Good day, welcome to the adidas Group conference call for the first quarter 2015 financial results. Today's conference is being recorded. At this time, I would now like to turn the conference over to Mr. Sebastian Steffen. Please go ahead, sir.
Thank you very much, Holly. Good afternoon, ladies and gentlemen. I'm Sebastian Steffen, and as you know, I head up the IR activities here at the adidas Group and would like to welcome you to our first quarter 2015 financial results conference call. Our presenters today are Herbert Hainer, the adidas Group CEO, and our CFO, Robin Stalker. To allow for ease of comparison, all sales and revenue-related growth rates will be discussed on a currency-neutral basis unless otherwise specified. In addition, all figures will refer to the group's continuing activities due to the planned divestiture of the Rockport business segment. Lastly, all figures will be discussed excluding goodwill impairment losses unless otherwise stated. Robin will, of course, deal with those topics specifically in his presentation. Let's get started, over to you, Herbert.
Thanks very much, Sebastian, good afternoon, ladies and gentlemen. I'm very pleased to report to you today that we got off to a successful start to the year with our adidas and Reebok brands enjoying great momentum. We have excited consumers around the world with our innovative performance products, cutting-edge technologies, fashion-driven styles, and highly engaging marketing campaigns. As a result, both our top and bottom line improved significantly. Even so, we have increased our long-term oriented brand-building investments. There was much more to the first quarter than the pure financials. Let me start with a few topics that are definitely worth mentioning.
With the announced sale of the Rockport business, we made an important decision that will also allow us to focus more strongly on our core brands, adidas, Reebok, and TaylorMade, and on the highest potential opportunities to drive sustainable, profitable growth for our shareholders. Although Rockport has performed well over the last several years, it has not been core to our strategy of striving to be the global leader in the sporting goods industry. During the first quarter, as part of our shareholder return program, we also continued with our share buyback program. After already having repurchased EUR 300 million worth of shares in the first tranche at the end of last year, we kicked off the second tranche at the beginning of March. Up until July 3rd, we will be investing another EUR 300 million to buy back our own shares.
In fact, by the end of April, we had already repurchased more than 2 million shares during the first 8 weeks of the second tranche. A total of more than 7 million shares since the start of the program, representing more than 3% of the total number of our shares outstanding. This is on top of our recently announced upgraded dividend policy, according to which we will be paying out between 30% and 50% of our net income attributable to shareholders going forward, reflecting our clear commitment to sustainably creating significant value for our shareholders. Talking about creating value. At the end of March, we introduced our new strategy, Creating the New. This is an ambitious, yet realistic plan that provides a layout for accelerating our growth trajectory until 2020.
With Creating the New, we are moving away from a static and reactive planning process to one that is iterative, agile, and proactive. This puts us in a position where we can and will constantly evolve, improve, and sharpen our plan as we listen to our consumers. In order to succeed, we need to win their hearts and minds. Going forward, we will be judged by our consumers, which is clearly reflected in our group-wide incentivation plan. The new mindset, brands first, will not only bring brand reputation to new levels, it will ultimately be a step change for both our top line and for the group's profitability. Based on three strategic choices, speed, cities, and open source, we will drive brand design, brand advocacy for all brands of the adidas Group to new heights.
This, in turn, will allow us to gain significant market share in key markets and categories, generate attractive margin expansion and operating leverage, and deliver superior returns to our shareholders. The initial reactions to our plan have been very positive. Now it's about execution, an area where we have not always been as successful in the past as we should have been. That will be different this time. We have reoriented our entire organization to create clarity on roles and responsibilities across the entire value chain. We will stay rigorously focused on our three strategic choices. We will, at all times, have visibility on our progress through a combination of both financial and strategic short-term targets to which we will hold our management accountable. All of us are fully committed and aligned behind our new plan and convinced that this strategy will make a difference.
As you can see from our first quarter results, it has already started to do so. Let me now take a look at these results in more detail. The key financial results of the first quarter were as follows. Group sales were up a strong 9%. In euro terms, sales were even up impressive 17% and increased by more than EUR 600 million to EUR 4.1 billion. We recorded strong growth at adidas and Reebok, with revenues increasing 11% and 9% respectively. From a category perspective, adidas Running, Originals, and NEO, as well as Reebok Training and Fitness, were particular standouts, all growing at strong double-digit rates. The group's gross margin remained stable at 49.2%, despite significant pressure from currency and input costs. Operating margin increased 10 basis points to 8.9%, and net income from continuing operations improved 22%.
Taking a closer look at the top line, you can clearly see that adidas and Reebok enjoy very robust momentum. This is not only the case in one or two markets. This is success on a very broad-based basis. With the exception of Russia/CIS, the combined revenues of adidas and Reebok grew in all regions. The performance of brand adidas was particularly strong in Western Europe, China, and Middle East, Africa, and Asia, where sales grew at double-digit rates each. Another standout is the 9% top-line growth in North America, reflecting the initial success of our brand-building initiatives in this all-important market. At Reebok, double-digit revenue improvements were recorded in Western Europe, Latin America, China, and Japan. Even in Russia/CIS, Reebok was able to increase its top line, underlying the strength of the brand in this market.
What to me is even more pleasing than the top-line development is that we were able to translate this brand momentum into strong bottom-line growth despite significantly stepping up our marketing spend. We had already told you that in 2015, we will go out loud and bold with our brands, and we did. For adidas, we started the global rollout of a series of films called Sport 15. Across all channels, we will be telling brand stories that motivate and inspiring young athletes. In addition, we launched the There Will Be Haters football campaign. With some of our best endorsement partners, we have been creating a fundamentally different tone of voice to anything adidas Football has ever delivered. Both campaigns have been resonating extremely well with consumers around the globe. In addition, Reebok's Be More Human campaign has also been a huge success.
