Asics Corp. has outlined goals that sees the Japanese performance footwear and apparel company returning to the lead in market share in the run specialty channel in North America by 2025, and a new focus on regional profitability.
Mitsuyuki Tominaga, who will take over as Asics’ president and COO in January 2024, delivered the company’s Mid-Term Plan 2026 that calls for the “transformation” of Asics into a “Global Integrated Enterprise,” or GIE. The presentation was made at the company’s ninth annual Investor Day, held this past week at its headquarters in Kobe, Japan,
“By further promoting global and digital, we will unify the whole Asics group and build a more organic category management system,” said Tominaga. “By executing this transformation to a GIE, we hope to accelerate the growth of Asics further.”
Three priorities drive GIE: Global Growth, Brand Experience/Value Enhancement and Operational Excellence.
- Global growth will be supported by “further strengthening collaboration between each category and each region,” said Tominaga, who, today, is Asics’ managing executive officer, chief digital officer and chief information officer.
- The value of Asics’ brand experience will be enhanced by “expanding direct customer touchpoints and communication through its direct-to-consumer omnichannel in the expansion of the running ecosystem,” added Tominaga.
- Operational efficiencies will be improved by technology, including improving the accuracy of data-driven demand planning and implementing global digital supply chain reforms to bolster profitability.
In North America, Asics’ targets under its Mid-Term Plan 2026 call for increasing sales to ¥78 billion by 2026, up from ¥67 billion expected for 2023. The growth represents a compound annual growth rate (CAGR) on a currency-neutral basis of around 5 percent.
Operating earnings in North America are expected to improve at a far greater rate, to 5.0 percent of sales in 2026 from 1.0 percent in 2023.
Based on the slides presented by Asics during its Investor Day, the theme under the 2016 plan for North America is “Completion of the reform in North America,” supported by a “Shift to a profitable structure through fundamental profit restructuring.” The company’s three priorities for the North America region include:
- No. 1 in running and tennis footwear
- Running: Achieve the No. 1 market share in running specialty footwear in 2025
- Tennis: Focus on specialty stores, sporting goods and team business
- Establish a global product creation company in Boston to promote quick product planning and development
- Improvement of profits through optimal channel mix
- Maximize profits for each channel through the effective execution of sales channel strategies
- Improve the quality of business with wholesale accounts
- Toward a premium brand for target customers
- Focus on high-value-added products
- Establish a Running Ecosystem and maximize lifetime value using OneAsics and digital technology
The 2026 plan for North America comes as Asics reappointed Koichiro Kodama as president and CEO for the region in mid-October. He was CEO of Asics North America between February 2019 and December 2020 and then became the managing executive officer based in Asics’ Japan headquarters. He replaces Richard Sullivan, who had led the North American business since October 2020.
In September, Asics named Tominaga as its next president and COO. Current president, CEO and COO Yasuhito Hirota will transition to the role of chairman and CEO at the start of 2024.
Asics’ North America region sales are up 16.1 percent in the first nine months of 2023, on top of gains of 22.2 percent in 2022 and 31.8 percent in 2021. Sales fell 17.2 percent in 2020 due to the pandemic and had fallen in the previous four straight years, including declines of 15 percent in 2018 and 17 percent in 2016.
Brooks surpassed Asics in market share in the run specialty channel around 2010, but lately, Hoka and On have increased competition in the run channel.
Mid-Term Plan 2026
Companywide, Asics forecasted growth from 7 percent to 10 percent over the next three years under its Mid-Term Plan 2026.
Operating income is expected to reach ¥80 billion or more, representing a ratio of around 12 percent. That compares to operating income expected to reach ¥52 billion, or 9.1 percent of sales, in 2023.
The new plan comes as Mid-Term Plan 2023, first announced in February 2021, has far exceeded targets as it nears its end. Sales are expected to reach ¥570 billion this year compared to a target of ¥435 billion under Mid-Term Plan 2023.
Operating income is projected to reach ¥53 billion this year compared to a target of ¥25 billion. Operating income is expected to reach 9.1 percent of sales, surpassing a goal of 6 percent or more.
