Yonex, the Japanese racquet sports and golf company, raised its outlook for the year after reporting results for the second quarter ended September 30, which had exceeded plan, benefiting from a weakening yen.

Company sales in the second quarter rose 10.6 percent to ¥39,676 million ($258 mm). Operating earnings in the quarter slumped 41.2 percent to ¥2,570 million. Net earnings declined 18.8 percent to ¥2,134 million.

Second-quarter figures were attained by subtracting first-quarter results from the six-month results.

In those six months, Yonex’s sales rose 18.8 percent to ¥79,532 million. Operating income improved 15.0 percent to ¥8,847 million. Profit attributable to the owners of the parent increased 18.8 percent to ¥79,532 million.

In its six-month report, Yonex said about the sales gains, “Demand within the sporting goods market remained favorable. To further stimulate market growth, we focused on marketing initiatives and grassroots promotions, highlighting international tournaments and the achievements of Team Yonex athletes.

“Badminton demand continued to grow solidly, particularly in China. In tennis, Yonex’s global brand recognition continued to rise, and sales of new model racquets expanded significantly. Despite the negative influence of currency translation due to the stronger yen, first-half consolidated net sales rose to a record high.”

Gross margins in the six months eroded to 43.9 percent from 45.2 percent due to higher procurement and manufacturing costs, as well as quality-related losses. However, gross profit increased due to higher sales. SG&A expenses increased 15.4 percent to ¥26,028 million, primarily due to higher advertising expenses for strengthened global marketing activities aimed at revitalizing markets and enhancing brand recognition, as well as higher personnel expenses.

Regional Performance in the Six Months

Japan Segment sales were up 11.0 percent to ¥31,278 million. Yonex said, “Badminton demand remained solid, with racquet sales increasing across a wide range of price points. The summer tournament season contributed to increased playing activity, resulting in higher string sales and overall revenue growth. In tennis, sales also rose, supported by the launch of new products.st half. Badminton demand remained strong in Asia and picked up in Europe, where the World Championships held in France further stimulated the market and contributed to higher sales. Tennis sales increased as marketing efforts leveraging the strong achievements of Team Yonex players and new product launches proved successful.

Operating income improved 8.0 percent to ¥2,074 million. Although gross profit margin declined due to higher procurement and manufacturing costs and quality-related losses, higher sales boosted gross profit and more than offset the rise in SGA from higher personnel and global advertising expenses, resulting in higher earnings.

Asia Segment sales improved 26.2 percent to ¥40,931 million. Yonex said that in China, “Amid steady growth in the badminton market, grassroots promotions and ‘Head-to-Toe’ offerings leveraging the Chinese national team’s success drove sales growth across a wide range of products, including apparel and bags. In tennis, sales grew as we leveraged our role as the official ball supplier for major international tournaments to enhance brand visibility and drive overall category growth.”

In Taiwan, “Local players’ strong performances at an international tournament held in May attracted record crowds and kept excitement for badminton high, contributing to sales growth,” said Yonex.

Operating profits in Asia advanced 19.2 percent to ¥6,044 million. Gross profit increased due to higher sales. While SG&A expenses rose mainly due to higher advertising and personnel expenses in China, the increase in gross profit more than offset this rise in costs, resulting in higher earnings.

North America Segment sales in the six months increased 24.6 percent to ¥876 million. Yonex said, “Sales increased as strong demand for our new EZONE racquet series and strings drove strong growth in tennis, while badminton demand expanded with rising playing activity in the U.S. and Canada, supporting higher sales of strings and shuttlecocks. In April, Yonex launched a DTC e-commerce site in the U.S. to improve product access, enhance brand visibility, and promote ‘Head-to-Toe’ product communications.”

Operating profit in North America declined 13.0 percent to ¥286 million. Gross profit increased due to higher sales, but SGA rose due to increased personnel, marketing, and DTC-related expenses, resulting in lower earnings.

Europe Segment sales increased 8.0 percent to ¥3,085 million. In Germany, tennis sales increased, driven by a favorable response to the new EZONE racquet series. Yonex said, “Brand visibility and player engagement were further enhanced through the international tournament held in May, contributing to continued sales growth. Badminton products also performed well amid steady demand.” In the UK, “Tennis sales remained solid, driven by our new EZONE series. Badminton sales UK also increased, supported by steady demand for racquets and strings.”

Operating earnings slid 23.3 percent to ¥227 million. Although gross profit increased with higher sales, SGA rose due to higher personnel and tournament-related advertising expenses, resulting in lower earnings.

Consolidated Net Sales by Sports Categories in Six Months
Badminton sales increased 20.2 percent to ¥48,876 million, with gains observed in both Japan and overseas as the market continued to expand. Tennis, up 14.8 percent to ¥10,420 million, also saw higher overseas sales, particularly in North America and Europe. Sales in the ‘Others’ category, up 20.4 percent to ¥19,184 million, were driven by strong sales of apparel and bags in China. Golf sales declined 24.9 percent to ¥690 million.

Upward Revision to FY Earnings Forecasts

Yonex raised its guidance for the full year, in part due to strong sales and a weakening yen. The company said, “In the first half, both overseas and domestic markets remained strong, supported by steady sports demand and effective marketing leveraging international tournaments and Team Yonex players’ strong achievements. In addition, the yen was weaker than the rate assumed at the beginning of the fiscal year, resulting in sales and profit exceeding our May forecast.”

Image and Charts courtesy Yonex