Good day, and welcome to the adidas Group conference call for the first quarter 2016 financial result. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sebastian Steffen. Please go ahead, sir.
Thank you very much, Daniel, and good afternoon, ladies and gentlemen, and welcome to our first quarter 2016 financial results conference call. Our presenters today are adidas Group CEO, Herbert Hainer, and our CFO, Robin Stalker. Let me remind you that as always, all revenue-related growth rates will be discussed on a currency-neutral basis, and that in addition, all figures will refer to the group's continuing activities and be discussed excluding goodwill impairment losses from last year. You all know that we have not just one, but actually two announcements to cover today. I think we should get started right away. Over to you, Herbert.
Yes. Thanks very much, Sebastian, and good afternoon or good morning, ladies and gentlemen. As you will have seen from our communication last week, we flew off the starting blocks in 2016 as the group experienced its fastest start to a year in more than a decade. We achieved record first quarter sales of EUR 4.8 billion, up 22%, which is our highest organic quarterly growth rate in more than 10 years. We recorded particularly strong growth at the brand adidas, with revenue increasing a blistering 26% as key performance categories, as well as our lifestyle business, grew at strong double-digit rates. Sales growth at Reebok also further accelerated. With the 6% top-line increase, Reebok now looks back on 12 consecutive quarters of growth.
Despite the headwinds from negative currency effects, the group's gross margin increased 30 basis points to 49.4%, a clear testament to the desirability of our brands and products across the globe. Despite a further increase in marketing investments, operating expense leverage in the quarter helped drive operating margin up 1.4 percentage points to 10.3%. Consequently, net income from continuing operations grew 38% in the quarter. This powerful performance reflects a strong acceleration for our group across the board. Particularly important was the strong momentum in our focus markets. As we have outlined last year, North America, Western Europe, Greater China, and Latin America are key to our 2020 strategic plan, as we expect 80% of our growth towards 2020 to come from those markets. In Q1, those markets did exactly that, all growing at strong double-digit rates, thus contributing the vast majority of our group's top-line growth.
We have every confidence that this overall momentum will be sustainable going forward and forecast double-digit growth in each of those markets for the full year 2016. From a brand perspective as well, it is exactly those categories driving this growth today that will also be key to take our top line to new heights over the next five years. I'm sure you remember that we have assigned clear roles to each of our categories to focus their energy on achieving the specific goals over the next years. I'm very pleased to see that our core performance categories, namely football, training, and running, as well as our key lifestyle categories, adidas Originals and adidas NEO, are all enjoying outstanding momentum in the marketplace, with all of them posting strong double-digit growth rates in Q1.
This, ladies and gentlemen, is proof positive that we are focused on the right areas of our business, which not only bring us operational and financial success in the here and now, but even more importantly, ensure we are making major progress towards our long-term strategic aspirations. We are all extremely excited about the achievements of the first three months of the year. The best part is that there is much more behind this stellar financial performance than just successful product launches and inspiring marketing campaigns. The momentum our brands are enjoying today is a direct consequence of our new consumer-obsessed mindset, which, after the implementation of brand leadership, is now not only fully reflected in our organizational structure, but is also clearly leaving its mark on our results.
Our new operating model is directly spurring our current momentum as it allows us to develop holistic concepts that include all the different areas such as product design, marketing, and point-of-sale activation, which ultimately decide how impactful we are vis-à-vis the consumer. With the strong double-digit growth rates in literally all regions as well as in all key performance and lifestyle categories, the first quarter results are proof positive that with brand leadership in full swing, we are indeed much more impactful in winning the heart and the minds of our consumers on a much broader scale than ever before. Make no mistake, brand leadership is not only about organizational adjustment. It's much more a change in mindset. This new consumer-obsessed mindset is strongly embedded in our 2020 Strategic Business Plan and is the foundation to great brand desire with our consumers.
In order to measure brand advocacy amongst our target audience, we established the Net Promoter Score as a comprehensive system that guides us forward. In 2015, we invested heavily in the rollout of this NPS system, which now allows us to constantly listen and respond to our consumer needs. At the same time, we have started to integrate the voice of the consumer in our business processes. It is fair to say that the consumer now has a seat at our table. Besides establishing NPS and making it a bonus-eligible KPI for all of our employees, we have refined and significantly upgraded our consumer profiling capabilities. All of this enables us to have a laser-sharp focus on our target consumer.
We are absolutely convinced that brand leadership and its consumer-centric approach is a significant contributor to the excellent momentum our group is currently enjoying and ensures that the current success is much more sustainable. Let's now dive deeper into the operational and financial highlights of the first quarter, which is characterized by accelerating momentum at our core brands, adidas and Reebok. In particular, adidas, the engine of our group, has never come out of the blocks faster. Revenues grew at a blistering rate of 26% in the first quarter. While this also reflects continued strong double-digit improvement in our lifestyle businesses, more importantly, the momentum in sport performance accelerated as expected. Driven by double-digit increases in key performance categories, revenues in our sport performance business grew 22% during the quarter. Let's have a more detailed look at the different categories.
Starting with football, which could not have had a better start to this important event year. Revenues are up 25% in the first quarter, with double-digit increases in most markets. We are especially proud seeing our footwear business grow at strong double-digit rates, reflecting the successful introduction of new products and franchises. Back in January, we revolutionized the game of football by releasing ACE 16+ PureControl, the first laceless football boot. Presented and worn on the pitch by some of the world's best players. One of those players is Juventus, Turin, France midfielder, Paul Pogba, with whom we joined forces earlier this year. Paul is one of Europe's most in-demand football players, and we are thrilled about working with him in the future.
Paul will, from here on, be our main athlete promoting the ACE franchise, and we are all excited to see him and our boot shine at the UEFA Euro 2016 football European Championship later this year. Talking about the Euro, our apparel business, which also grew double-digits during the quarter, sees ongoing robust demand for federation kits, and it is well prepared for the upcoming events and will once again enjoy huge popularity in 2016. Our running business also performed very strongly during the first three months of the year. While both footwear and apparel sales improved at double-digit rates, the overall sales increase of 19% was very much driven by the further rollout of our Boost product family, now representing one-third of our total running footwear business.
A particular highlight of the first quarter was certainly the official launch of PureBOOST X, our first true female-focused running shoe concept. Without a doubt, PureBOOST X will help us to position Boost as the must-have innovation, also for the female athlete. We had successful launch activation in major cities around the world, and the initial feedback we have received from female consumers is very encouraging. Q1 also saw the introduction of PureBOOST ZG, another super light running shoe that helps us gain even more credibility in the area of energy running. In addition to some very exciting product launches, the overall visibility of Boost continues to gain traction. Within the marathon scene, Boost is more and more being the synonym for crossing the finish line before anybody else does. Only a couple of weeks ago, Lemi Berhanu won the Boston Marathon, wearing, of course, Boost.
