquisitions or anything like that. We believe that we have a good portfolio. Kasper's given you more detail about the portfolio today. What we have done, however, is we have continually increased our dividend payout, we put focus on a shareholder return program, completing also in the last few months, the third tranche of our share buyback program, and there are still some open amounts there should one choose in the future to do further tranches.
Okay, great. Thank you.
Okay.
We will now take our next question from Cedric Lecasble from Raymond James. Please go ahead.
Yes, good afternoon, gentlemen. Actually, I had questions also on speed, if I could follow up. Could you tell us what exactly you can do today and how much? What should we expect from your two factories in Germany and Atlanta by 2020? What would be the ramp-up phase, and what products would go through these factories? Would they be dedicated to e-commerce or to some other usage? That would be very helpful. I imagine that you will give much more at the Investor Day next week. I will only ask you this one.
We'll give you much more next week because we believe that this actually does require greater level of detail that we feel comfortable giving on the phone. We'll be happy to answer to a certain level of detail, of course, not to the level that you ask, but we'll elaborate next week, if that's okay.
Okay. Thank you.
No patience, Cedric and Tracy, we have time for one last question, please.
Perfect. We'll now take our last question from Jürgen Kolb from Kepler Cheuvreux. Please go ahead.
Thanks very much. Lucky me. Thank you very much. Two questions. Coming back on the CapEx line again. Robin, you mentioned that in this CapEx of EUR 1.1 billion, there's also a portion for the headquarter investment. I guess that's pretty much a one-off. Could you please give us an indication how much in this EUR 1.1 billion is reserved for the headquarter expansion? On a more performance category. Kasper, you mentioned that in some categories, you obviously can still do better in the performance category. I was wondering if you could maybe elaborate a little bit on the football category, and here, not so much on the apparel side, but more on the footwear side. You said that you regained market leadership in the footwear overall. I guess that is supported by the apparel line.
Maybe a word on how you've seen the trends in 2016 on the footwear side. Also, where you see that trending maybe going forward. Thank you.
Jürgen, thanks. Yes. We're talking about around EUR 200 million being the influence of the headquarter improvements here. There is a period, this is along, we just haven't had a little bit in 2016. We've got more in 2017. Also, some sort of figure in the triple-digit millions in 2018 as well.
Okay.
On the footwear side, it's particularly the Stadium-to-the-street concept that we do have different iterations of the different cleats and, of course, very different price points, a very, very clear and stringent hierarchy. There's no doubt that the feedback we're getting both from consumers but also our key retailers is that we have the leading design and also functionality in our cleats. We see that over and over again, which we're extremely happy about. You can also see, I don't know where you saw that, we did introduce a different business model, which I find is quite interesting. You can say it doesn't have an impact on market share at this stage, it's called Glitch, where you basically have a subscription on a different upper on a football so you can make it look differently.
You make a subscription. Over time, you get the football cleat to look different. It is a concept Stadium to street with different price points, different functionality, really, I think we have the hottest product at this stage. We're very happy with where we are with the overall football franchise, which is really a core of the DNA of our company. We'll be able to speak in further detail next week. Also, show you some of the product that we have and not those that are coming, we believe we have a very strong lineup not only in the store but also for the future store that is coming. With this, I'd like to thank everybody for the questions today, and I'll hand back to Sebastian.
Yeah. Thanks very much, Kasper. Thank you very much, Robin. This completes our conference call for today. Thanks very much also to all of you for joining us today. As we've said, we're very much looking forward to having as many of you as possible here in Herzogenaurach next week for our Investor Day. Those of you who accepted our invitation and signed up should have already received all the information on the logistics and the agenda. If you have any questions, be it on the Investor Day or one of the releases today or on any other topic, I guess you know how to track us down, and please don't hesitate to reach out to Christian, myself, or any other member of the investor relations team. That's it for today. Have a great day. See you next week, and bye-bye.
This concludes today's call. Thank you for your participation. You may now disconnect.