Asics reported a small loss in the first quarter as sales sunk 13.5 percent. In the North American region, first-quarter sales were down 20.0 percent at currency-neutral rates.

Net sales decreased 13.5 percent (a decrease of 10.7 percent at currency-neutral rates) to ¥85.3 billion ($793 mm), mainly due to weak sales of the Performance Running category and the Onitsuka Tiger category resulting from the impact of the spread of COVID-19.

Operating loss was ¥882 million ($8.2 mm) due to the decrease in net sales as well as due to an increase in advertising expenses. Operating earnings were ¥6.19 billion ($58 mm) a  year ago.

Ordinary loss was ¥3.14 billion ($29 mm) due to the sales decline and higher advertising expenses, as well as due mainly to the recording of foreign exchange loss resulting from the impact of the depreciation of currencies in countries with emerging economies such as the Russian ruble and the Brazilian real.

The net loss came to ¥243 million ($2.3 mm) against earnings of ¥4.37 billion a year ago. The reduced loss versus the ordinary loss was mainly due to the recording of income tax refunds at its U.S. subsidiary in the U.S.

Asics said in its comments, “This period is off to a difficult start due to the cooling down of personal consumption as a result of factors such as marathon events being suspended or a reduction in their scale, temporary closing of own retail stores and regulations on going out, all because of the global spread of the novel coronavirus disease (COVID-19). However, in response to this situation, the Asics Group implemented the following initiatives.

“China significantly felt the impact of the spread of COVID-19 from the middle of January, but our subsidiary in China focused on strengthening digital sales as well as the development and production structure within China for fall and winter in order to speed up early market introduction of products planned and developed in China. Approximately 60 percent of its own retail stores were temporarily closed, but the company is on a recovery track due to the reopening of almost all of its own retail stores in late March, etc.

“The temporary closing of own retail stores in various countries is continuing, but in the digital sector, the Group’s e-commerce net sales were strong, with year-on-year growth of approximately 60 percent. Furthermore, in North America, many marathon events were being suspended, but the Group promoted virtual races that utilize Asics Runkeeper. As a result of this initiative, the number of people newly registered with Asics Runkeeper increased by double or more year on year.

“In marketing, the Group flexibly responded depending on the situation, such as reducing marketing investment. In response to the reduction in the scale of the Tokyo Marathon, the Group reviewed the marketing method from the conventional method, such as focusing more on digital marketing. Furthermore, in this situation where sales at stores are difficult, the Company is strengthening digital media investments, and expanding e-commerce sales.”

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Regional Performance

Japanese region
Net sales decreased 8.3 percent to ¥30,325 million ($282 mm) due to the impact of the spread of COVID-19 from March. Segment income decreased 51.8 percent to ¥1,075 million ($10 mm) due to the effect of the sales decline, as well as due to increased costs of own retail stores.

North American region
Net sales decreased 21.1 percent (a decrease of 20.0 percent at currency-neutral rates) to ¥15,666 million ($146 mm), mainly due to the impact of the spread of COVID-19 from March. Segment loss was ¥1,578 million ($14.7 mm).

European region
Net sales decreased 12.1 percent (a decrease of 8.4 percent at currency-neutral rates) to ¥21,709 million ($202 mm) due to a sudden slowdown from the latter half of March resulting from COVID-19, despite steady sales from the beginning of the year. Segment income decreased 39.9 percent (a decrease of 37.4 percent at currency-neutral rates) to ¥499 million ($4.6 mm) mainly due to the sales decline.

Greater China region
Net sales decreased 17.2 percent (a decrease of 14.1 percent at currency-neutral rates) to ¥6,931 million ($64 mm), mainly due to the impact of the spread of COVID-19. Segment income decreased 65.0 percent (a decrease of 64.0 percent at currency-neutral rates) to ¥426 million mainly due to the effect of decreased sales.

Oceanian region
Net sales increased 4.9 percent (an increase of 14.5 percent at currency-neutral rates) to ¥4,742 million mainly due to strong sales of the Performance Running category. Segment income decreased 13.7 percent (a decrease of 5.8 percent at currency-neutral rates) to ¥542 million ($4 mm) mainly due to the impact of the deteriorated cost of sales ratio related to the purchase exchange rates.

Southeast and South Asian regions
Net sales decreased 8.4 percent (a decrease of 5.8 percent at currency-neutral rates) to ¥2,749 million ($26 mm), mainly due to the impact of COVID-19. Segment income decreased 52.7 percent (a decrease of 50.6 percent at currency-neutral rates) to ¥203 million ($1.9 mm) mainly due to the effect of the sales decline.

Other regions
Net sales decreased 29.0 percent (a decrease of 19.9 percent at currency-neutral rates) to ¥7,324 million ($68 mm), mainly due to impact of the spread of COVID-19 in Korea and South America. Segment loss was ¥92 million ($860,000).

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Category Performance

Performance Running
Net sales decreased 11.5 percent (a decrease of 7.8 percent at currency-neutral rates) to ¥38,271 million ($356 mm). Operating income decreased 87.0 percent (a decrease of 83.8 percent at currency-neutral rates) to ¥239 million ($2.2 mm).

Core Performance Sports
Net sales decreased 9.3 percent (a decrease of 7.0 percent at currency-neutral rates) to ¥11,439 million ($106 mm). Operating income decreased 46.1 percent (a decrease of 45.2 percent at currency-neutral rates) to ¥357 million ($3.3 mm).

Sports Style
Net sales decreased 17.9 percent (a decrease of 13.9 percent at currency-neutral rates) to ¥7,386 million. Operating loss was ¥221 million.

Apparel and Equipment
Net sales decreased 22.8 percent (a decrease of 21.0 percent at currency-neutral rates) to ¥8,273 million ($68.7 mm). An operating income/loss improved due to the amount of deficit decreased resulting from an improved cost of sales ratio and a decreased selling, general and administrative cost.

Onitsuka Tiger
Net sales decreased 29.5 percent (a decrease of 27.3 percent at currency-neutral rates) to ¥7,597 million ($70.6 mm). Operating income decreased 88.9 percent (a decrease of 88.3 percent at currency-neutral rates) to ¥228 million ($2.1 mm).

Photo courtesy Asics