In total, Boost is now looking back on 18 major marathon wins, and we continue counting as we speak. In training, we also enjoyed great momentum during the quarter. As sales increased 15% with double-digit growth rates in all major markets. Within the training business, the female athlete is playing an increasingly important role, and it comes as no surprise that our women's business outperformed the male business during the first quarter. We received very positive feedback on our Here to Create campaign launched in February, which has been a major activation tool so far this year. Later in March, we announced a multi-year partnership with Wanderlust, producer of the largest yoga lifestyle events in the world, which helps us to bring an entirely new level of everyday fitness engagement to the female athlete.
Through marketing activation like these and innovative product concepts, we have identified the right anchors to get the versatile female athlete hooked to the brand and our training business. Moving over to our lifestyle business, where the unparalleled momentum from the prior year continued right into the first quarter of 2016. Revenues at adidas Originals grew 45% with strong double-digit increases in all markets, except Russia CIS. While we continue to experience huge demand around established key franchises such as the Superstar or the Stan Smith, the clear highlight of the first quarter bears only three letters, NMD, the hottest shoe model in the games this year. The global launch of NMD on March 17 was just phenomenal, beating our own very high expectations and creating unbelievable hype across key destination doors and online channels.
We witnessed consumers going crazy trying to get their hands on a pair, building record queues and crashing websites. Sell-through rates have been unbelievable, with more than 400,000 pairs sold only on one day. This unparalleled success is even more impressive, keeping in mind that there is no major asset involved. This really speaks for the power of the brand. In addition, there are two other factors behind the NMD madness. On the one hand, it is, of course, a unique look and feel, as NMD is technically a running shoe realized as a lifestyle sneaker. Its midsole is elevated with adidas Boost technology, while the upper utilizes the integrity of adidas Primeknit. This offers highest comfort combined with cutting-edge design.
On the other hand, the success of NMD also goes back to a number of special activations, including launch events and campaigns that took place in key cities around the world. This, ladies and gentlemen, is the best example of how big franchises are born and what it takes to create unparalleled hype in the industry. Moving over to Reebok, where the positive trends from the prior year continued during the first three months of 2016. With a 6% sales increase in the first quarter, Reebok not only saw a further acceleration in top line growth, the brand now also looks back on 12 consecutive quarters of growth. Of particular note is once again the fact that Reebok achieved double-digit sales increases in key markets such as Western Europe, Greater China, Japan, and Middle East, Africa, and the other parts of Asia.
In addition, from a category perspective, Reebok saw sales increases in two of its key categories, training and classics. Another valid proof point showing that Reebok is making further strides in improving its brand desirability is the fact that the gross margin improved by 40 basis points during the first quarter, mainly due to a more favorable regional mix. One market where the brand is still facing major challenges is North America, where we started to streamline Reebok's distribution footprint during the course of 2015 by reducing the number of factory outlets. In 2016, we will continue to pursue that path as we are convinced this is a painful, yet necessary move for a more profitable future.
We will also ensure we further increase the brand's retail visibility by growing the number of shop-in-shop solutions with key retailers, while at the same time opening up to 20 showrooms in 2016 to introduce the new Reebok to consumers across key locations in the U.S. Bringing back Reebok to us in its home market is the brand's most relevant goal going forward, and we will not stop working towards that goal until it is achieved. Another important goal of our strategic plan until 2020 is to better focus our efforts on those areas of our business where we can have the biggest impact in reaching our consumers and winning their brand loyalty. In this context, we made some important strategic decisions recently that will allow us to sharpen our focus even more going forward.
The first strategic decision is related to adidas NEO, which once again showed a tremendous performance during the first quarter, with revenues up 60%. As you know, over the last five years, we have grown adidas NEO from a small startup into a successful vertical business model with sales reaching EUR 1 billion in 2015. We are all very proud of where we have taken adidas NEO and what we have achieved so far. Part of this journey was to develop our own vertical retail format. In these stores, we have been testing new ways of engaging with our target audience, connecting our brand with young consumers, and gaining relevance among this audience. At the same time, we successfully developed speed capabilities for the group and used our own adidas NEO stores as pilots for many of these programs.
While our own adidas NEO stores will remain an important part of our distribution in most parts of the world, data shows that in other parts, we are more successful when exclusively offering adidas NEO products at key wholesale partners. As a result, we have decided that in Western Europe, we will offer our highly successful adidas NEO products through our key wholesale partners in the future. As a result of that, we will close our 16 own adidas NEO stores in Germany, the Czech Republic, and Poland. While we are convinced that this decision is the right one and will help us further accelerate our brand, the vast majority of the NEO store fleet, we are operating some 2,000 NEO shops in China alone, will not be impacted by this decision.
In addition, this morning, we made an important decision on our future approach to golf. After recently having concluded our extensive strategic review, we have now decided that going forward, we will focus our efforts in golf on further strengthening our position as a leading provider of innovative golf footwear and apparel through the adidas Golf brand. Our intention, therefore, is to actively seek a buyer for the hardgoods part of our golf business, more precisely for TaylorMade and Adams, as well as the leisure lifestyle offering of the Ashworth brand. During this process, we will of course ensure that TaylorMade's exclusive positioning and the strong brand name in the industry will be reflected at any given point in time. TaylorMade continues to be the clear number one driver brand in the industry and the most played brand on tour.
The most recent product launches, such as the M1 and the M2, have once again proven TaylorMade's unrivaled leadership when it comes to innovation. With Jason Day, TaylorMade also has the current number one player in the world playing our products. In looking at the performance during the first quarter, while our total golf business was down 1%, it is important to highlight that this decline had nothing to do with TaylorMade. The decline was solely related to lower revenues from the Adams and the Ashworth brands. TaylorMade, in contrast, managed to return to growth, up 6% versus the prior year, driven by sales increases in the brand's most important categories, metalwoods and irons. In addition, sales at adidas Golf also increased, driven by high single-digit growth in footwear, underlying the viability of this part of our business.
We should also not forget that we have made major progress with our restructuring plan announced last year. Hence, the organization around TaylorMade will definitely be a much more nimble and profitable one going forward. I'm convinced that with its leadership position in the industry and the turnaround plan gaining traction, which is clearly reflected in the top-line improvements recorded in Q1, as well as the recent market share gains, TaylorMade offers attractive growth opportunities in the future. However, we decided that now is the time to focus even more on our core strengths in the athletic footwear and apparel market. The planned divestiture will allow us to reduce complexity and focus our efforts on those areas of our business that offer the highest return.
As you can see, ladies and gentlemen, in addition to the huge operational progress we made during the first three months, we also made further progress when it comes to strategic decisions that will positively impact our group in the long term. With this, let me now hand over to Robin, who will guide you through the financials of the first quarter before I conclude our conference call by looking into our nearer future and what to expect from it.