The campaign, which aired for the first time during the NFL Super Bowl pre-game coverage, celebrates and supports everyday athletes who embody the fitness lifestyle, a fast-growing niche that Reebok owns. As athletes realize that Reebok shares their passion, understands their motivation, and supports them in their ultimate goal to be more human, the feedback we have received has exceeded our expectations so far. The success of these campaigns and the strong momentum of our brands are highly correlated with each other. This clearly shows that our brand-building investments are paying off and that the brand's first mindset of our new strategy is the right approach to drive top-line growth and sustainably increase the group's profitability. Let me now turn to the categories. Our running business performed very strongly during the first three months of the year.
While both footwear and apparel sales improved double digits, the overall sales increase of 13% was definitely driven by the introduction of the Ultraboost, the best running shoe of all time. Response from runners was just as great as the media attention we received and the post-launch support the product got in our own stores and in the shops of our key retail partners. In many locations, including some of our e-com outlets, the shoe sold out after only a few days. Once you get into the shoe, you don't want to get out of it. That's definitely how I feel. That's apparently how many of you felt during your store visit at our Investor Day, and that's how the runners feel out there. That's why we are still in the early stages of the success story of our Boost franchise.
Our football business declined 7% in the first quarter. This decline, however, was largely related to a surge in World Cup-related apparel sales last year, as we had already launched our federation kits in the first quarter of 2014. In contrast, footwear revenues were up 16%, reflecting strong sales of our totally new F50 as well as of the redesigned Predator and 11Pro boots, which are all featured in our successful There Will Be Haters campaign. From a regional perspective, we saw strong momentum for the category as a whole in Western Europe as well as in North America, with revenues in the latter growing at a double-digit rate. We also enjoyed great momentum in training, where sales increased 8% with double-digit growth rates in Greater China, Latin America, and Middle East, Africa, and Asia.
The recent trend shows that we are up for a new period of sustained growth in the category and are reasserting our leadership in the space. A great example is the new Stella Sport offering, which is resonating extremely well with consumers and retailers. In addition, double-digit increase in training apparel is clear evidence that focusing on this part of the business is also paying off. Basketball sales increased 1% in the first quarter, driven by increases in apparel. Let me make one thing clear, ladies and gentlemen, in basketball, 2015 is not so much about the pure sales growth. It's more about increasing brand desire. From a brand-building perspective, we had an outstanding quarter with an unparalleled presence during the 2015 NBA All-Star game in New York City, one of our six key cities in the new strategic business plan.
During this weekend in February, adidas showcased a strong portfolio of assets with players like John Wall, Kyle Lowry, Jeff Teague, Damian Lillard, and Tim Duncan. With Andrew Wiggins, who was not only voted Most Valuable Player of the Rising Stars Challenge, but was also just recently elected Rookie of the Year, we have another strong asset on our lines. On the product side, we launched the first Damian Lillard signature shoe to complete our three key signature lines around Derrick Rose and John Wall. While sales of the D Rose suffered from Derrick's temporary injury, sell-throughs for the adidas D Lillard 1, as well as the adidas J Wall 1, were very promising. Additionally, we have decided not to extend our long-term partnership with the NBA. While the NBA has been a great partner, the partnership didn't help us to build our brand with our consumers.
To make adidas Basketball stronger than ever before, from now on, we will be placing a much higher emphasis on footwear. To achieve this, we now have a new team in place based in the U.S., which will take a lead role when it comes to design, future, and brand communication. Focusing on building our brand and connecting with the target consumer will be the ultimate catalyst to get the young U.S. athlete to wear adidas Basketball footwear and for the long-term success of this category. In the lifestyle sector, we also got off to a great start into the year. The adidas Superstar quickly became the shoe of the season. The global launch of the Supercolor and the introduction of the Superstar silhouette in 50 different colorways in cooperation with Pharrell Williams has brought the franchise to new levels.
Sales and sell-through spiked across all channels around the globe, creating halo effects far beyond the product itself. Moreover, at the launch of the Yeezy Boost, our first shoe developed in collaboration with Kanye West, long queues formed in front of stores. Let's not forget the success of the newly launched Tubular and the latest version of the ZX Flux. All of this drove an impressive 29% sales increase at adidas Originals, with strong double-digit increases in all markets except Russia. adidas NEO also continues to enjoy great momentum in the marketplace. Revenues in the first quarter grew 18%, driven by double-digit growth in North America, Greater China, Latin America, and Middle East, Africa, and Asia, as well as continued strength in Western Europe.
With its Now is Everything campaign, NEO has again delivered a blueprint for connecting with consumers and inviting them to become part of the NEO lifestyle. Supported by Selena Gomez, the campaign has delivered huge engagement levels and activation among the target group. Let me now move to Reebok, where the positive trends from the prior year continued during the first quarter of 2015. Reebok has seen growth through the eighth consecutive quarter, clear testimony that the brand is resonating well with the fit generation. With the exception of North America, where Reebok is undergoing a strategic shift of its own retail distribution, closing some of its factory outlets, the brand grew across all markets.
Of particular note is certainly the fact that Reebok grew at double-digit rates in Western Europe and Latin America and was even above the prior year levels in Russia and CIS, despite the challenging market conditions. From a category perspective, Reebok's growth is deriving exactly from those categories where the brand's future will lie. Training and running, as well as the several studio activities, together with ongoing robust momentum in classics, are setting the brand up for a bright future. A valid proof point which shows that Reebok is also improving its point of sale execution is the latest ZPump launch. In March, Reebok took over the malls and in-store execution with the introduction of the ZPump Fusion, featuring its successful pump technology in innovative footwear models. Sell-through data at our main retail partners in our Reebok FitHubs and online was well above expectations.
At TaylorMade-adidas Golf, while currency-neutral sales were down 9% due to the sales declines in metalwoods and irons, the first quarter performance reflects a sequential improvement compared to previous quarters. It still masks, however, the positive response we have seen to our first major product launches in over a year. The R15 and the AeroBurner drivers were not only successful on the world's professional golf tours, with several wins at major tournaments over the last couple of weeks. The strong reception of the product also helped to lift our metalwoods market share compared to the year-end level. The launch of the AeroBurner irons in March had similar effects on our irons market share towards the end of the quarter.
