Asics Corp.’s sales in the American region fell 26.6 percent in the first quarter on a reported basis and 23.3 percent on a currency-neutral basis, to ¥21.9 billion ($200 mm). The decline was attributed to “weak sales in the U.S.”
In the ended March 31, operating income in the American region tumbled 82.8 percent, or 82.0 percent on a currency-neutral basis, to ¥443 million ($4 mm). The erosion was blamed on the sales decline and came despite an improved cost of sales ratio.
Companywide, Asics reported sales were off 7.4 percent and down 9.4 percent on a currency-neutral basis, to ¥104.6 billion ($953 mm).
Gross profit decreased 3.2 percent to ¥49.9 billion ($485 mm), mainly due to lower sales despite an improved cost of sales ratio. As a percent of sales, gross margins improved to 47.6 percent against 45.6 percent.
SG&A expenses increased 7.9 percent to ¥41.3 billion ($376 mm) due to increased costs in line with the expansion of own retail stores. As a percent of sales, SG&A significantly increased to 39.5 percent from 33.9 percent.
As a result, operating income decreased 35.4 percent to ¥8.5 billion ($77 mm).
Ordinary income slumped 47.2 percent to ¥7.4 billion ($67 mm). Also impacting the bottom line were foreign exchange losses recorded in the latest quarter compared to foreign exchange gains posted in the year-ago period. Net profit dropped 43.2 percent to ¥5.3 billion ($48 mm).
In the company’s home market of Japan, sales decreased 7.0 percent to ¥32.9 billion ($262 mm), due to reduction of the lines of sportswear products with low profit margins. Segment income decreased 52.8 percent to ¥1.71 billion ($16 mm), due to the effect of the decline in sales.
European region sales increased 3.7 percent to ¥28.7 billion ($262 mm), due to steady sales in certain emerging-market countries. Currency-neutral sales were off 5.8 percent. Segment income increased 2.4 percent to ¥2.4 billion ($22 mm) and were down 7.0 percent, mainly due to increased costs in line with the expansion of own retail stores despite an improved cost of sales ratio.
Oceanian/Southeast and South Asian region sales slumped 6.3 percent and were down 7.3 percent currency-neutral to ¥7.6 billion ($300 mm). Weak sales in Australia offset strong sales in Southeast and South Asian regions. Segment income decreased 7.6 percent and off 8.5 percent currency-neutral to ¥1.45 billion ($13 mm) due to the effect of the decline in sales, despite an improved cost of sales ratio.
In the East Asian region, sales increased 5.8 percent and inched ahead 2.7 percent on a currency-neutral basis to ¥14.7 billion ($134 mm), due to strong sales of running shoes and Onitsuka Tiger shoes, particularly in China despite weak sales in South Korea. Segment income decreased 25.8 percent and were off 27.7 percent on a currency-neutral basis to ¥1.93 billion ($18 mm). The earnings decline was due to “vigorous advertising investment” in China and lower profits in South Korea.
In the company’s Other business segment, sales increased 12.6 percent and grew 7.2 percent on a currency-neutral basis to ¥2.98 billion ($27 mm), due to steady sales of outdoor wear and other items under the Haglöfs brand and the impact of the foreign exchange rate. Segment income was ¥197 million ($1.8 mm) against ¥69 million a year ago.
Asics kept the company’s guidance for the first half and year unchanged. For the first half, sales are expected to reach ¥205 billion, up 0.6 percent. Net income is expected to drop 65.8 percent to ¥4 billion. For the full year, sales are projected to reach ¥425 billion, up 6.2 percent, and net income is expected to reach ¥12 billion, down 7.5 percent.
Photo courtesy Asics