Great. Thanks very much, Herbert, and good afternoon also from my side, ladies and gentlemen. In the next few minutes, I will provide you with a more detailed overview of the financial performance during the first three months of 2016. In this quarter, it was an exceptionally big challenge to decide what markets, channels, and categories we should focus upon as we have seen strong growth across the board. Let's start with a bird's-eye view on our market segments before we dive deeper into just a selected few. As you can see, we were able to build on the strong momentum we experienced in the fourth quarter of 2015, with sales growth accelerating in nearly all of our markets. All of our market segments recorded strong double-digit increases during the first quarter, with the exception of Russia CIS.
As Herbert has already mentioned, we are especially excited to see our four focus markets perform extremely well. Let me therefore dive deeper into each of those markets. Starting with Western Europe, where we succeeded in sustaining our strong momentum from the last quarter. In Q1 2016, we were able to grow sales by 25%, driven by a 26% increase at adidas and a 15% growth at Reebok. At brand adidas, we saw excellent growth in the football category, which gives us every reason to be confident that we will be able to continue taking market share from our competitors, supported by our strong presence at the UEFA Euro. From a market perspective, the strong growth in Western Europe was driven by double-digit revenue increases in all major countries, led by the U.K., Germany, Italy, and France. Additionally, our own retail business showed significant growth during the first quarter.
Sales growth of 25% was driven by strong comp store sales increases, up a tremendous 17% in the period. Looking at the segment's profitability, it was already largely anticipated that the strengthening of the U.S. dollar will have a highly negative impact on gross margins. However, through pricing initiatives and positive product mix effects, we were able to largely mitigate these negative effects and to limit the decline to two percentage points, resulting in a gross margin of 46.1% for the quarter. This also impacted Western Europe's operating profit, which increased at a disproportionate rate of 12% to EUR 313 million, resulting in a decline of 2.3 percentage points in operating margin to 22.2%. Let's turn to North America, where sales accelerated strongly in the first quarter. Revenues increased 22%, driven by even more distinct growth at brand adidas of 31%.
Ladies and gentlemen, we are proud to know that this growth was driven by our lifestyle and performance business. The latter is a clear sign that our grassroots activation is paying off, with the U.S. consumer starting to acknowledge us as an authentic sports performance brand. This becomes even more visible when you look at the categories. Our U.S. sports business increased more than 50% in the first quarter. Also key categories such as training and running recorded double-digit growth within the quarter. The latter was supported by the increasing popularity of our UltraBOOST franchise. In total, sports performance sales in the U.S. grew 20% in Q1. At Reebok, we are still on track with streamlining the business and rebuilding brand reputation in North America. Hence, Reebok sales in Q1 declined 13%, in line with our expectations.
Although you might expect that the activation of the U.S. consumer comes at a high price, I can tell you that we were actually able to turn around operating performance from a loss of EUR 9 million in the previous year to a profit of EUR 19 million in the first quarter of 2016. This translates into an operating margin increase of 4.1 percentage points to 2.7%, supported by an increase in gross margin of 1.2 percentage points, and, of course, further operating leverage. Let's move over to Greater China, where we managed to further accelerate our already strong growth momentum from the previous year. Sales increased a strong 30% during the quarter as a result of double-digit sales growth at adidas and Reebok, where revenues grew 30% and 22% respectively. Our first quarter performance marks the eighth consecutive quarter of double-digit growth in the region.
Although we were facing quite difficult comparisons from the previous year, where sales were already up 21%. It is particularly pleasing that also in Greater China, our performance business at brand adidas is witnessing accelerating momentum, thereby showcasing China's growing interest in sport. In the first quarter, the brand not only recorded double-digit growth in the training and running categories, but achieved tremendous double-digit growth in the football category, in line with the government's ambitious objectives to develop football in China. Likewise, Reebok, as a core fitness brand, profited strongly from the ongoing trend towards a healthier lifestyle in China. The brand was able to grow all major categories at double-digit rates. The strong top-line momentum further accelerated on the way down to the bottom line.
Not only were we able to further improve our gross margin by 1.3 percentage points to 57.2%, we also generated strong leverage in operating expenses, which only increased by 20% in the first quarter. As a result, operating profit in Greater China was up 36% and almost reached the EUR 300 million mark, whilst operating margin increased 2.5 percentage points, ending the quarter at an impressive level of 39.1%. This, ladies and gentlemen, demonstrates that China's sports performance market is still in its infancy, and we believe there is still plenty of room for growth. Let's finish our journey through our market segments with a look at Latin America. In total, sales accelerated in the first quarter, growing by 19%. The increase was mainly due to strong double-digit growth at brand adidas, which is successfully withstanding macroeconomic challenges within the segment's countries.
Reebok sales declined during the course of the quarter. From a countries perspective, Argentina, Mexico, and Chile remained the major growth drivers of the segment, but Brazil also made a strong recovery and recorded impressive double-digit growth ahead of the Olympic Games. Therefore, we have every confidence that this market segment will remain a major growth driver throughout 2016 and also in the years to come. Gross margin in Latin America has also showed a pleasing trend in the first quarter, increasing 2.8 percentage points to 45.2%. This development was not only driven by a more favorable pricing mix, but also by an improved product and channel mix. The segment ended the first quarter with an operating profit of EUR 56 million or an operating margin of 14.1%, up 40 basis points versus the prior year.
Turning away from our markets to our last outstanding operating segment, other businesses, where sales increased 6% in the first quarter. This development was driven by strong double-digit revenue growth at other centrally managed businesses. TaylorMade-adidas Golf and Reebok-CCM Hockey recorded a decrease of 1% and 2%, respectively. The decline at TaylorMade-adidas Golf was solely related to the Ashworth and Adams Golf brands, as Herbert has already mentioned. Gross margin in other businesses was down 0.5 percentage points to 36.9%, mainly due to lower product margins at TaylorMade-adidas Golf. Given stable operating expenses, the segment recorded operating expense leverage, which ultimately resulted in an operating loss of only EUR 1 million, following a loss of EUR 5 million in the previous year. I turn now to our group's performance and the major operating P&L items.
Let's start with the group's gross margin, which increased 0.3 percentage points to 49.4% despite severe currency headwinds, which wiped out almost 400 basis points of gross margin. These headwinds, however, were more than compensated by a significantly more favorable pricing and product mix the group experienced during the quarter. This, ladies and gentlemen, is a clear sign of the desirability of our brands and underpins our ability to implement price increases based on our relentless focus on bringing innovative and exciting products to the market. By brand, the adidas gross margin remained at a strong level of 47.4%, down 20 basis points, while Reebok's gross margin increased to 38.0%. Other operating expenses grew at a distinctly lower rate than group revenues, up 13% to EUR 1.9 billion.