In addition, with the introduction of our Boost technology into the golf category, as well as the launch of the first fully asymmetrical golf shoe, we have captured a lot of attention among golfers. There is no doubt that our strong product lineup, as well as our cleaner market environment, puts us up for growth going forward. We have learned our lesson from the past. We will definitely not sacrifice the long-term success of our TaylorMade-adidas Golf business for short-term goals. Instead, we will very closely monitor the industry and only slowly increase the volumes we are bringing to the market.
While our first quarter performance definitely reflects an improvement in the overall state of our business compared to the prior year, it also shows you that every decision we make and every product we launch needs to be for the long-term benefit of our business. The opening of the first standalone TaylorMade-adidas Golf outlet store at the end of the first quarter plays an important role here, as it will elevate the off-price golf shopping experience and make our closeouts and the off-season product business much more efficient. This comes on top of the extensive restructuring program we undertook last year and which involved the closure of one of our facilities in the U.S. and a 15% reduction in the global TaylorMade-adidas Golf workforce. Not only is the retail environment in golf much healthier today, so is our organization.
Building on this significantly better foundation and thanks to the promising product launches, TaylorMade-adidas Golf is back on track for growth and profitability this year. With that, ladies and gentlemen, let me now hand you over to Robin to take a closer look at the individual market performance and walk you through the financials.
Great. Thanks very much, Herbert, and good afternoon, ladies and gentlemen. As Herbert has just elaborated on, we enjoyed a great start to 2015 with strong growth at both adidas and Reebok. Throughout my comments today, I will therefore focus on how our business developed from a market perspective and how this impacted our financial results throughout the various P&L items. As you heard during our Investor Day back in March, from Q1 2015 onwards, you will see us report the combined adidas and Reebok businesses for the following seven markets. That's Western Europe, North America, Greater China, Russia CIS, Latin America, Japan, and MEAA, which includes most of the markets in Asia, the Middle East, and Africa. Other businesses, which includes the businesses of TaylorMade-adidas Golf, Reebok-CCM Hockey, and other centrally managed businesses, will continue to be reported separately.
Let's start with Western Europe, where the strong finish from 2014 continued right into the first quarter of 2015. Revenues in Western Europe grew 11% due to double-digit sales growth at both adidas and Reebok. From a market perspective, the main contributors to the increase were the U.K., Italy, France, and Spain, where revenues grew at double-digit rates each. There's absolutely no question that our brands are seeing great broad-based momentum across the entire marketplace, which goes back to the investments we've been making in Western Europe lately. The fact that Western Europe has become one organization under one leadership team, together with a strong product assortment and improved point-of-sale execution, will ensure we continue to dominate the marketplace in the future. Sales in North America turned positive in the first quarter, up 7% versus the prior year.
Growth was due to a robust performance at adidas, where revenues accelerated in the first quarter, up 9% versus the prior year, driven by double-digit sales increases in the football category, as well as at adidas Originals and adidas NEO. Reebok revenues in North America decreased 3%, and this development mainly reflects our commitment to further streamlining the brand's factory outlet business, which resulted in a 5% reduction of Reebok's North American store base during the first quarter. We talked a lot about North America during our Investor Day and about the investments we'll be making to ensure we gain relevance and significantly increase our visibility in that marketplace. The first quarter of 2015 proves that this is not a vision but clear action taking place already.
Not only have we increased our sales and marketing working budget by more than 50%, we have also further invested in sales administration and sales forces. We're up 30% during the first quarter. Ladies and gentlemen, while these investments weigh on North America's profitability in the short term, there's absolutely no question they build the foundation for increased brand desire and ultimately also for profitability improvements in the long run. We already expect profitability in North America to turn positive during the second quarter. In Greater China, sales increased a strong 21% as a result of double-digit sales growth at adidas and Reebok, where revenues grew 21% and 58% respectively.
While the increase at adidas was mainly due to strong double-digit sales increases in the training and running categories, as well as at adidas Originals and adidas NEO, Reebok sales were driven by a significant increase in classics, where revenues more than doubled. This outstanding performance during the first quarter clearly shows that our brands are at the forefront of the market and resonating extremely well with the Chinese consumer. China is and will remain one of our important growth markets in the future. Our long-term goal for this market is very clear. We want to become number one in China by 2020. First quarter performance gives us every confidence that we have everything it takes to achieve this goal. Moving over to Russia CIS, we enjoyed a solid first quarter despite depressed consumer sentiment and economic activity, which negatively impacted private consumption and growth during this quarter.
Sales were slightly below the prior year, down 3%, as Reebok sales increased at mid-single digit rates and adidas sales declined. As expected, the devaluation of the Russian ruble had a significant negative impact on the segment's gross margin development, which resulted in a gross margin decline of 9.9 percentage points to 51.3%. It's important to mention, however, that this decline would have been even higher without the positive effects from a more favorable pricing mix, as prices in Russia CIS have been increased at double-digit rates versus the prior year period. In order to safeguard the segment's profitability in 2015, operating expenses will be an area of particular importance throughout the year, with a firm goal to strongly improve the operating expense ratio.
In this regard, the agile nature of our business model will give us the operational flexibility we need to have in order to win the profitability challenge. During the first quarter, operating expenses were down 36% due to significant decline in operating overhead costs, which also reflects the reduction in the number of stores as we reduced our footprint by close to 30 stores net. Revenues in Latin America increased 6%, despite tough comparisons with the prior year period, where revenues had been up 19%, supported by the sell into the World Cup of World Cup-related products. adidas revenues this quarter grew 5%, driven by double-digit increases in the training, running, and basketball categories, as well as at adidas Originals. Reebok revenues were up 16%, mainly due to double-digit sales increases in the running and training categories.
With the exception of Brazil, where revenues were below the prior year level, all major markets grew compared to the prior year. In particular, Argentina and Peru, each with double-digit sales increases, supported the overall top-line development. In Japan, revenues rose 7%, with both adidas and Reebok above the prior year level. adidas revenues grew 3%, supported by double-digit sales increases in the running category, as well as at adidas Originals. Reebok revenues, although very small, increased 80%, driven by classics, where sales more than doubled. In the first quarter of 2015, sales in MEAA increased 10%, mainly due to a 10% sales growth at adidas, which was driven in turn by double-digit sales increases in the training and running categories, as well as at adidas Originals. Reebok revenues in MEAA increased 3%, mainly as a result of double-digit sales increases in classics.
