Asics Corp. reported an operating loss in its American region of ¥398 million ($3.5 mm) in the third quarter as sales declined 8.1 percent.
The loss compared with operating earnings of ¥782 million a year ago. Revenues reached ¥24.5 billion ($216.5 mm), down from ¥26.6 billion a year ago.
The figures were calculated by subtracting six-month results from nine-month figures.
The results did show an improving rate versus the 22.4 percent tumble the Americas region showed in the six months.
Overall, sales in the nine months in the American region decreased 17.8 percent (a decrease of 16.1 percent on a currency-neutral basis) to ¥67.7 billion ($598 mm), due to weak sales in the U.S. Segment loss amounted to ¥958 million ($8.5 mm) due to the effect of the decline in sales despite an improved cost of sales ratio. In the year-ago period, operating earnings were ¥4.33 billion.
Companywide, Asics slashed its earnings guidance for the year as it also saw a steep decline in profits in the Europe and a modest decline in Japan.
Overall sales in the quarter third dipped 3.4 percent to ¥102.9 billion ($909 mm). Operating profit was down 17.9 percent to ¥6.9 billion ($61 mm) while net income grew 18.3 percent to ¥4.87 billion ($43 mm).
In its home market of Japan, sales in the quarter were off 0.4 percent to ¥28.4 billion ($250.9 mm) while operating profits eased 7.6 percent to ¥1.87 billion ($16.5 mm).
In the European region, sales in the quarter were down 5.3 percent to ¥29.3 million ($258.9 mm). Operating profits tumbled 47.7 percent to ¥1.92 billion ($17.0 mm).
In the Oceania/Southeast and South Asian region, sales in the quarter were down 3.1 percent to ¥6.54 billion ($57.8 mm). Operating profits dropped 19.0 percent to ¥836 million ($7.4 mm).
In the East Asian region, sales in the quarter gained 5.3 percent to ¥14.82 billion ($130.9 mm). Operating earnings climbed 62.9 percent to ¥2.18 billion ($19.3 mm).
In the Other segment, which includes Haglöfs, sales in the quarter inched up 1.2 percent to ¥3.21 billion ($28.4 mm). Operating income was ahead 64.6 percent to ¥614 million ($5.4 mm).
For the nine months ended September 30, consolidated net sales decreased 4.7 percent (5.6 percent on a currency-neutral basis) to ¥295.7 billion $2.61 bn). Domestic net sales decreased 2.5 percent to ¥77.1 billion $681 mm) mainly due to reduction of the lines of sportswear products with low profit margins despite strong sales of Onitsuka Tiger. Overseas sales decreased 5.5 percent (or 6.6 percent on a currency-neutral basis) to ¥218.6 billion ($1.93 bn) mainly due to weak sales in the American region, despite strong sales of Onitsuka Tiger shoes in the East Asian region as well as in the Oceanian/Southeast and South Asian regions.
Gross profit decreased 1.9 percent to ¥140.6 billion ($1.24 bn) mainly due to lower sales despite an improved cost of sales ratio. SG&A expenses increased 5.4 percent to ¥125.2 billion ($1.11 bn) due to increased costs in line with the expansion of own retail stores.
As a result, operating income decreased 37.1 percent to ¥15.4 billion ($136.1 mm). Profit attributable to owners of parent decreased 47.5 percent to ¥8.3 billion ($73.3 mm). The decline also reflected foreign exchange losses recorded in the latest nine months compared to foreign exchange gains in the year-ago period.
Looking ahead, the updated outlook includes:
- Sales are now expected to reach ¥385 billion, down 3.8 percent year-over-year. Previously, full-year sales were expected to land at ¥425 billion, up 6.2 percent;
- Operating income is expected to reach ¥2 billion, down 38.7 percent. Previously, operating income was expected to be ¥20 billion, ahead 2.2 percent;
- Net income is now expected to show break-even profits against a profit of ¥13.0 billion in 2017. Net income had been expected to reach ¥12 billion, down 7.5 percent year over year.
Image courtesy Asics