Mizuno Corporation reported fiscal first quarter results, indicating that the Japanese economy maintained a gradual recovery trend that was due primarily to improved employment and income conditions due to further wage increases and the effect of various policies, including a flat-amount cut of personal income tax and the Nikkei Stock Average remaining at high levels.

Still, the company said the Japanese economy saw volatility in the financial market, higher prices, and other concerns, and, therefore, concerns lingered regarding the sluggish growth of corporate earnings and personal consumption.

Mizuno said the non-Japan economies have also continued to recover. However, there are concerns about the slowdown of consumption owing to continuing high interest rates and inflation and the impacts of growing global instability on financial markets and distribution networks.

Amid the excitement over global sports events, Mizuno said the market has expected growing opportunities for a wide range of sports. Meanwhile, the expansion of the sports market for outdoor personal sports, including golf, which has continued to expand since the pandemic, has steadily grown. As such, the Group’s sales in Japan reportedly remained robust in competitive sports products, including football (soccer), volleyball, and racket sports, and sales of its work business remained strong. Non-Japan sales also continued to grow in products for competitive sports such as football and lifestyle shoes.

Mizuno pointed to these factors as the fiscal first quarter ended June 30 produced record highs:

  • Net sales increased 6.3 percent year-over-year (y/y) to ¥60,783 million;
  • Operating profit grew 21.6 percent y/y to ¥6,498 million;
  • Ordinary profit was 16.9 percent y/y to ¥7,398 million; and
  • Profit attributable to owners of parent increased 10.0 percent y/y to ¥5,135 million.

Region Summary

Japan
In Japan, sales of products for competitive sports, such as soccer, volleyball, and racket sports, reportedly remained strong. In addition, Mizuno said its work business, which is a non-sports business, remained solid. Lifestyle shoe sales, which are the focus of the company’s business expansion efforts in the region, also reportedly increased. Mizuno recorded net sales of ¥34,797 million in the first quarter, up 6.9 percent y/y, and operating profit expanded 24.1 percent y/y to ¥3,131 million for the period.

Europe
In Europe, the football (soccer) business and lifestyle shoes business, which are the focus of the company’s business expansion efforts in the region, reportedly “enjoyed growth.” The company also reported that sales of products for competitive sports, such as volleyball, also increased. According to company commentary, the region’s gross profit margin of running shoes, which is one of Mizuno’s largest categories, reportedly improved, reflecting efforts to improve the margin. As a result, although net sales decreased 2.0 percent y/y to ¥6,473 million, operating profit increased 41.9 percent y/y to ¥275 million in the region.

Americas
In the Americas, sales reportedly increased primarily in the products for competitive sports despite downward pressures on business activities such as continuing high interest rates and advancing inflation. Gross profit margin improved “thanks to progress in optimizing inventory levels.” Net sales grew 8.1 percent y/y to ¥11,293 million in the quarter, and operating profit expanded 9.2 percent y/y to ¥1,738 million in the fiscal first quarter ended June 30.

Asia and Oceania
In Asia and Oceania, the football business, which is the focus of the company’s business expansion efforts, posted growth in South Korea and Southeast Asia. Sales of products for competitive sports, such as racket sports and volleyball, also increased here. Lifestyle shoe sales reportedly grew as well, even though the increase was “relatively modest.” Region net sales were ¥8,217 million, up 8.5 percent y/y, and operating profit increased 27.5 percent y/y to ¥1,379 million in the quarter.

Balance Sheet Summary
Total assets at quarter-end were down Y666 million from the end of the previous fiscal year, which ended March 31, to ¥205,484 million. This was said to be primarily due to decreases in merchandise and finished goods by ¥2,642 million and accounts receivable—trade by ¥2,463 million, while cash and deposits increased by ¥2,248 million and investment securities increased by ¥666 million in the quarter.

Liabilities at the end of the first quarter decreased by ¥6,702 million from the end of the previous fiscal year to ¥57,383 million. This was said to be primarily due to decreases in notes and accounts payable—trade by ¥2,241 million and accounts payable—other by 1,880 million and accrued expenses by ¥1,880 million.

Net assets increased by ¥6,035 million from the end of the previous fiscal year to ¥148,101 million.

As a result, the equity ratio reportedly increased by 3.1 percentage points from 68.6 percent at the end of the previous fiscal year to 71.7 percent at the end of the first quarter.

Image courtesy Mizuno