From a market perspective, the main contributors to the increase were the United Arab Emirates, South Korea, and Turkey. Revenues of our other businesses were down 1% in the first quarter, as sales growth at Reebok-CCM Hockey and other centrally managed businesses was more than offset by a 9% decline at TaylorMade-adidas Golf. This development was mainly due to sales decreases in the metalwoods and irons categories, as Herbert has already mentioned in detail. On the positive side of things is clearly the development of the segmental operating margin within other businesses, which improved by 4.9 percentage points. This was mainly due to lower operating expenses as a percentage of sales, driven by lower marketing expenses at TaylorMade-adidas Golf. Turning now to our group performance and starting with the P&L.
In the first quarter of 2015, the gross margin of the adidas Group remained stable at 49.2%, a strong achievement considering the significant pressure we faced from currencies and input costs during the quarter. This was a direct consequence of the positive effects from a more favorable pricing and product mix, in particular at the adidas and Reebok brands. Other operating expenses increased 15% to EUR 1.7 billion, mainly as a result of the increase in marketing working budget expenditure, as well as higher operating overhead costs. It is important to mention that the increase in marketing reflects our commitment to increase our brand investment, targeting even stronger brand visibility and desirability towards our consumers. However, percentage of sales, other operating expenses decreased 0.8 percentage points to 41.6%, reflecting strong operational leverage.
Now, as you saw earlier today, in light of the change in the composition of the group's reportable segments and the associated cash-generating units, respectively, we determined that goodwill impairment is required in the first quarter of 2015. As a result, goodwill impairment losses for the first three months ending March 31, 2015, amounted to EUR 18 million, comprising impairment losses of EUR 15 million within the segment Latin America and EUR 3 million within the segment Russia CIS. Goodwill for these groups of cash-generating units is now completely impaired. The impairment losses were non-cash in nature and do not affect the group's liquidity position. Excluding goodwill impairment losses, the group's operating profit increased 18% to EUR 363 million in the first quarter of 2015. This translates into an operating margin of 8.9%. That's up 10 basis points versus the prior year.
The development was driven by our strong top-line expansion and the operating leverage we achieved. Turning briefly to the non-operating items of the P&L, net financial expenses decreased strongly to EUR 0 million versus the EUR 13 million in the prior year. This development was due to positive exchange rate variances during the first quarter, as well as the non-recurrence of negative exchange rate effects from the prior year. The first quarter tax rate increased 90 basis points to 29.8%, mainly due to a less favorable earnings mix. This, however, is in line with our guidance for a full-year tax rate at a level of around 29.5%. Net income from continuing operations, excluding goodwill impairment losses, increased 22% to EUR 255 million, versus EUR 209 million in the prior year.
This translates into diluted earnings per share from continuing operations, excluding goodwill impairment losses, of EUR 1.24, up 27% compared to the prior year. Now, looking specifically at the retail part of our business, revenues increased 14% to EUR 895 million, on top of a 22% increase in the prior year period. This increase was driven by strong double-digit growth at adidas and high single-digit growth at Reebok. Concept stores, factory outlets, and concession corners were all up versus the prior year. Comparable store sales were up a solid 4% during the first quarter, with growth across most regions and all store types. By brand, adidas comp store sales grew 5%, while Reebok comp store sales were down 2%. Our e-commerce business continued to grow at strong double-digit rates with sales up 56%. Retail gross margin decreased slightly by 10 basis points to 59.9%.
The positive effect from a more favorable product and pricing mix was more than offset by the devaluation of the Russian ruble. The operating margin for retail operations was up 280 basis points to 16.0%, leveraging lower operating expenses as a percentage of sales. In terms of our store development, at the end of the first quarter, we operated 2,895 stores, a net decrease of 18 stores versus 2,913 at the end of 2014. Of the total number of stores, 1,604 were adidas, 436 were Reebok branded. In addition, the adidas Group, as part of the adidas and Reebok owned retail activities, operated 855 factory outlets. During the first quarter, we opened 49 new stores and closed 67 stores, while 23 stores were remodeled. Looking at the full year, we will continue to rigorously manage our store base.
We currently anticipate a net decrease of our store base of around 60 adidas and Reebok stores in 2015. We plan to open around 210 new stores, depending on the availability of desired locations, and approximately 270 stores will be closed over the course of the year, primarily in Russia, CIS. Moving on to the balance sheet. Operating working capital as a percentage of sales increased slightly by 30 basis points to 21.9%. This was mainly due to the increase in accounts receivable from continuing operations, which was in turn largely driven by currency movements. Inventories from continuing operations remained stable in the first quarter of 2015, reflecting our strong focus on inventory management. In terms of our capital structure, we ended the quarter with net borrowings of EUR 542 million, an increase of EUR 288 million versus the last year.
This development is mainly a result of the utilization of cash for the share buyback program, as Herbert has already mentioned. As a result, the ratio of net borrowings to EBITDA amounts to 0.4 versus 0.2 in 2014. Finally, our equity ratio remains at a strong level of 46.7% at the end of the first quarter, compared to 48.8% in the prior year. To wrap up, ladies and gentlemen, I am pleased we got off to the starting blocks well in 2015. While our strong first quarter results are testimony to our improved top and bottom-line performance, even more importantly, we have further increased our long-term orientated brand-building investments. As a consequence, we are very optimistic about our outlook for the remainder of the year, and we reconfirm our full-year guidance for 2015.
However, we remain vigilant and acknowledge the fact that while we had a great start to the year, we need to bear in mind that most of the year is still ahead of us, and we will also be facing tougher comparisons from the prior year World Cup-related sales during the second and third quarter. With this in mind, let me hand back to Herbert, who will give you more details on what to expect from the next quarter.
