Asics’ Q4 Sales In North America Show Modest Decline

Asics Corp.’s sales in the North American region in the fourth quarter slid 5.5 percent to ¥18.8 billion ($171 mm) from ¥19.9 billion a year ago. The operating loss in the region was reduced to ¥2.12 billion ($19 mm) from ¥2.95 billion.

The figures were attained by subtracting out nine-month figures from full-year results.

For the full-year, sales in the North American region decreased 0.2 percent (an increase of 1.2 percent on a currency-neutral basis) to ¥78.96 billion ($720 mm) despite strong sales of the Performance Running category and the Core Performance Sports category. The segment loss amounted to ¥5.97 billion ($692 mm) mainly due to strategic marketing investment. In the prior-year, the segment loss was ¥4.18 billion.

For the quarter, companywide sales inched up 1.0 percent to ¥91.9 billion ( $837 mm). The operating loss was cut to ¥2.04 billion ($18.4 mm) from ¥4.9 billion. Net income came to ¥159 million ($1.5 mm) against a net loss was ¥28.6 billion.

For the year, companywide net sales decreased 2.2 percent (an increase of 1.6 percent on a currency-neutral basis) to ¥378.05 billion ($3.44 bn), mainly due to weak sales of the Apparel and Equipment category, in addition to the effect of foreign exchange rates despite strong sales of the Performance Running category and the Onitsuka Tiger category on a local currency basis.

Gross profit on a companywide basis in the year decreased 0.5 percent to ¥179.7 billion, mainly due to the effect of foreign exchange rates on account of the strong yen, despite an improved cost of sales ratio.

Selling, general and administrative expenses decreased 0.6 percent to ¥169.0 billion due to the effects of business restructuring carried out at the end of the previous fiscal year despite strategic marketing investment. As a result, operating income increased 1.1 percent to ¥10.6 billion ($97 mm).

Ordinary income increased 15.3 percent to ¥10.1 billion ($92 mm), mainly due to an increase in non-operating income and a significant decrease in foreign exchange losses.

Net profit in the year was ¥7.1 billion ($65 mm), mainly due to the recording of deferred tax assets due to tax consolidation in Japan applied from the next fiscal year. In the prior year, the net loss came to ¥20.3 billion.

By region for the year, sales in the Japanese region increased 2.3 percent to ¥120.95 billion due to strong shoe sales to overseas sales subsidiaries. Segment income increased 21.3 percent to ¥4.9 billion due to an improved cost of sales ratio. In business results by region measured by the same basis as the previous fiscal year, segment income increased 39.3 percent to ¥5.62 billion.

In the North American region, sales decreased 0.2 percent (an increase of 1.2 percent on a currency-neutral basis) to ¥78.96 billion due to strong sales of the Performance Running category and the Core Performance Sports category. The segment loss amounted to ¥5.97 billion mainly due to strategic marketing investment. In business results by region measured by the same basis as the previous fiscal year, segment loss was ¥4.18 billion.

In the European region, sales decreased 9.5 percent (a decrease of 3.7 percent on a currency-neutral basis) to ¥95.61 billion mainly due to weak sales of the Performance Running category and the Sports Style category. Segment income decreased 43.8 percent (a decrease of 40.2 percent on a currency-neutral basis) to ¥2.87 billion. Segment income measured by the same basis as the previous fiscal year decreased 22.1 percent (a decrease of 17.0 percent on a currency-neutral basis) to ¥3.97 billion.

Greater China region sales decreased 0.6 percent (an increase of 4.3 percent on a currency-neutral basis) to ¥39.45 billion mainly due to the effect of foreign exchange rates, despite strong sales of the Performance Running category and the Onitsuka Tiger category on a local currency basis. Segment income decreased 13.7 percent (a decrease of 9.3 percent on a currency-neutral basis) to ¥5.4 billion mainly due to increased selling, general and administrative expenses resulting from starting full-scale headquarters function in Shanghai from this fiscal year and strategic marketing investment. Segment income measured by the same basis as the previous fiscal year decreased 13.4 percent (a decrease of 9.0 percent on a currency-neutral basis) to ¥5.42 billion.

In the Oceanian region, sales increased 4.6 percent (an increase of 13.5 percent if applying the previous fiscal year’s foreign exchange rate) to ¥18.4 billion mainly due to strong sales of the Performance Running category. Segment income decreased 27.9 percent (a decrease of 21.8 percent if applying the previous fiscal year’s foreign exchange rate) to ¥1.94 billion mainly due to a deteriorated cost of sales ratio. Segment income measured by the same basis as the previous fiscal year decreased 13.5 percent (a decrease of 6.1 percent on a currency-neutral basis) to ¥2.34 billion.

In the Southeast and South Asian regions, net sales increased 18.8 percent (an increase of 21.2 percent if applying the previous fiscal year’s foreign exchange rate) to ¥11.3 billion mainly due to strong sales of the Performance Running category and the Onitsuka Tiger category. Segment income decreased 20.0 percent (a decrease of 18.0 percent on a currency-neutral basis) to ¥789 million mainly due to strategic marketing investment. Net sales in India maintained high growth of approximately 30 percent compared to the same period in the previous fiscal year, on a local currency basis. Segment income measured by the same basis as the previous fiscal year decreased 19.7 percent (a decrease of 17.7 percent on a currency-neutral basis) to ¥792 million.

In Other regions, net sales decreased 4.5 percent (an increase of 5.4 percent on a currency-neutral basis) to ¥36.31 billion mainly due to the effect of the foreign exchange rate, despite strong sales of the Performance Running category in South America and strong sales of the Onitsuka tiger category in Korea. Segment income amounted to ¥810 million, a significant improvement, reflecting the effect of structural reform conducted at the end of the previous fiscal year. In business results by region measured by the same basis as the previous fiscal year, segment income was ¥902 million.

For the current year, Asics expects revenues to reach ¥400 billion, up 5.8 percent; operating income to equal ¥9 billion, down 15.4 percent; ordinary income of ¥8 billion, off 20.8 percent; and net income of ¥4 billion, down 43.6 percent.

Photo courtesy Asics