Asics Corp. Q1 Impacted By Weakness In Europe And Americas

Asics Corp. reported sales in the first quarter declined modestly in the first quarter due to declines in Europe and the Americas region.

In the Americas region, sales declined 3.1 in the first quarter on a currency-neutral basis “due to market forces and additional retail partner store closings,” according to a statement from Asics America Group. Sales in the U.S dropped 9.3 percent.

Overall sales in the Americas region decreased 5.3 percent to ¥29.9 billion ($263 mm) The decline reflected weak sales in the U.S. that offset strong sales in Brazil. Segment income increased 141.1 percent (an increase of 146.7 percent on a currency-neutral basis) to ¥2.57 billion ($22.5 mm) mainly due to an improved cost of sales ratio.

Overall, Asics Corp revenues sunk 4.0 percent to ¥113.05 billion ($990.1 mm) and were off 1.3 percent on a currency-neutral basis.

Domestic net sales in Japan decreased 3.6 percent to ¥30.8 billion ($270 mm) mainly due to weak sales of sportswear, despite steady sales of running shoes. Overseas sales decreased 4.2 percent to ¥82.2 billion ($720 mm) due to weak sales in European region as well as the effect of the strong yen, despite strong sales of running shoes in East Asia and steady sales in Oceania/Southeast and South Asian regions. Onitsuka Tiger shoes also performed favorably, mainly in Oceania/Southeast and South Asia and East Asia. Sales in local currencies decreased 0.4 percent in local currencies.

Gross profit decreased 1.3 percent to ¥51.5 billion ($451 mm) due partly to the effect of the foreign exchange rates despite an improved cost of sales ratio.

SG&A expenses increased 4.1 percent to ¥38.3 billion ($335 mm) due to increased costs related to rollout of the various digital strategies. As a result, operating income decreased 14.1 percent to ¥13.3 million ($116 mm). Ordinary income increased 7.1 percent to ¥14.0 billion ($123 mm) due to foreign exchange gains recorded in the latest quarter compared to foreign exchange losses posted in the corresponding period of the previous fiscal year. Profit attributable to owners of parent increased 0.4 percent to ¥9.36 billion ($82 mm).

In the Japanese region, sales decreased 2.6 percent to ¥35.4 billion ($310 mm), segment income increased 1.3 percent to ¥3.6 billion ($31.5 mm) driven by continuous efforts to improve profitability.

European region sales decreased 12.9 percent (a decrease of 7.5 percent on a currency-neutral basis) to ¥27.7 billion ($243 mm), due to the effect of changes in the retail market and intensifying competition, in addition to the effect of foreign exchange rates. Segment income fell 43.0 percent (a decrease of 39.4 percent on a currency-neutral basis) to ¥2.3 billion ($20 mm) mainly due to the effect of declined sales.

Oceanian/Southeast and South Asian regions Sales increased 11.3 percent (a gain of 11.5 percent on a currency-neutral basis) to ¥8.1 billion ($71 mm), due to continuing steady sales of running shoes and the strong sales of Onitsuka Tiger shoes. Segment income added 3.6 percent (an increase of 3.7 percent on a currency-neutral basis) to ¥1.56 billion ($13.7 mm) due to the effect of increased sales, despite increased cost of purchase arising from fluctuation of exchange rates.

East Asian region sales increased 13.1 percent (an increase of 17.6 percent on a currency-neutral basis) to ¥13.9 billion ($122 mm), due to the continuing strong sales of running shoes and Onitsuka Tiger shoes, particularly at the subsidiary in China. Segment income increased 1.5 percent (an increase of 7.5 percent on a currency-neutral basis) to ¥2.6 billion ($23 mm) due to the effect of increased sales.

Other business sales decreased 13.1 percent (a decrease of 4.8 percent on a currency-neutral basis) to ¥2.65 billion ($23 mm), due to weak sales of outdoor shoes under the Haglöfs brand and the effect of foreign exchange rates. Segment income was ¥69 million ($604,000) against a loss of ¥47 million.

For the full year, Asics said it expects sales to increase 5.2 percent to ¥420 billion. Operating earnings are projected to slump 13.6 percent to ¥22 billion. Net earnings are expected to drop 16.5 percent to ¥13 billion.

Photo courtesy Asics