Thank you, Robin. Ladies and gentlemen, the strong first quarter underlines that our strategy to increase brand desire with our consumers already starting to pay off. Let me also make clear that elevating brand desirability is not a sprint, it's a marathon. Therefore, we will, of course, continue to inspire young athletes with cutting-edge innovation and focused marketing campaigns to tell our brand stories. On the marketing side, to build on the success of the "Take It" campaign, we launched the next TV spot called "Takers" during the NCAA Men's Basketball National Championship game. Within the space of just around three weeks, the second part of our Sport 15 campaign has already over 27 million views on YouTube. A clear proof point that our new marketing campaign is again resonating extremely well with our consumers.
While our investments in marketing are certainly one of the key initiatives to increase brand desire, another critical step is to significantly increase our visibility on the field of play, and particularly in U.S. sports. Last year, we were excited to sign four of the top six NBA draft picks, among them the first draft pick, Andrew Wiggins. In his first season, Andrew has played 82 games and scored 17 points per game. He was the MVP of the Rising Stars Challenge during the NBA All-Star Game in N.Y., and just last week, he was honored as the NBA Rookie of the Year. What a great success. Similar to basketball, we have also brought back the adidas brand to other U.S. sports.
During this year's NFL Scouting Combine, the most important pre-draft event in U.S. sports, the adidas brand was not only the most talked about brand, owning over 70% of all social media conversations, we also signed top prospects in American football. Last week, during the first round of the 2015 NFL draft, six young adidas athletes were selected. Among others, Kevin White, who will play for the Chicago Bears, Trae Waynes, joining the Minnesota Vikings, and DeVante Parker, now with the Miami Dolphins. Those players will be the foundation for our elevated presence in American football. On the apparel side, we have launched the Uncontrol Yourself campaign for our new spring-summer 2015 ClimaChill product range.
The campaign represents an evolution of ClimaChill with the new and [the Valiant] black training shirt, which is not only sleek in design and aesthetics, but also at the forefront of active cooling technology within the sporting goods industry. Featuring international athletes such as football star Gareth Bale or basketball player Jeremy Lin, the campaign will include above and below the line digital PR activations across the globe. Our new strategic plan is all about Creating the New. Rest assured, we will continuously bring newness into our brands, categories, and franchises. In tennis, only a few days ago, we introduced a new Roland-Garros collection by Y-3. The collection combines Y-3's bold aesthetic with the breakthrough advances of adidas performance technology. It will debut at Roland-Garros this May, worn by two of the world's leading tennis players, Jo-Wilfried Tsonga and Ana Ivanovic.
Combining innovations with cutting-edge design elements is certainly an area where we will be focusing on even more in the future. In football, we have seen positive trends, especially on the footwear side, supported by the There Will Be Haters campaign. Later in 2015, we will introduce a radical revolution by bringing two completely new franchises into our portfolio. These new football franchises will focus on the two most important types of football players, the playmaker and the game-changer. We will not only go after the athletes on the pitch, but also after the kids that are playing on the streets and in the cages. Additionally, as we come closer to the finish of the current season, I'm already looking forward to the next one, as we welcome Manchester United and Juventus Turin to the adidas family. Stay tuned for many new exciting products and stories.
On the lifestyle side of things, the relaunch of the iconic Superstar shoe, the hype around Yeezy Boost, and the ongoing success around the Stan Smith, just to name a few highlights, have all resulted in a fantastic start to the year. For the remainder of the year, we will continue to build on our four strong franchises to further amplify brand desire among lifestyle consumers. For example, since yesterday, young kids have the possibility to design and create their very own customized ZX Flux shoe with a unique Star Wars look through our ZX Flux app. The Star Wars art graphic gallery will be constantly updated with fresh official images, especially towards the start of the highly anticipated movie at the end of this year. At Reebok, the success around the new ZPump Fusion running shoe has clearly exceeded our own high expectations. We will not stop there.
We will use our successful partnership with Finish Line to further roll out the ZPump franchise into additional stores, ensuring premium presentation throughout the entire year. In addition, Reebok also signed NFL athlete J.J. Watt, who is a fitness fanatic, to endorse the ZPump franchise. Our strategic collaborations with CrossFit, Spartan Race, and Les Mills and the UFC will also see great product launches over the next months, such as the Nano 5.0, which is ready for the upcoming CrossFit Games, as well as Reebok's first UFC-related product range, including fight uniforms and fan gear. After a long winter, the golf season has finally started with the most important months to come in the second and the third quarter, where we expect momentum at TaylorMade-adidas Golf to pick up.
To that purpose, our product pipeline is full of new innovations, such as the new AeroBurner family, consisting of AeroBurner metalwoods, mini drivers, irons, and golf balls. All of them are made for speed and more distance. On the footwear side, we have introduced the first asymmetrical golf shoe, the adipower Boost, to reflect the radically different needs of each foot during a swing. Using biomechanics, we found significant differences in the forces placed on each foot during the swing and designed the shoes to perform optimally for both right and left-handed players. They are as different from each other as they are from every other pair of golf shoes in the world. Before I come to the end, I would like to highlight a new cooperation which we have recently kicked off.
As you know, Creating the New will change the way we work with our numerous partners, athletes, consumers, and communities around the globe. This is open source. We want to open up ourselves and invite all of them to co-create the future together with us. One of the first outcomes is our new running app, adidas Go, which we have developed in cooperation with Spotify. adidas Go is the first running app that uses iPhone's accelerometer to instantly match a runner's favorite music to their workout. adidas Go calculates the user's stride rate to automatically identify and play tracks with matching beats per minute from Spotify's extensive music library. This gives runners a unique and intuitive way to improve their running experience with perfect music to match their workout. Ladies and gentlemen, all of this shows you that our business is in great shape.
Our product pipeline is full for the upcoming months, Brand activation will continue as the year progresses. These are just a few of the reasons why we have every confidence in the performance of our business for the remainder of 2015 and beyond. With that, let me thank you for your attention. Now, Robin and I are happy to take all your questions.