This translates into operating expenses as a percentage of sales of 40.3%, 1.3 percentage points below the prior year level, mainly as a result of operating leverage on both expenditure for point-of-sale and marketing investments, as well as operating overhead expenditure. Additionally, different phasing of the group's expenditure for marketing investments, in particular with regard to the UEFA Euro and the Rio Olympic Games in Q2 and Q3, also supported the positive trend in the first quarter. Adding together the positive effects from a higher gross margin as well as operating leverage, the group's operating margin increased a strong 1.4 percentage points to 10.3%. In absolute terms, the group's operating profit increased 35% to EUR 490 million.
In the first quarter of 2016, we recorded net financial income of EUR 6 million compared to 0 in the prior year. This development was due to positive exchange rate effects, as well as a decline in interest expenses. The group's tax rate returned to a normalized rate of 29.5% in the first quarter of the year. Compared to the previous year, the tax rate decreased 0.4 percentage points. Accordingly, net income from continuing operations increased 38% to EUR 350 million. This translates into diluted earnings per share from continuing operations of EUR 1.71, up 38% compared to the prior year. Moving over to the retail part of our business, which reveals a trend just as pleasing as our overall group performance, revenues were up 22%. Comparable store sales increased a strong 13% during the first quarter, with double-digit growth across all regions except Russia CIS.
By brand, adidas comp store sales grew 15%, while Reebok comp store sales were up 3%. Looking at our online business, e-commerce once again showed a particularly strong development during the quarter with sales up 47% year-over-year. Gross margin in our retail business increased an impressive 3.3 percentage points to 61.2%, while operating margin showed an even stronger improvement, driven by additional leverage on operating overheads. In the first quarter, operating margin was up 5.5 percentage points to 19.6%. Moving over to the balance sheet, operating working capital as a percentage of sales decreased 1.7 percentage points to 20.2%. The improvement mainly reflects the strong top-line development during the last 12 months, as well as our continued focus on tight working capital management.
We ended the first quarter of 2016 with net borrowings of EUR 809 million, an increase of EUR 267 million versus last year as a result of the utilization of cash for the purchase of fixed assets, the acquisition of Runtastic, and the share buyback program. However, put into perspective with our EBITDA development, the ratio remained virtually unchanged, amounting to 0.5 times. Finally, our equity ratio remains at a strong level of 42.3% at the end of the first quarter, compared to 46.7% in the prior year. Ladies and gentlemen, to wrap up the financial part for today and to conclude on our very successful start in 2016. Our first quarter achievements clearly show how our relentless focus on the consumer ultimately translates into outstanding financial results. Our accomplishments this year so far are a real testament to the strength of our brands.
Our product and marketing initiatives are resonating extremely well with consumers across all regions. We are more focused and closer to the consumer than ever before, which gives us every confidence in the group's momentum going forward. With this, let me now hand back to Herbert, who will share with you our outlook for the remainder of the year.
Thank you, Robin. Ladies and gentlemen, let me now give you a quick overview of what you can expect from us in the second quarter, adding to what we already talked about at the beginning of March when we published our full-year results. Let me start with football. For sure, one of the most exciting categories in 2016 with two major football events just around the corner, the Euro 2016 and the Copa América. Those events will be perfect platforms for the adidas brand to activate core assets, key franchises, and tailored messages. This will lift the engagement with our football consumer as we move through the year. Let me start with the Copa América. We have a strong and unique partnership portfolio around South America's most successful federations, including Argentina, Mexico, and Colombia.
Through football stars such as Lionel Messi, Luis Suárez, and James Rodríguez, there is no doubt our brand will enjoy unparalleled visibility during the event, which gives us a huge opportunity not only in South America, but also in North America, where the tournament will be hosted for the first time in history. As the official sponsor of the Euro 2016, as well as partner of nine high-caliber teams, including world champion Germany and reigning champion Spain, we're excitedly looking forward to the start of the tournament on June 10. I promise you, we are more than prepared for it. In addition, during the summer, we will also see exciting and innovative product launches in our football category, supported by exclusive pre-sales in our direct-to-consumer channels as well as through selected e-tailers.
This will include a new version of our successful ACE and X franchises, inspired by the trophies that players around the world strive to win in order to write their names into the history books. We have everything in place to engage in a close manner with the football communities in key cities. Through our various newsrooms, we will ensure we are in a constant dialogue with our target audience. All of this not only gives us the confidence that adidas will once again be the clear winner of this sports summer, it also reinforces our bullish view that the current strong momentum in football will last way beyond the second quarter. Let me now turn to running, where our rapid growth path will remain highly visible during the second quarter, as our focus on key running footwear franchises continues to gain traction.
We will continuously build on our existing key franchises, UltraBOOST and PureBOOST, with new silhouettes coming up soon. UltraBOOST is and will continue to be the hottest running shoe, not only, but also in the all-important U.S. market. Here, a couple of weeks ago, after the launch of the new colorways, we sold over 5,000 pairs within one hour on adidas.com. The next edition of UltraBOOST is almost there. In June, we will be launching UltraBOOST Uncaged, the next edition of this successful franchise family. It will help our running business to further strengthen our positioning in energy running, as it will provide our consumers the next level of lightweight, smooth, and energetic running.
Talking about the U.S. running market, let me remind you that the commercially relevant price point is actually at much lower price tags, that this part of the running market still represents a huge opportunity for our brand. To further hit the sweet spot of the running market, our Bounce franchise plays a central role and will continue to focus on Bounce to further increase its high profile and make it the next success story. In this context, we are very much looking forward to the next chapter, UltraBOOST. Hitting the market at price points of around $100, the UltraBOOST has already received phenomenal feedback from our most important retailers in North America. As a result, we are confident that we can drive considerable volumes in the months to come.
Let me move over to Originals, where we build upon the outstanding hype and the momentum we have created around the NMD over the last couple of months. As we have told you already several times, our focus has been and will continue to be on creating constant newness in our existing key footwear franchises, be it Superstar, Stan Smith, ZX Flux, Tubular, and NMD, and on carefully managing their life cycles. You can definitely expect new and exciting brand and color updates within all of our five footwear franchises in Q2, including the Stan Smith Roland Garros Pack, the ZX Flux Racer, S.E. in Primeknit, and Tubular Nova Emerald. At the same time, we will further broaden the overall horizon of franchises, just like our Originals team has done in a fantastic way with NMD.