Another key accomplishment under the Asics 2023 plan has been expanding its OneAsics membership to 9 million, up from a target of 5 million or more set under its Mid-Term Plan 2023 and 4.5 times higher than the membership count in 2019.
Asics also expects to reach its goal to reduce carbon emissions by 15 percent this year compared to 2015, as well as increase the percentage of female managers in the company to 38 percent, up from the 35 percent target in its 2003 plan.
“Under the Mid-Term Plan 2026, we will continue to focus on the category structure and further grow to achieve the number one profitability in the industry,” said Tominaga.
Profitability is expected to be aided by reductions in SG&A expense to 41 percent of sales by 2026 from 42.3 percent expected in 2023, but also by Asics’ transformation to a global integrated enterprise that will primarily be driven by improving cooperation between headquarters and regional offices.
Tominaga said Asics aims to “build a more organic category management system that unites the whole Asics group by strengthening cooperation between the head office and regional business companies. Regional CEOs will be placed directly under the COO, and, in particular, major regional CEOs will be asked to participate in global management through participation in important meetings, thereby further strengthening collaboration between categories and regions.”
The transformation to a global integrated enterprise structure also includes regional offices being responsible for expanding through activities other than product sales. Tominaga said, “Specifically, we will focus on expanding the running ecosystem and supply chain reform.”
Under the 2023 plan, Asics’ headquarters were responsible for management, product development and production, while regions were responsible for product sales.
The 2026 plan also calls for better leveraging of human resources, IT and data on a global basis. Tominaga said, “In these transformations, we will achieve more global and dynamic management.”
Category Growth Targets
Addressing growth among categories, Asics set a goal to become the number-one running brand in Japan, the U.S. and Europe by 2025.
In Europe, Asics estimated its market share in the run category at 25 percent in 2022. Its goal is to increase that share to 29 percent by 2026. In North America, it aims to increase market share in the run category to 25 percent by 2026, up from an estimated 9 percent in 2022. In Japan, Asics is seeking to expand its share to 33 percent from 26 percent in 2022. Asics has the biggest share in Australia, at an estimated 36 percent in 2022, with plans to increase that share to 38 percent by 2026.
“We will continue to maintain and increase our market share in Europe and Australia, where we currently have a high market share, and, above all, regain the number one position in the U.S.,” said Tominaga. Asics also aims to become the leading run brand in Southeast Asia and India.
Overall, Asics indicated its biggest run market is Europe, with performance running product sales of ¥85 billion in 2022; followed by North America, ¥83 billion; Greater China, ¥30 billion; Australia, ¥22 billion; Japan, ¥11 billion; Southeast Asia, ¥5 billion; and India, ¥2 billion.
Tominaga said, “In performance running, we will maximize the value of the runners’ experience by developing innovative products through the ‘C Project’ under the direct supervision of the CEO and expanding the running ecosystem through OneAsics, thereby increasing our market share and becoming the number one performance running footwear brand by 2025.”
The goal is for running footwear sales to reach ¥355 billion globally by 2026, up from an expected ¥287 billion in 2023, representing a CAGR of around 7 percent.
In other product categories, core performance sports (CPS) sales are expected to expand to ¥90 billion by 2026 against an expected ¥70 billion in 2023, representing a CAGR on a currency-neutral basis of around 10 percent.
“We will focus on tennis on a global basis, aiming to achieve the number one market share,” said Tominaga. The aim is to position tennis as “the second pillar of profit” for Asics after running. In the CPS category, Asics will also look to strengthen soccer initiatives in Japan and Australia while growing indoor sports (volleyball and basketball).
Asics also has big plans for Onitsuka Tiger as a “luxury lifestyle brand” with a goal set to surpass ¥100 billion in sales.
“Onitsuka Tiger has already established itself as a brand and has been generating high-profit margins,” said Tominaga. “While maintaining this high-profit margin, we will further accelerate growth in Japan, Greater China, South Korea, and Southeast Asia. We will also accelerate our growth in Europe.”