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. Once again, ladies and gentlemen, please press star 1 to ask a telephone question. We will pause now for just a moment to allow everybody to signal. Our first question today now comes from Louise Singlehurst of Morgan Stanley. Please go ahead. Your line is open.
Hi. Good afternoon, gentlemen. A couple of quick questions from me, please. I wonder if you can just talk about the marketing costs and the lumpiness that we should expect throughout the year. Clearly, there'll be a little bit more, I guess, for Q3 and the back-to-school season, particularly as we look at the U.S. market. Then secondly, if we could just contextualize Boost, because obviously that's growing phenomenally well. If you can give us an idea of the volumes as a total, what that actually means in terms of volumes for the total footwear. Thank you.
Okay, Louise. It's obviously going to be our marketing spend is different to the timing to the spend last year, which was largely related to the event, the World Cup. I can't call out a particular lumpy quarter because, as Herbert said, we're investing heavily into the brands, and that investment has already started in the first quarter. I think you can expect that in the first half of this year, we're going to be significantly higher than we were in the first half of last year. It evens out a bit in the third and fourth quarter because obviously that's when we really started last year to increase our marketing spend, as we announced, I think, in our third quarter of last year. The difference would be mainly in the first two quarters.
To the second question, Louise, as we have already said, we will build further out our Boost technology. We are calculating around 12 million-13 million pairs of Boost shoes in 2015, compared with around close to 7 million in 2014.
Thank you. Just one final question on the marketing. Can you just talk to us a little bit about the category spend, where you're allocating the funds, the order of priority? I know he's spoken a lot again about the U.S. and how much of it is going onto digital. Thank you.
It's nothing new digital for us. Obviously, it's been a significant part of our expenditure over the last couple of years, I think we've shown a great response from the consumers in digital. As we called it out last year, the key investment need for us is in our more mature markets, and that's predominantly America and a bit in Western Europe. That's for the categories that are relevant in those markets. Herbert mentioned in his speech the heavy investment into American sports such as NFL and with the players there, I think you should expect us to be more and more relevant for the American consumer, and that's where we're putting our marketing.
Great. Thank you.
Thank you. Our next question today now comes from Adrian Rott of Deutsche Bank. Please go ahead.
Hi, everyone. Two questions please for me. Firstly, on group gross margins. You've mentioned the pressures from FX and FOB costs. Yet the group gross margin has remained stable. I was just wondering whether you could comment on how big the pressure was from either side on the group level and what you've done specifically to mitigate this, i.e., in terms of mix and pricing architecture, what has happened there? Secondly, on the U.S. As you've mentioned, the marketing working budget for the U.S. is up sharply, and we've seen that the operating margin for the region is down some four percentage points year-over-year. I was just wondering whether you could talk about the scope that you see for gross margin improvement here, i.e., how can mix improve going forward? What are the terms of collaborations with Dick's and so on? That'd be helpful.
Thank you.
Okay. Thank you very much for that. I think that's why I put it into my prepared comments, that this is a really positive development. If you think, even though our gross margin is at the same level as last year, that's significant if you think of the input price increases that we had, which were around about 1.4 percentage points. Obviously we've had significant FX pricing pressure as well, particularly if you think of the impacts in Russia with the ruble. What we've done is we've been able to enjoy better product and category mix and also price increases. We called it out in Russia that we put up prices double digit, but that has not just been limited to Russia. The improvement in product mix and pricing of something over 1.4 percentage points.
In terms of the U.S. and our profitability there, I think we've already mentioned that we expect to be profitable again in the U.S. already from the second quarter. Here, as I think Herbert mentioned in his comments, this is a marathon for us. It's not a sprint. We're investing in improving the recognition and attractiveness of our brands in this important market. We're doing so for the long-term benefit there in growing the profitability, hopefully sustainably. It's not just about significant improvements one quarter over another. It's a longer-term impact.
Can I just follow up on the S quickly? I think the long-term investment probably relates to the marketing spend. If you think about, if you roll out those collaborations with Dick's and so on, can we expect the mix to improve as well, so that gross margins, which are currently 12 percentage points below group, edge up a little bit over time?
Firstly, you have to recognize that the American market, and this is the same with our competitors also, the profitability at the gross margin level is significantly lower than what it is in Europe and in Asia. That has to do with the makeup of the retail environment in America, but also the sort of product that the consumer buys there. Everything that we've been undertaking over the last few months is also to fundamentally improve the prices that we can achieve at the point of sale, and that obviously also will improve our gross margin. Yes, expect improvements to come there as well. All I'm saying is, don't expect them to be seen in just one quarter to the next.
All right. Thank you.
Thanks.
Thank you. Our next question now comes from Jörg Philipp Frey of Warburg Research. Please go ahead. Your line is open.
Hello, gentlemen. Probably, first of all, you've now managed quite a good gross margin development. What measures are you actually taking right now already to counterbalance the expected sourcing price increases due to negative currency effects you could see in 2016? That's the first one. The second one, while we saw now 480 basis points margin increase in other businesses despite a weak gross margin. Well, with your new product launches, I expect you can see gross margin improvements for the remainder of the year. Can you give us a bit more color when we could see gross margin improvement in TaylorMade, particularly? That's it for the start.
Okay. I'll start with the second question. No, I'm not able to give you any more color on that. Herbert has called it out also. The business should be improving. We are releasing product that we believe will be able to be sold through without discounting. That improves our margins. There was, in the first quarter, I know, in other business, there was some discounting in the CCM Hockey margins. That presumably goes away during the rest of this year, so look to an improvement there. Your first question was about 2016, it's still too early to give a definitive answer to what the situation is going to be for us in 2016.
The dollar/euro and the dollar with other currencies also is such that our hedge rate that we will achieve will obviously be inferior to what we've enjoyed in 2014 and definitely what we enjoy in 2015. The sort of actions that we will be taking are just the sort of actions that we've already shown here also in the first quarter and what we've indeed done in previous years. That is relying on the product mix. It is the category mix. It is also re-engineering product where we can. Yes, it also means putting up prices where we believe that is acceptable in the market. Don't forget this general question about sourcing costs, in particular point of the dollar. That is something that everybody in the industry suffers. It's not something just for this group.