All of this will, of course, be supported by exciting product launches resulting from key collaborations with Kanye West, Nigo, Palace, and White Mountaineering. In addition, our future campaign, which was launched earlier this year, will see new chapters coming up in Q2, thereby continuing the dialogue with influential streetwear hounds. Last but certainly not least, we will create additional hype with adidas Originals' first full-length skateboarding film called "Away Days." Filmed over the course of three years and featuring some of the biggest talents in skateboarding, the film is the first of its kind and will enjoy a world premiere tour through our key cities, starting on May 29th. All in all, ladies and gentlemen, there is no doubt, adidas Originals is as hot as never before, and we are all well-positioned and prepared to elevate our lifestyle business to new heights in 2016.
This is also true for adidas NEO, where the second quarter has started with a real blockbuster launch when NEO introduced its newest footwear technology, Cloudfoam, a lifestyle footwear comfort concept. This innovative development features soft, lightweight cushioning, thereby providing ultimate support and immediate comfort for the consumer. The launch of Cloudfoam was supported by a big social media-led campaign. Fronted by YouTube sensations Amanda Steele and Marcus Butler, the campaign encourages consumers to step in to do the things they love the most, posting pictures of these things they are most passionate about on Instagram using Cloudfoam hashtag. First sell-out data from our own retail sources is extremely promising and confirms our bullish view on NEO's newest footwear concept. To conclude, at Reebok, we will continue to drive the brand's fitness credo throughout 2016, underlining Reebok's positioning as the global fitness brand.
In this context, last week, Reebok successfully launched its new and striking global fitness campaign called 25,915 Days, reminding people that they have, on average, 25,915 days in life to push their limits, overcome every obstacle, and to honor the body they have been given. The campaign is a continuation of Reebok's award-winning Be More Human marketing platform and is unconditionally targeted at the FitGen consumer. 2016 will also see an ongoing strong focus on local grassroot events and activations, such as the Reebok CrossFit Games in the U.S., taking place throughout May and July. Around the event, Reebok will officially launch an updated version of the well-proven CrossFit Nano training shoe, which makes us confident that Reebok's important training business will experience ongoing robust demand in 2016. In classics, the strong momentum from the first quarter is set to continue.
At the beginning of Q2, Reebok unveiled Question Mid "Misunderstood," the latest footwear release in the 20th anniversary of the Reebok Question Mid celebration, honoring the great Allen Iverson. The "Misunderstood" takes inspiration from newspaper headlines and other notable quotes about Allen, both positive and negative, in a black and white colorway. Available at $130 at select retailers, the shoe will for sure create additional hype around Reebok's strong lifestyle business. As you can see, ladies and gentlemen, Q2 will be another great quarter for the adidas Group. Fueled by a number of exciting product launches, inspiring activation campaigns, and global sports events, we have every confidence that the strong momentum the group witnesses during the first quarter will continue over the next months.
In light of the strong brand momentum at both adidas and Reebok, and to give credit to our strong first quarter performance, we have increased our top and bottom-line outlook for 2016. We now expect sales to increase at the rate of around 15%, driven by double-digit growth in all markets except Russia CIS, where we still expect revenues to be around the prior year level. Following the improvement in our group's gross margin in Q1, which is a direct reflection of the strength of our brands across regions and categories, we now expect to compensate almost all of the severe headwinds, which we will be facing this year from negative currency effects as well as further labor cost increases in our sourcing countries already on the gross margin level.
As a result, we are now confident we will be able to limit the gross margin decline to a maximum of 50 basis points compared to the prior year level of 48.3%. This, together with leverage on our operating expense, will lead to an operating margin improvement of up to 50 basis points to a level between 6.6%-7%. As a result of both an increased top-line outlook as well as an improved expectation on our operating margin, we now project net income from continuing operations to increase at a rate between 15%-18% compared to the prior year level of EUR 720 million. With that, ladies and gentlemen, Robin and I are now happy to take all your questions. Thanks very much for listening.
Thank you. If you would like to ask a question at this time, please press the star or asterisk key followed by the digit 1 on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question. We'll pause for a moment to allow everyone to signal. Thank you. We can now take our first question. It comes from John Guy of MainFirst. Your line is open. Please go ahead.
Yes. Good afternoon, Herbert and Robin and Sebastian. 3 questions, please. If I could start with the Originals business. You've had a very strong start indeed. I think Originals was roughly EUR 3.5 billion turnover business for you in 2015. I appreciate that the comp was reasonably tough at 31%, although on a relative basis, the comp gets tougher going into the fourth quarter by about 15%. What confidence do you have that Tubular and ZX Flux will be able to generate the same consumer reaction that you've had with Stan Smith and Superstar and NMD? That's my first question. My second question is around average trade working capital. There's a good improvement there of around 170 basis points. The inventory was up 25% growth on a constant currency basis against sales up 22%. Are you happy with the inventory position across the key markets?
Is it completely clean in terms of how you see it? It looks like there was an additional build in the North American market. Can you give us some indication as to how much of the sales reflect sell in over sellout trends? Finally, my third question is just on the Japanese market. There was a pretty strong spike there. Is that really reflective of the increased footfall of Chinese consumers that we're seeing in that market, or is there something else that we should be reading into the Japanese growth that we've seen? Many thanks.
Sebastian. John, let me answer the first question on the Originals business. As we have told you already since quite some time, one of the key targets within our new plan, Creating the New, is to build franchises. In Originals, we have five named, as you said, Stan Smith, Tubular, ZX Flux, NMD, and Superstar. I think we have learned quite a lot how to bring these products to market. As you have seen, NMD was by far the best success which we had ever had with 400,000 pairs sold in one day. Of course, this will not happen every day, but we are absolutely convinced that with Tubular, we have the next strong franchise which we are building.
Obviously with a 30%-40% increase, it gets tougher to compare quarter by quarter, but we are absolutely confident that we manage our Originals business and the demand of these franchises in the right way, as you have seen in the past when we took Superstar or Stan Smith from the market for a certain period of time. The third question on the Japanese market, there was a certain shift from the fourth quarter into the first quarter. Also in the first quarter, in 2015, we had a change of our trade term policy, which therefore led to an underdeveloped first quarter in 2015. This all helped by growing our first quarter in 2016 by 44%. I also don't want to hide that our business is very strong in Japan, especially when I look to our own retail stores, we see very good progress.
Sorry, John. On that, do you have any idea in terms of how much of that is local consumption or driven by tourism in the Japanese market?
No, unfortunately, John, I don't have any idea.
Okay. Thanks for that.
John, your second question about inventories.
Yeah
looking at this in detail, the inventories are great. They're clean. In fact, overall, the aging has slightly improved again. The largest growth is obviously in major markets such as Western Europe and pleasing also to see growth in the others. This is reflecting the sell-through also and the demand. These are not a sell-in issue.
Many thanks, indeed.
Welcome.
Thank you. We can now move on to our next question. It comes from Fred Speirs of UBS. Please go ahead, sir. Your line is open.