Under the new three-year growth plan, Onitsuka Tiger’s sales are expected to reach ¥80 billion by 2026 compared with ¥60 billion in 2023, representing a CAGR on a currency-neutral basis of around 10 percent.
The sportsstyle footwear category, represented by styles such as GEL-Quantum, GEL-Lyte and Vintage Tech, is expected to reach ¥80 billion in sales in 2026 compared with a ¥60 million forecast for the current year, presenting a CAGR on a currency-neutral basis of around 10 percent. The growth is expected to be boosted by improving connections to younger consumers and includes a planned entry into skateboarding.
Sales in the apparel and equipment (APEQ) category are expected to reach ¥40 billion in 2026 against ¥35 billion in 2023, representing a CAGR on a currency-neutral basis of about 5 percent.
Other regions outside North America prioritized for growth include Europe, which is expected to expand at a 5 percent CAGR on a currency-neutral basis to reach ¥168 billion in 2026. Growth is expected to be driven “by establishing an overwhelming number one brand position, especially in running and tennis, and by strengthening cooperation with acquired race registration companies and expanding the running ecosystem,” said Tominaga.
In Greater China, sales are expected to expand at a 17 percent CAGR on a currency-neutral basis under the new three-year plan to reach ¥120 billion in 2026. Tominaga said the gains are expected to be driven by both performance running and Onitsuka Tiger.
Indonesia, India, Korea and Latin America are designated as “high-growth” regions. Said Tominaga, “For India in particular, we plan to double sales from 2023 by promoting local production and opening our own stores for the first time.”
Branding Focus
Regarding brand initiatives, Tominaga said Asics plans to “increase the value of the brand experience by increasing direct contact with customers, deepening connections and providing high value-added products and services.”
Goals include increasing OneAsics membership from 10 million to 30 million by 2026. Asics plans to “strengthen OneAsics membership and the omnichannel whereby we communicate directly with customers over the next three years. At the same time, we will promote an optimal mix of DTC channels that can generate profit while firmly controlling operational costs, which will rise as we increase DTC.”
Overall, by 2026, wholesale is expected to account for 60 percent of global sales, with 20 percent each coming from retail stores and e-commerce.
Asics will also take advantage of what Tominaga believes is Asics’ ownership of the “number one running platform,” or running ecosystem, globally. Last year, Asics acquired the leading European race registration provider, Njuko, to join its other acquisitions of RunKeeper (training app), Race Roster (Canada and U.S. registration) and RegisterNow (Australia registration). Tominaga said, “We will firmly establish the value of not only our products but also our services.”
Finally, innovation will be a priority as part of its branding focus with plans to launch a new global product planning company in Boston in 2024 to strengthen product creation. Said Tominaga, “We will bring together R&D, planning, design and other functions to create a structure that can lead to product innovation across categories with a sense of speed.”
In 2018, Asics opened Asics Creation Studio, located at 125 Summer Street in Boston, as its East Coast headquarters to supplement its U.S. headquarters in Irvine, CA.
Operational Excellence
Goals aligned with improving operational excellence include implementing supply chain reforms to reduce inventory turnover from 170 days in 2023 to less than 140 days in 2026. Tominaga said Asics plans on “improving planning accuracy and strengthening cooperation among related divisions by making the system more horizontal than ever before.”
Tominaga added that investing in digital technology “is essential” to Asics’ transformation into a globally integrated enterprise. He said, “We aim to become a truly digital-driven company on a global scale by utilizing the same data and aligning perceptions across the entire company and by making full use of the common global core system already in place, as well as generative AI and other technologies.”
He concluded his comments by noting that since joining Asics as CIO in 2018, he has been guiding the company’s push to become digitally driven, including its investments in e-commerce, OneAsics, run registration properties and running app.
“Under the leadership of CEO Hirota, Asics is on a growth path,” said Tominaga. “And I believe that we can still grow in the future. To this end, I would like to use my experience and knowledge to lead the implementation of the Mid-Term Plan 2026 and help Asics achieve its goals in order to grow into a truly global company.”
Photo courtesy Asics