Asics significantly lowered its outlook for the year after reporting a steep decline in profits in the nine months on a 4.7 percent revenue decline. The Americas region showed a loss in the nine months on a 17.8 percent sales drop.

In the nine months ended September 30, 2018, consolidated net sales decreased 4.7 percent (a decrease of 5.6 percent using the previous fiscal year’s foreign exchange rate) to ¥295.7 billion. Domestic net sales decreased 2.5 percent to ¥77.1 billion mainly due to reduction of the lines of sportswear products with low profit margins despite strong sales of Onitsuka Tiger shoes. Overseas sales decreased 5.5 percent (a decrease of 6.6 percent using the previous fiscal year’s foreign exchange rate) to ¥218.6 billion 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 mainly due to lower sales despite an improved cost of sales ratio. Selling, general and administrative expenses increased 5.4 percent to ¥125.2 billion 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. Ordinary income decreased 47.0 percent to ¥13.6 billion due to foreign exchange losses recorded in the nine months ended September 30, 2018 compared to foreign exchange gains posted in the corresponding period of the previous fiscal year. Profit attributable to owners of parent decreased 47.5 percent to ¥8.3 billion.

Business results by reportable segments were as follows.

  • Japanese region Sales decreased 2.6 percent to ¥89.96 billion, due to reduction of the lines of sportswear products with low profit margins despite strong sales of Onitsuka Tiger shoes. Segment income decreased 34.8 percent to ¥4.23 billion, due to the effect of the decline in sales.
  • American region Sales decreased 17.8 percent (a decrease of 16.1 percent using the previous fiscal year’s foreign exchange rate) to ¥67.7 billion, due to weak sales in the U.S. Segment loss amounted to ¥958 million due to the effect of the decline in sales despite an improved cost of sales ratio.
  • European region Sales increased 0.6 percent (a decrease of 4.1 percent using the previous fiscal year’s foreign exchange rate) to ¥81.6 billion, due to almost same scale sales of running shoes as well as previous year. Segment income decreased 33.5 percent (a decrease of 36.6 percent using the previous fiscal year’s foreign exchange rate) to ¥4.83 billion mainly due to increased costs in line with the expansion of own retail stores.
  • Oceanian/Southeast and South Asian regions Sales decreased 5.2 percent (a decrease of 4.1 percent using the previous fiscal year’s foreign exchange rate) to ¥20.0 billion, due to weak sales in Australia despite strong sales in Southeast and South Asian regions. Segment income decreased 13.7 percent (a decrease of 12.7 percent using the previous fiscal year’s foreign exchange rate) to ¥2.95 billion due to the effect of the decline in sales despite an improved cost of sales ratio.
  • East Asian region Sales increased 6.2 percent (an increase of 4.3 percent using the previous fiscal year’s foreign exchange rate) to ¥41.6 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 3.1 percent (a decrease of 4.6 percent using the previous fiscal year’s foreign exchange rate) to ¥5.38 billion, due to vigorous advertising investment in China and the effect of lower profit in South Korea.
  • Other business Sales increased 3.6 percent (an increase of 5.5 percent using the previous fiscal year’s foreign exchange rate) to ¥7.23 billion, due to strong sales of outdoor wear and other items under the HAGLÖFS brand. Segment income was ¥250 million.

Looking ahead, Asics now expects sales for the year to reach ¥385 billion, down 3.8 percent year-over-year; operating income of ¥2 billion, down 38.7 percent; ordinary income of ¥10 billion, off 54.0 percent; and break-even net profits.

Previously, guidance called for full-year sales of ¥425 billion, up 6.2 percent; operating income of ¥20 billion, ahead 2.2 percent; ordinary income of ¥19.5 million, down 10.3 percent; and net income of ¥12 billion, down 7.5 percent.

Image courtesy Asics