Good afternoon. It's Fred from UBS. Three questions, please. First, on the Q1 sales growth components we saw for the adidas brand. You've taken visible price mix in several regions, which seems to have been well received by the consumer, judging by your segmental gross margins. I wondered, could you talk a bit about the price mix contribution to sales growth in Q1? Could you also perhaps talk about your pricing plans for the rest of the year in Western Europe? My second question was also on momentum we're seeing at adidas. Was Q1 significantly ahead of your initial internal expectations? If we look ahead, do you see any reason why the current sales momentum could not be sustained over the next 6 months, particularly if you think about your current order book? Last question on the U.S.
We're seeing excellent sell-out figures for adidas from the SportScan data. Just wondered if you could confirm whether you're also starting to see a pickup in brand perceptions relative to your key competitors in that market when you look at Net Promoter Scores. Thank you.
Hi, Fred. This has been a lot of questions. Let me start by starting with the last one. The brand perception from the consumer in the U.S., absolutely, we see an increase, as I said during my speech, that we have NPS as one of our KPIs for all the regions, and we definitely see an uptick there. We see it in market share, and obviously, when you talk also to the key retailers, you will hear the same. Pricing in Western Europe. Yeah, definitely, we were able to raise our prices because of the new product which we brought into the market. I spoke about the football footwear products, ACE 16+, or on the other hand, in the running silhouettes with our Boost technology. This definitely gives us a leverage that we can have better prices in the market.
As I also said during my speech, I definitely do see a lot of potential in running, especially at around the $100 U.S. price barrier in the U.S., which we obviously will go after that as well. I don't have any doubt because, as you rightly said, that we know already our sales for the next six months. I don't have any doubt at all that we will have a strong second, third, and fourth quarter, and that 2016 will be a record year for us. The first question was about adidas price mixing contribution. I look to Robin.
Yeah. Okay. Thanks, Herbert. I think here the point, Fred, is that, yeah, as Herbert has said, not just for Western Europe, but for the other markets also, we've been successful increasing our prices. I think also a factor in terms of the performance here is to note that we are getting more sales through at full price, and this is a positive thing for us. You would have recalled from our strategic plan that we want to increase our full price sell-through, and it's early days, but this is also a factor that's helping that mix in the gross margin.
Great. Thanks.
Welcome.
Thank you. We can now move on to our next question. It comes from Adrian Rott of Deutsche Bank. Please go ahead, sir.
Hi, good afternoon, everyone. Three questions, please. Number one, just going back to Originals really quick. If you look at the future order book, can you tell us what is roughly the volume split between your classic silhouettes, i.e., Superstar and Stan Smith, as opposed to the younger franchises, i.e., NMD, Flux, and Tubular? On NMD specifically, what's the rough timeline of scaling up this franchise? Secondly, you've mentioned in the slide pack that footwear and training was up double digits. Can you give me a hint which footwear franchises belong to training? I thought it's historically been an apparel category.
Just on retail like-for-likes, which for adidas were plus 15%, can you sort of give some color on how that splits up into home courts, neighborhood stores and the factory outlets and maybe comment a little bit on what's driving people into stores in your view? Is it event related or has traffic been picking up around releases from Originals and running, for example, just to understand the sort of like-for-like drivers? Thank you.
That takes.
Okay, Adrian. In terms of adidas Originals, I think I cannot answer your question exactly on percentages, but I can give you a picture. On Superstar and Stan Smith, we have a consistent common business during the 12-year period because this we steer by the volumes which we give to the market. Whereas on the new silhouettes like NMD, as I said before, we had 400,000 pairs sold on one day. Obviously, here you have a peak when you launch and then we drive by limited volumes or controlled volumes, let's put it that way, to make it a sustainable franchise. I think you have two different pictures.
The one which is a consistent one, which are in the market already since 20 years, and then the new ones, Tubular, NMD, which are coming in, having a big Boost when we launch it, and then we drive it to a consistent business going forward in the next years. In terms of training, I think, it's fair to say that training is still mainly apparel driven. Footwear is only a small part because footwear is mainly divided into running, into basketball, et cetera, and we only have a few footwear silhouettes in training. It's mainly the apparel business. Therefore, the growth is comparable to that what we had in the past.
Adrian, in terms of the growth of our own retail shops of 15%, that's 24% in the concept stores, 14% in factory outlets, and a decline of 7% in the concession corners.
All right, great. Thank you.
You're welcome.
Thank you. We can now move on to our next question. It comes from Antoine Belge of HSBC. Your line is open. Please go ahead.
Yes. Good afternoon. First question relates to the disposal of part of your golf business. I'd like to check a few figures with you. I think last year, the overall golf business was around EUR 900 million. Is it fair to assume that two-third of that, around EUR 600 million, will go? What was actually the amount of losses attributable to that part that will be disposed? Also what are your expectations or requirement in term of how much you want from that business? What do you intend to do with the cash you will get? Second question on the U.S. business. Obviously, third quarter of strong growth and actually accelerating. I think you already mentioned a few of the reason behind that. What is causing the acceleration sequentially?
With regards to the Euro 2016 football championship, is it fair to say that Q1 was actually not a big quarter in terms of products after the Q4 saw the launch of the balls and then the jerseys, then it's probably going to be Q2 and Q3. Actually, do you expect more in Q2 or fairly even between Q2 and Q3? Thank you.
Good.
Okay, Antoine. Starting with TaylorMade. Yep, your estimate is pretty correct. Around about EUR 900 million was the sales in that segment last year. About two-thirds relates to the hard goods business of TaylorMade and then the business of Adams and Ashworth. We had a loss last year of about EUR 100 million in that segment, which we described. What we want for it is the best price we can get for it. We've just taken the strategic decision. I can't give you any other comments on what the sort of price is at this stage. We'll enter into negotiations, and we'll keep you informed of that. We have the goal to continue to invest in our business, the proceeds of the sale will, in the first instance, be used to continue to invest in our business. We have a good shareholder return program ongoing.
We don't have any acquisitions or anything of that planned at this stage.
To your second question, Antoine, in the U.S., I think there is not only one specific thing which is helping us to get this momentum in the U.S. It's a variety of initiatives which we have taken, starting one and a half years ago with changing the management, with putting a new strategy in place, then investing more in the markets. I mean, you have heard when we talked about during the year last year with Aaron Rodgers, James Harden, obviously Kanye West has helped a lot, Pharrell Williams. Also a more selective distribution strategy that we bring the right products to the right distribution channels, which obviously helps sell through and helps more full price sell through, as Robin has alluded, which gives us a better margin.
