Asics America Group, which includes the United States, Brazil and Canada, reported sales on a currency-neutral (C-N) basis rose 10.2 percent in its first quarter ended June 30. Operating profit and net income before taxes slightly rose 0.3 percent and 1.4 percent, respectively.
According to the financial statement from Asics Corp., sales in the Americas rose 26.7 percent to ¥21.87 billion ($222.4 mm). Operating income jumped 15.3 percent to ¥2.66 billion ($27.1 mm).
Asics said the smaller gain on a C-N basis despite the top-line growth was mainly due to an increase in advertising expenses supporting further growth later in 2013. This quarter sales increase on a C-N basis was largely driven by strong momentum in the running footwear category. Additional growth in “fast rising categories” such as tennis and Onitsuka Tiger brand also helped drive growth.
Asics America Group said it is on pace to show continued growth throughout 2013 and is on track to reach its billion dollars sales goal by 2015.
“In Q1, Asics America expanded its offerings with a new line of training products through a national advertising and integrated marketing campaign built around the concept of ‘Next,’” said Asics America Group President and CEO Kevin Wulff. “The entrance into this category demonstrates our commitment to evolve the brand by continuously offering innovative and relevant athletic performance products.”
Companywide, Asics Corp. reported sales rose 15.8 percent to ¥76.6 billion ($779.18 mm) from ¥66.1 billion. Operating income grew 2.4 percent to ¥8.52 billion ($86.7 mm). Net income jumped 33.4 percent to ¥6.58 billion ($66.9 mm).
Companywide, gross profit rose 15.7 percent to ¥34.3 million ($348.9 mm), mainly due to an increase in net sales. Selling, general and administrative expenses increased 20.9 percent to ¥25.76 billion ($262 mm), primarily due to increases in personnel expenses, advertising expenses and Korean subsidiaries’ commission paid to distributors.
In Japan, sales inched ahead 3.9 percent to ¥27.6 billion ($280.8 mm) but operating earnings slumped 34.0 percent to ¥980 million ($10 mm), mainly due to the strong sales of walking shoes and Onitsuka Tiger shoes accompanying the expansion of directly managed sales venues, in addition to the strong sales of running shoes.
Overseas sales increased 21.5 percent to ¥54.4 billion ($553.4 mm) due to the strong sales of running shoes in the Americas, Europe and other regions and the effect of foreign exchange rates.
In its Europe division, revenues were up 18.1 percent to ¥21.44 billion ($218.1 mm), and increased 3.1 percent on C-N basis, thanks to the strong sales of running shoes. Operating earnings were down 6.1 percent to ¥3.33 billion ($33.9 mm), and decreased 18.1 percent on C-N basis. The decline on C-N basis was mainly due to a rise in purchasing costs and an increase in selling, general and administrative expenses due to new openings of directly managed stores, etc., in spite of a decrease in advertising expenses.
In the Oceania region, sales were up 23.2 percent to ¥3.89 billion ($39.6 mm) and grew 8.6 percent on C-N basis. Operating profit reached ¥1.00 billion ($10.2 mm), a gain of 14.1 percent versus the year-ago period on a reported basis although only an increase of 0.7 percent on a C-N basis. The smaller C-N profit gain was mainly due to an increase in personnel expenses
The East Asia division saw sales jump 46.1 percent to ¥4.67 billion ($47.5 mm), and grew 22.6 percent C-N. Operating profits were down 10.4 percent to ¥223 million ($2.27 mm) and dropped 23.9 percent C-N due to the recording of commission paid to distributors as commission fee at the Korean subsidiary and an increase in personnel expenses and advertising expenses, etc., at the Chinese subsidiary.
In its Other Business segment, which includes the Haglöfs outdoor brand, revenues increased 17.5 percent to ¥2.55 billion ($25.9 mm) but decreased 1.6 percent on a C-N basis. Asics said in addition to the effect of foreign exchange rates, revenues benefited from “steady sales” of outdoor shoes that compensated for “weak sales of outdoor wear under the Haglöfs brand and other products.” The Other Business segment showed a loss of ¥176 million ($1.8 mm) against operating income of ¥25 million.
Asics forecast sales for the first half of its year ended March 31, 2014 is expected to grow 21.2 percent to ¥153.5 billion, operating income to increase 23.1 percent to ¥13.5 billion, and net income 29.0 percent to ¥7.5 billion. For the full year ended March 31, 2014, sales are expected to rise 21.1 percent to ¥315.0 billion; operating income is projected to rise 31.3 percent to ¥24.5 billion, and net income 5.3 percent to ¥14.5 billion.