No, definitely. I just wanted to make sure that you are going to prepare for that. To add something on that one, do you see some potential to have some savings from lower raw material prices in general to just compensate you a bit in 2016? Would you say that we should not have high hopes on that side?
We definitely have hopes, and definitely it is true that certain of the raw materials are probably going to be more attractively priced in the later seasons. However, it's not just the raw materials that is the issue for us here. Indeed, the majority of the pressures at the moment in terms of input prices coming through labor costs, that's something that I suspect, if you think of the countries where we are having our product manufactured, those sort of pressures are likely to continue.
Yeah. Thanks a lot.
Thank you.
You're welcome.
Our next question now comes from Fred Speirs of UBS. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. A couple from me, please. Firstly, on the wholesale business in Greater China. Obviously, very strong performance in Q1. Just wondered if you could give us a sense, please, on how the wholesale sales growth split out between new doors being added by your partners versus higher orders from the existing stores, and also just a comment around recent sellout performance there. Secondly, on retail comps. I think you shared these were on 4% overall. Just wondering what those were ex Russia. And then also if we look at the Reebok comps, if you could make a comment around how the Fit Hub specifically are doing. Thank you.
Fred, let me start with the first question on Greater China. As I have said several times in the past, we are very happy with our business in China. We started
Of the crisis in 2009 to really clean up our store base inventory. I can tell you, just having meetings with the two biggest accounts, Belle and YY, that our sell-throughs are the best within the industry, and therefore our inventory is the lowest, and therefore, the profitability with us is the best. They have seen our collections for fall/winter and spring/summer 2016. I definitely do believe that we will see the positive continuation of our China business. Of course, not at 20% plus rate as we have seen it in the first quarter, which was a little bit helped by the Chinese New Year. The overall positive trend in China will continue.
The third question to the Reebok FitHub comps, let me tell you that we just have started to build up the Reebok FitHubs, and they are definitely helping us to transport the image of the new Reebok as a fitness brand into the consumers. Therefore, as in all the retail developments, you have to build up first. We see already some very good results. On the other hand, we also have some stores where we still have to educate the consumer. The best success we definitely see where we combine the Reebok FitHub stores with already a CrossFit gym or close by a gym.
The comp store sales growth, excluding Russia CIS, was a positive seven.
Thank you.
Thank you. Our next question today comes from Ashley Wallace of Bank of America. Please go ahead.
Hi. Thanks for taking my call. I just have a follow-up question on the comp store sales, particularly if you could give us some indication of what the comps were in Russia and how they trended over the quarter and maybe what you've seen into the second quarter. Just on TaylorMade, given Q1 was quite weak, down 9%, can you maybe give us a bit of an update on why you're so confident in your double-digit growth for the full year? Just lastly, on your hedging rate U.S. dollar/euro in 2016, if you already have that set in place.
Okay, Ashley. Yes, certainly. I just answered in the last question from Fred. Excluding CIS Russia, the comp store sales growth is up 7%. Actually, the Russian comp store decline is minus seven. I can't tell you how it developed between January and March. I don't have the quarterly figure. The third question on the hedging rate, as I answered a minute ago, no, I can't give you a hedging rate at the moment. We're hedged for 2015, probably around the 134. I say that's the U.S. dollar/euro, anyway. I think the actions that I mentioned in the previous question that we'll take to mitigate the deterioration in the U.S. dollar/euro, we'll have to wait and see how they pan out, and I'll give you more guidance on that when we get closer to the start of 2016.
Ashley, on your second question, TMAG. Obviously, we are just at the start of the season, and the next months will be important for the business. We are quite confident because we bring a lot of new products into the market, as I have told you during my speech. We have seen already good success with our R15 product and the AeroBurner. We will continue to extend the AeroBurner family, bringing in new footwear. By the way, the footwear, the Boost golf shoe is definitely the shoe in the industry at the moment. There are still challenges out in the market, but we are definitely confident that with a cleaner market, with our new product introduction, and with the status which TaylorMade Golf has in the industry and with the consumers, that we will see growth in 2016.
Okay, thank you.
Thank you. Our next question now comes from Zuzanna Pusz of Berenberg. Please go ahead.
Good afternoon, everyone. A few questions on my side, please. On gross margin, have you seen any positive hedging impact this quarter? If so, could you please quantify it? Maybe on pricing. As you've mentioned before, you have implemented price increases, not only in Russia. I mean, in what other regions have you seen the biggest price increases that are worth mentioning? Maybe finally, on Reebok-CCM Hockey. It seems like the decrease of your gross margin and other businesses segment is mainly due to lower product margins in Reebok-CCM Hockey. I was wondering, is the discounting, is it kind of market or brand specific? Thank you.
Okay, Zuzanna. Thank you very much. I'll give these a go. Firstly, in terms of hedging, we've actually got a slight positive on the dollar/euro hedging. Our rate at the moment is about 134 compared to last year about 133. However, we had negatives on all the other pairs. They were the overriding point. It's a minimal basis point impact in any case in the total development in the first quarter. Unlikely to be significant in the full year. In terms of price increases I mentioned outside of Russia. It's not so much by countries, more by product class and by categories. I can't call out a specific one, but obviously, we've been improving the technologies in running, which we've launched a lot of product with Boost technology at the end of the moment.
We've been able to generate higher price points from, et cetera, just as an example. The third point, yes, I confirm your summary. CCM Hockey was the main reason for the decline of the gross margin in the other businesses, but it's a very small part of our overall group, obviously. I suspect here, this is more because of the seasonality of that business, so it's more market-driven rather than specific to CCM Hockey.
Thank you.
Thank you. Our next question now comes from John Guy of MainFirst. Please go ahead.