I think this all together is really keeping our momentum up. In addition to that, I think you have read it, we have definitely been the number 1 sneaker brand in the U.S. in 2015. I think we had five or six models within the first 10 sneakers. I don't see any stop for that. Once again, when you see what happens in the U.S. and how we get more and more shelf space, how we put more and more shop-in-shops, be it on the sporting goods side or on the mall-based. As I said during the speech, it's not only the originals business, so don't get it wrong. We're also very proud about our sport performance business in the U.S., especially on the U.S. sports categories. I must say, I'm quite pleased.
Still a long way to go and still a huge potential for us to grow our business there. The last three quarters and the next three quarters will be definitely fantastic. In terms of UEFA Euro, you are completely right. Q1 is a rather smaller quarter because we introduced the ball in Q4 2015 and the jerseys of all the competing teams of us. In Q2, obviously, the closer we get to the World Cup, the more the jersey sales go up again. Q3 depends a little bit on the performance of our teams. If they go to the final, then, which is in July, which is Q3, then obviously we will fill the pipeline again. I must say, I'm very optimistic for the Euro because we have nine teams, as you know, more than anybody else.
We have the ball, we have strong teams with Germany, Spain, and not to forget Benelux, which might be right for a surprise. This is quite an exciting time. Copa América is directly coming after that.
Thank you very much.
Welcome.
Thank you. We can now move on to our next question. It comes from Omar Saad of Evercore ISI. Your line is open there. Please go ahead.
Thank you. Good morning. Good afternoon. Congratulations on another very nice quarter. I have a couple questions. My first question, I wanted to ask if you could elaborate a little bit on, you clearly have some really strong products with very strong demand, very hot in the marketplace. I wondered if you could give maybe a little bit more detail and help us understand how the company is managing the demand and the distribution. What's different today versus maybe how the company would have managed some of these really strong areas in the past? What's changed, and how has the strategy evolved? I have one more follow-up, too.
Omar, as we have said already, more than a year ago, through our new strategy, Creating the New, we definitely will put the consumer in front of everything we do. We said we definitely do believe that we get much more insight into the market and therefore can steer our product flow better into the distribution channels where this consumer type is shopping, which I just said as an example in the U.S. We don't give Originals, not to anybody anymore, as you might have heard and seen that one of the other retailer is complaining. This is what we do believe is the right thing. We don't give every high-performance product to every retailer anymore, which also might cause one or the other complaint, but we definitely do believe this is right for the business, and the success is definitely supporting our strategic decisions.
Obviously, with our market research and the consumer insights, we definitely know much more where the consumer is going, what they're buying, and also, therefore, controlling the volumes and the amount which we are giving into the market. So far, we are quite pleased with what we see in terms of, A, sell-through data in the market, therefore higher full price. Obviously, if the sense is better, requests from the consumers, I think this is definitely proof positive that what we are doing to steer the momentum in the market is the right one.
Okay. Thank you. Herbert, if I could also ask a question on the performance side. It's really intriguing to see there seems to be an inflection in the performance business. I know it's not a growth number. I think 22% this quarter constant currency. It's not a number that you guys publish every quarter. Maybe help us understand what's changed there, too, in that side of the business. Is it the product platforms Boost and other? Is it marketing? Is it the move to more of a sport-specific category approach? Help us understand what's really driving, in your opinion, that inflection.
Omar, obviously, we would be happy to report every quarter 22% increase, but as you rightly said, this might not always be possible. Good. First and foremost, I think we have gone back to where we always have been strong in bringing innovative products to market. I think I have said it during 2015, it was definitely our mistake that for the World Cup in 2014, we didn't have a new innovative football product. This was clearly a miss, and I feel guilty for that, but, hey, it is what it is. This is our strength. We took a bold move with the new football footwear category, where we went from 4 silos back to 2 silos. Definitely this was an outcome of the market research which we did with a lot of young kids playing in the streets.
They clearly told us you have only type 2 of players. You have the one who wants to control the game, and you have the other one who is trying to create chaos, like Thomas Müller, for example. Unfortunately, he didn't create chaos yesterday. Hey. This is the same in running. I think our running shoes, with all respect, are the best running shoes which are in the market. We have shown sustainability and consequence in Boost, because you might remember when we first launched Boost, a lot of comments, white outsole, and it's maybe too soft and blah, blah. We were convinced about that this will be the standard in the future, you will see in the running cushioning and energy policy.
I think these are the main ingredients that we went back to where our strength is, bringing innovative products to the market, launch it in an exciting way as we did, and then distribute it through the right channels that we get to the consumer who is coming to this distribution channels. This will continue, and therefore, I'm absolutely convinced that the positive momentum, especially for our innovative products on more or less all the performance categories will continue. I am convinced that in basketball, you will see in 6 to 12 months, you will see it's the same picture.
Okay, thank you. That's very helpful. Good luck.
Thank you. We can now move on to our next question. It comes from Andreas Inderst of Macquarie. Please go ahead, sir. Your line is open.
Yeah. Thank you. Good quarter. I have a couple of questions. The first one on NMD, in terms of potential. What's actually your sales level you have for the Superstar and the Stan Smith, just to evaluate the NMD potential you might have in the medium term? That's the first question. A second question on speed to market and full price sales. Robin, you mentioned this was one contributor for the gross margin improvement. Where are you actually today, versus your target to have 50% of sales than in terms of speed, 45 days in terms of deliveries? That's my second question. My third question on the U.S. market. We have seen a good operational leverage in the first quarter. Is that a run rate we can assume also for the next few quarters, given your bullish comments on top line? Thank you.
Hey, Andreas. On NMD, obviously we don't give you all the precise figures because I'm sure our competitors are listening to the call as well. Let me just give you a hint. We have sold 50 million pairs of Superstar last year, though this should give you a kind of a potential what we are looking for.
For the last two questions, Andreas. Good. We're still very early days with full price sell through. Our announcement about our Creating the New plan goes through to 2020. There's a lot of work that we're doing on those key initiatives which is helping us get closer to those goals, but we're still very much at the early stages. 2016 is the first year of that strategic business plan. You'll hear more about when we talk about those particular initiatives when we do some sort of tutorial later in the year. Second part for me was about operational leverage. Yes, very definitely. We were talking about this last year when I was talking about the massive headwinds coming from the sourcing this year because of the devaluation of the EUR against the USD. We were looking for leverage in any case for operating overheads, particularly in 2016.
I can confirm we're definitely going to be getting that. I think what you're seeing in the first quarter is not just, however, operating overhead leverage. That's the smaller part. The larger part at the moment was because of the marketing working budget expenditure. This is, to a certain extent, also timing-related phasing because of where we spend our money, obviously recognizing that we have certain events this year. I expect, particularly with the top-line growth that we're now expecting, that yes, we'll have good operating leverage, and that is one of the reasons why we also felt that we could increase our guidance for bottom-line development for us for 2016.
Okay. Thank you. Very helpful.
Thank you. We can now move on to our next question. It comes from Jamie Bowler of Goldman Sachs. Your line is open. Please go ahead.
