Asics Corp. reported a loss in the six months ended June 30 as sales dropped 21.5 percent. In North America, sales were down 27.1 percent but online sales grew 151 percent in the region.

Subtracting first-quarter results from six-month results shows global sales in the second quarter declined 30.4 percent to ¥61,556 million. The operating loss in the second quarter was ¥2,837 million against earnings of ¥3,156 million a year ago. The net loss was ¥6,023 million against net income of ¥1,139 million.

In the North America region, sales were down 26.5 percent in the second quarter to ¥12,748 million. The operating loss was reduced to ¥556 million from an operating loss of ¥629 million in the prior year.

In a statement from Asics North America, which includes the United States, Canada and Mexico, the company said significant growth in the digital online business was seen in the second quarter for both their key retail partners and Asics owned e-commerce. During the quarter, the brand saw triple-digit online business growth year-over-year in the U.S. and Canada. Simultaneously, key accounts expanded their online business with Asics, and Asics increased its presence in the digital marketplace month-over-month.

While the digital growth was significant, the brand felt the impact of the global pandemic across both wholesale and retail with year-over-year declines in these channels.

“During these challenging times, we remain optimistic seeing growth in our digital channels and as we look to the recovery of retail,” said Koichiro Kodama, Asics North America CEO. “I am very proud of how our team has navigated our business forward. Further, as a brand founded on the principle of ‘Sound Mind, Sound Body,’ we remain focused on delivering best in class performance products to our loyal consumers at a time where movement is more important than ever.”

Companywide, net sales in the six months decreased 21.5 percent to ¥146,897 million as a result of factors such as temporary closures of own retail stores and its wholesale customers’ retail stores due to the impact of COVID-19.

Gross profit decreased 20.7 percent to ¥70,583 million due to the impact of the decrease in net sales. The operating loss was ¥3,873 million due to the impact of the decrease in net sales, as well as due to an increase in sales commissions, etc.

Asics’ ordinary loss was ¥5,982 million due to the sales decline, as well as due mainly to the recording of foreign exchange loss resulting from the impact of the depreciation of currencies in countries with emerging economies.

The net loss was ¥6,266 million due mainly to the recording of loss on temporary closing of stores despite the recording of income tax refunds at a subsidiary in the U.S.

All major regions were impacted by the impact of the spread of COVID-19 in the six months.

In the Americas region, net sales in the half decreased 27.1 percent to ¥28,414 million. Segment loss was ¥2,134 million.

Japanese region net sales decreased 24.0 percent to ¥47,004 million. Segment loss was ¥1,509 million due to the impact of the decrease in net sales, as well as due to increased costs of own retail stores.

In the European region, net sales decreased 20.5 percent to ¥37,094 million. Segment income decreased 29.5 percent to ¥737 million.

Net sales in the Greater China region decreased 0.7 percent to ¥18,525 million. Segment income decreased 32.6 percent to ¥2,133 million.

In its smaller regions, Oceanian sales increased 1.4 percent to ¥8,587 million due to strong sales of the Performance Running category and the Sports Style category. Segment income increased 4.8 percent to ¥1,087 million.

In the Southeast and South Asian regions, sales decreased 34.0 percent to ¥3,663 million due to the impact of the spread of COVID-19. Segment loss was ¥71 million.

In Other regions, sales decreased 34.8 percent to ¥11,993 million due to the impact of the spread of COVID-19 in South Korea and South America. Segment loss was ¥317 million.

In its statement, Asics said that due to the global spread of COVID-19, Asics Group “continued to face a challenging situation, such as cancellation or scale-down of various competitions, temporary closures of own retail stores and the slump in personal consumption. However, there were signs of recovery in some regions where economic activities were resumed.”

Asics said it implemented the following initiatives to deal with the spread of COVID-19.

  • Digital — E-commerce sales increased worldwide. Sales increased by 151 percent in North America, 139 percent in Europe, and 103 percent in consolidated level. In order to strengthen the digital field, the Group developed worldwide virtual races using ASICS Runkeeper and promoted MetaRacer by digital marketing such as social networking services when it was launched.
  • SG&A expenses controls — The Group reduced SG&A expenses globally, including marketing expenses, in order to improve profitability to offset the impact of lower sales due to the spread of COVID-19. Due in part to the transfer some expenses of own retail stores to extraordinary losses, S.G.& A. expenses were reduced by ¥6.2 billion compared to the last year, by ¥20.5 billion compared to the plan.
  • Inventory management — In response to the result of Q2 and second half sales environment, the Group has enhanced its inventory management, such as by canceling some production orders. The Group also changed the schedule of new product launches in the second half to optimize sales opportunities. In addition, the Group grasped the status of inventories and returns in wholesale due to the temporary closures of stores and promptly allocated inventories for e-commerce sales. Through these measures, the Group responded to the dramatic changes in the sales and distribution structure at each sales company.

For the full year, Asics expects revenues of ¥300,000 million, representing a decline of 20.6 percent. Operating income is expected to show a loss of ¥14,000 million, ordinary income is expected to show a loss of ¥17,000 million, and the net loss is expected to be ¥22,000 million. Asics withdrew its guidance when it reported first-quarter results.

Photo courtesy Asics