Asics’ Q1 Earnings Drop On Weakness In The Americas And Japan

Asics reported net earnings fell 43.2 percent in the first quarter ended March 31. Sales were off 7.4 percent and down 9.4 percent on a currency-neutral basis.

Consolidated net sales decreased to ¥104.6 billion from ¥113.05 billion.

Domestic net sales decreased 7.1 percent to ¥28.6 billion, mainly due to reduction of the lines of sportswear products with low profit margins. Overseas sales decreased 7.6 percent (a decrease of 10.3 percent using the previous fiscal year’s foreign exchange rate) to ¥760 billion, mainly due to weak sales in the American region, despite strong sales of running shoes and Onitsuka Tiger shoes in the East Asian region and steady sales of Onitsuka Tiger shoes in the Oceanian/Southeast and South Asian regions.

Gross profit decreased 3.2 percent to ¥49.9 billion, mainly due to lower sales despite an improved cost of sales ratio. Selling, general and administrative expenses increased 7.9 percent to ¥41.3 billion due to increased costs in line with the expansion of own retail stores. As a result, operating income decreased 35.4 percent to ¥8.5 billion.

Ordinary income decreased 47.2 percent to ¥7.4 billion due to foreign exchange losses recorded in the first quarter ended March 31, compared to foreign exchange gains posted in the corresponding period of the previous fiscal year. Profit attributable to owners of parent dropped 43.2 percent to ¥5.3 billion.

In the Japanese region, sales decreased 7.0 percent to ¥32.9 billion due to reduction of the lines of sportswear products with low profit margins. Segment income decreased 52.8 percent to ¥1.71 billion, due to the effect of the decline in sales.

In the American region, sales decreased 26.6 percent (a decrease of 23.3 percent using the previous fiscal year’s foreign exchange rate) to ¥21.9 billion, due to weak sales in the U.S. Segment income fell 82.8 percent (a decrease of 82.0 percent using the previous fiscal year’s foreign exchange rate) to ¥443 million due to the effect of the decline in sales despite an improved cost of sales ratio.

European region wales increased 3.7 percent (a decrease of 5.8 percent using the previous fiscal year’s foreign exchange rate) to ¥28.7 billion, due to steady sales in certain emerging-market countries. Segment income increased 2.4 percent (a decrease of 7.0 percent using the previous fiscal year’s foreign exchange rate) to ¥2.4 billion, 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 decreased 6.3 percent (a decrease of 7.3 percent using the previous fiscal year’s foreign exchange rate) to ¥7.6 billion, due to weak sales in Australia despite strong sales in Southeast and South Asian regions. Segment income decreased 7.6 percent (a decrease of 8.5 percent using the previous fiscal year’s foreign exchange rate) to ¥1.45 billion 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 (an increase of 2.7 percent using the previous fiscal year’s foreign exchange rate) to ¥14.7 billion due to the strong sales of running shoes and Onitsuka Tiger shoes, particularly in China, despite the weak sales in South Korea. Segment income decreased 25.8 percent (a decrease of 27.7 percent using the previous fiscal year’s foreign exchange rate) to ¥1.93 billion, due to vigorous advertising investment in China and the effect of lower profit in South Korea.

In its Other business segment, sales increased 12.6 percent (an increase of 7.2 percent using the previous fiscal year’s foreign exchange rate) to ¥2.98 billion, due to steady sales of outdoor wear and other items under the Haglöfs brand and the effect of the foreign exchange rate. Segment income was ¥197 million.

Asics kept 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. Net income was ¥12 billion, down 7.5 percent.

Photo courtesy Asics