Hi, everyone. Just a couple of quick questions from me. You gave a bit of detail in terms of your retail progression in Western Europe and Latin America. I don't know if you could help us understand how it's trending elsewhere in the world, particularly in areas like the U.S. relative to wholesale. Then a second question, also on your e-commerce business. You mentioned that the direct e-commerce business has grown 47%. Are you seeing similar sorts of rate of growth at third parties as well? That's it for me.
Good, Jamie. Thanks very much. Retail is obviously a different size in the various markets that we have, but we have a strong growth in all of our regions in retail. I'm just trying to find the particular figures. 70%, I think, is the figure in North America. In terms of the
What was the second question? Sorry.
The second question was.
Oh, okay.
The second question was on e-commerce.
Yes.
Obviously we don't have all the numbers of all our retail partners on e-commerce, my personal assumption is that our products on our site obviously are going much faster because we put a lot of content around the products which we put onto our e-com, and we follow it diligently day by day, minute by minute. Of course, be it the original product or the key innovation product on the footwear side for football or for running are doing very well with our wholesale partners as well. As I said, we definitely have a stronger run with our own e-commerce side.
Thanks a lot.
Thank you. We can now move on to our next question. It comes from Jürgen Kolb of Kepler Cheuvreux. Your line is open. Please go ahead.
Thanks very much. Three questions from my side. First of all, regarding the closures of the 16 NEO stores, over what period are you planning to close them, and should we expect any specific closure costs associated here, or it's just the ending of these contracts so that you can close them down? First question. Second one, on the U.S. again, I was wondering if you could maybe provide us with the sales distribution in the individual sales channels or retail channels broken down into sporting goods or mall-based retailers. What is the sales split in the U.S. market for brand adidas at this point in time? Lastly, also on the U.S. market, the new Brooklyn design office, that is as far as I understand, but just wanted to double-check, already fully operational.
Has it already impacted some of the collections or is that something which is still to come for fall/winter maybe this year? Thanks.
Hey, Jürgen. On the first question, we will close all the 16 NEO stores until the end of the year. You don't need to expect any material one-time cost. It is all reflected in our forecast already.
On the U.S. sales distribution, yes, of course, we have the numbers, what the percentage of the individual distribution channels is. This we don't disclose. Thirdly, the Brooklyn office is officially opened or will be officially opened in September. The designers are already on board. Of course, they are working already.
Very good. Super. Well done. Super quarter. Thanks.
Thank you, Jürgen. The design, which is successful so far, is still done by ourselves. You can expect more from the new designers in New York.
Understood.
Thank you. We can now take our final call today. It comes from Chiara Battistini of JPMorgan. Your line is open. Please go ahead.
Hi. Thank you very much for taking my questions. I have three, if I may. First of all, on pricing. Some of your peers, your competitors, have commented on a level of price increases over our ASP of high single digit. Would that be an estimate that you're also comfortable with? On pricing also, Puma last week on their conference call mentioned that they think that some of the retailers are not fully passing through the price increases implemented by the brands. What are you seeing on that front, please? On football, please. In the last event years, you provided a target for football sales. If I'm not mistaken, a couple of years ago, it was around EUR 2 billion sales from football in 2014. What kind of levels are you expecting from this category this year?
Just a clarification on the contribution from the UEFA in Q1, because you mentioned the football apparel was up double-digit in Q1, thanks to good demand of the kits for the teams. Does that include also the replica shirts for the European teams or no? Finally, on Originals. Can I just confirm that it's roughly now just a bit more than 20% of total sales and of group? Would you be able to give also a contribution on profits, please? Thank you.
First one, yeah.
Okay, Chiara, thanks very much. I think although we don't give any specifics on the actual price increases, it's also very difficult because it's dependent on the market and obviously on the particular product. We don't do an across-the-board one-figure price increase. We look at it as intelligently we can. What can the market take? What are the particular consumers? What is the particular product we're looking at it? That will vary. But a high single-digit average is probably fair. In terms of whether dealers are passing it on or not, I have no comment. I do not have any information on that. Whatever competitors have said, you may have to ask them for more detail.
Paul?
In addition to that, Robin, definitely, Chiara, this speaks once again for the demand and the desirability of your brand. If your brand is hot, there's no reason to reduce prices or not giving price increases to the consumer. Therefore, as Robin said, we haven't seen anything that people are not sticking to our recommended retail prices. In terms of football, what you said, the increase in the replica kits is mainly driven by Manchester United and Juventus Turin, which we brought new to our roster. As we said already beforehand, we definitely expect here now a boost in the Q2 as the Champions League is coming to a final where our teams, Bayern Munich and Real Madrid, are playing until the semifinals, and now the European Championship starts. What was the fourth question?
About Originals.
The share of Originals.
The share of Originals is still under 30%. Obviously, we have nice growth, but as you have seen, we also grow very well on the performance side. Most probably during the second quarter, this will be even higher. Just to give you another example, in China in the first quarter, the growth of performance and Originals was at the same level. Once again we said before, we are managing very carefully our growth. Don't be concerned about that one because we have a clear, sharp focus on that, because we definitely want to have a long-term Originals business, not just a few quarters.
Finally, Chiara, no, we do not break down profitability by the segments.
Perfect. Thank you. Just on football, do you have a target in terms of sales as you had in previous event years or no?
Of course, we have one. Have in mind that in 2015, we did a little bit over EUR 2.2 billion. Of course, we will break a new record in 2016, but we haven't given out a number yet.
Okay, perfect. Thank you very much.
Welcome.
Thank you very much, Chiara.
That's it for today's Q&A session. I will now hand the call back to Sebastian Steffen for any concluding remarks. Thank you.
Thank you very much, Daniel. Thank you very much, ladies and gentlemen. Thank you very much, Herbert and Robin. This actually completes our conference call today. I know that there were a couple of more questions out there, so I can only encourage you that, of course, the IR team is available, and if you have any questions on the details of this call or any other topic, please don't hesitate to reach out to us. Our next reporting date for our second quarter results will be at the beginning of August 4. However, at this stage, I would like to invite you, and Robin had already mentioned that, to our third IR tutorial workshop, which will take place here in Herzogenaurach on July 18. During this half-day workshop, we will once again provide you more insight into our new strategic business plan, Creating the New.
This time, we will take a deeper look into the three strategic choices that we had introduced last year in March: speed, cities, and open source. We would, of course, be delighted if you could join us here on site. Of course, the event will also be webcast on our Group website. There will, of course, be a formal invitation that will go out over the next couple of weeks, but it would be great if you could already block this date in your calendar. As I said, if you have any questions, please don't hesitate to reach out to the IR team. With that, I would like to thank you for your participation, wish you a very good day, and look forward to talking to you soon. Bye-bye.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.