Yes. Good afternoon, gentlemen. Thanks for taking my questions. Robin, just a question for you, please, just to start with again, going on to the gross margin. I think you said it earlier on in the call that the input cost pressures were about 140 basis points, and then product and pricing gave you a positive 140, hence the stable. Within that, could you maybe just talk a little bit about You just talked about FX, but could you talk around any markdown activity, any specific impact that you had there? Also with regards to Russia CIS, you've very kindly given us the like-for-like ex-Russia and in Russia. In terms of the space contribution, and you talked around primarily seeing a net closure now running through in the course of 2015. What is your full year anticipation in terms of sales contribution from space in the Russia region?
Then, I guess finally, just sticking with Russia, you talked around raising prices to offset the ruble depreciation. Clearly, we've seen the ruble-dollar move now from around 69 back to 52. Other companies have talked around implementing double-digit price increases, only now to see their product looking pretty expensive. What are you budgeting for Russia like for like rolling through into 2016? Or is that a little bit too early? Thanks very much.
Okay, John. Thanks very much. That is probably a bit too early. I'll let Herbert answer the Russian questions in any case. Just your first question about the margin and discounting. No, I can't give you any particular favor for any particular discounting in this quarter. Obviously, there is always some discounting. There's nothing of any significance that flew through our gross margin development in the first quarter.
Coming to the second question, John, in Russia, we have said that on a constant basis, we were minus seven. In terms of net selling space at the end of the year, I can't give you a concrete figure because we are obviously watching the market quite closely. We have said that we have already started to take action closing stores, as Robin said, and we will further continue how the consumer behavior will continue. You know that it's still shaky in Russia because the economy is not improving. The ruble is now getting stronger, which obviously is a good thing, but we are still careful with the market. In terms of price increases, luckily, we saw that within the introduction of Spring-Summer '15 products, we increased some new products in prices, which we brought to the market.
As I said, luckily, we see that the higher-priced product, the new innovative products, are selling really well, better than the old ones, which had already been in the market. This obviously encouraged us to go further. We're watching also the market here very closely. A 10% increase over the course of the year is likely, but we take it product by product, so you cannot say that in general, we're increasing all the prices by 10% or increasing one category by 10%. It really depends on the product innovations and the product introductions into the market.
Thanks very much. That's very clear.
Thank you. Our next question comes from Christopher Svezia of Susquehanna Financial Group. Please go ahead.
Good afternoon, everyone. Just one broad question for me. Just for North America, 7% currency neutral growth, even with TaylorMade down is nice to see. I just want to focus on the guidance, low to mid single digit currency neutral growth, even with TaylorMade accelerating probably double-digit growth in Q2 and Q3, that would probably assume Reebok and Adi grow at a much lower rate, maybe at the lower end of that low to mid single digit level. Certainly lower than some of the peers out there. Can you maybe just discuss why that would be the case, just given the investments and the magnitude of the investments that you're making in that marketplace? Is there something, Herbert, you're seeing in the backlogs?
I know you don't talk specifically the backlogs, something you're seeing further down the pipeline for Fall 2015 into Spring 2016 that gives you that confidence. Maybe just talk a little bit more about that growth rate.
Yeah. Thanks, Chris, for the question because this gives me the opportunity to clarify maybe a misunderstanding. In the 7% currency neutral sales growth, TaylorMade is not included. This is for adidas and Reebok, and adidas was up 9% currency neutral, and Reebok was down by 3% currency neutral. I guess this clarifies it. Going forward, I definitely see For adidas and for Reebok growth path is forward. As we have said, this is not a sprint, this is a marathon because this is the most competitive market for us. We will build brand desirability by more investing into our brand campaigns, as we have told you six months ago, as we started to do in the first quarter already. We see the first positive signs.
I don't think now in terms of sales, it is more what we get back on feedback from the consumers for our campaigns, be it the Haters campaign in football, be it the Sport 15 campaign or the Be More Human. This is building brand desirability. Of course, we want to see the growth as well, and we are happy that with adidas, we started fairly good in the first quarter. As I said, America is definitely not a sprint, it's a marathon for us. I am definitely looking forward positively, also having in mind the backlogs which we have for the two main brands already.
Chris, does this answer your question? Chris is already gone.
This caller may have stepped away. We'll move to our next question. This is from Jonathan Komp of Baird. Please go ahead.
Great. Thank you very much. If I could just ask one more question on the North American results. On the 7% currency-neutral revenue growth, are you willing to break that out by pricing versus units?
Jonathan, no, we don't do that. I think overall, we have significantly increased the transparency you're getting for these markets now with our new segmented reporting. I'm sure there are areas that we can further improve, but we do not have volume and unit for you at the moment.
Okay, understood. One other question then, and forgive me if you've given this already, but, in terms of the currency impact for 2015, I'm wondering if you could just give the updated view overall on revenue, gross margin, and profits as you sit today.
Sure, Jonathan. Basically, we confirmed our guidance, and that is that our top line will grow mid-single digit. That's currency neutral, obviously. That our gross margin will be between 47.5 and 48.5, and that we will have an operating margin between 6.5 and 7%, and we'll grow our net income from continuing operations, excluding any goodwill impairment, will grow at a rate between 7 and 10%.
Okay. You haven't given any specifics on the currency impacts?
No. The only thing we say with currency neutral is obviously the top line. The rest obviously has to be generated in euros, and obviously there's some positive tailwinds, but there's also headwinds if you look at Russia. That's our guidance, including everything we know about currency.
Okay, understood. Thanks for taking my questions.
You're welcome.
Thank you very much. I think that was our last question. Operator, Holly, do we have another question?
We have no further questions, sir. I'd like to hand the call back to you now for any additional or closing remarks. Thank you.
Okay. Thank you very much, Holly, and thanks very much, Herbert and Robin. Ladies and gentlemen, that completes our conference call for today. As you know, our next reporting day will be August six for our Q2 numbers. Let me remind you that our IR tutorials workshops will actually premiere very soon. On June 24th, our general managers of the football, running, and Originals business will provide you with more details on their business and their strategies for the next couple of years. The formal invitation to that workshop will follow soon, and we're, of course, very much looking forward to welcoming many of you here in Herzogenaurach for this event. Of course, we will webcast this event as well. If you have any questions on that workshop or on our releases today, please feel free to contact any member of our 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 now conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.