Yonex Co., Ltd. reported fiscal 2024 first quarter global net sales increased 18.1 percent year-over-year to ¥27.99 billion ($205.9 million), reflecting demand in all regions despite concerns over inflation, economic slowdown and geopolitical risks. Yen depreciation contributed to sales increases in overseas subsidiaries, which also increased in local currency terms.

  • Badminton, which represented 58.8 percent of sales at Yonex for the quarter ended June 30, grew 21.7 percent to ¥16.47 billion ($125.9 million) in fiscal Q1.
  • Tennis, which comprised 16.4 percent of sales, increased 2.6 percent year-over-year to ¥4.60 billion ($35.1 million) for the fiscal quarter.
  • Golf only delivered 1.9 percent of sales for the quarter but grew 15.2 percent to ¥544 million ($4.2 million) in the quarter.
  • The Others category, which includes Apparel and Accessories, comprised 22.2 percent of total sales in fiscal Q1. Net sales grew 23.4 percent to ¥6.20 billion ($47.4 million) in fiscal Q1 2024.

The Japan region’s net sales were up 14.9 percent in yen terms year-over-year to ¥12.97 billion ($95.4 million) in Q1. Badminton sales increased due to further revitalization of the market, especially for club activities, and strong sales of our new model of racquets. Tennis sales decreased as the abating of the strong growth seen in the last few years. A large increase in revenues was recorded for Overseas Distributors. Reopening of sports facilities, restart of tournaments, and athletes’ successes at tournaments reportedly contributed to a revitalization of demand for sports worldwide.

Japan region’s operating profit declined 53.9 percent to ¥439 million ($3.4 million). Despite a rise in gross profit, operating profit decreased due to the increase in SGA. Advertising expenses increased in sponsorship of international tournaments and athletes, as well as the impact of the yen’s depreciation.

The Asia region’s net sales increased 18.4 percent in the fiscal first quarter to ¥11.91 billion ($87.6 million) in yen terms. In China, despite the impact of the most recent bout of COVID-19, which began in December 2022 and continued until the beginning of the current 1Q, sales reportedly increased as demand for badminton recovered on the back of resumptions of events and tournaments soon thereafter. In Taiwan, more opportunities to play badminton among junior players and health-conscious consumers led to growth. Sales increased due to strong demand for badminton equipment.

Asia region’s operating profit declined 23.4 percent to ¥1.72 billion ($13.2 million) in Q1. Gross profit margin declined due to the sales mix. Operating profit decreased due to higher personnel expenses resulting from efforts to strengthen its business foundation, and higher advertising expenses from marketing investments by the China subsidiary.

North America’s net sales surged 34.0 percent to ¥1.73 billion ($12.7 million) in Q1. The company said the badminton market continued to be strong. Although players are continuing to return to the courts, tennis sales fell due to an increase in inventory in the market overall since the second half of FY3/23. Total sales increased due to strong sales of badminton equipment and the effect of yen depreciation.

North America’s region operating profit declined 6.7 percent in yen terms to ¥215 million ($1.6 million). An increase in SG&A expenses due to investments in advertising and human resources exceeded the increase in gross profit derived from the higher sales and caused operating profit to decline.

Europe had the highest growth in yen terms in Q1 as net sales increased 38.9 percent to ¥1.19 billion ($8.8 million). In Germany, Badminton sales increased as the holding of international tournaments revitalized the market. The company said tennis sales increased due to the strong market, in addition to the attention garnered by tennis magazine awards given to Yonex racquets for their strong performance evaluation. In the U.K., sales increased mainly in badminton equipment, on the back of a highly active badminton market, as reflected by the record attendance at the All England Championships tournament.

Region operating profit jumped 535 percent in yen terms to ¥135 million ($1.0 million). Gross profit increased due to higher sales. Significant improvement in gross profit margin resulted from an improved sales mix and more efficient logistics. Consequently, the increase in gross profit exceeded the rise in SG&A arising from investments in advertising and human resources.

The Sports Facilities division, located solely in Japan, saw net sales decline 3.4 percent to ¥185 million ($1.4 million) in the fiscal first quarter.

Consolidated gross profit was up 12.7 percent for the year to ¥12.26 billion ($90.1 million), while gross margins slipped 210 basis points to 43.8 percent of sales.

Total SG&A expenses increased 27.3 percent to ¥9.48 billion ($69.7 million) as Yonex invested in advertising expenses arising from expenses for tournament sponsorships, tournament-related promotions, athlete contracts, and bonuses to athletes, as well as the impact of yen depreciation on those expenses.

The resulting consolidated operating profit declined 18.9 percent year-over-year in yen terms to ¥2.77 billion ($20.4 million) in the three-month period ended June 30, 2023. The company said the decline in operating profit despite higher gross profits was due primarily to the higher SG&A costs and investments.

Net profit fell 19.9 percent year-over-year for the quarter to ¥2.42 billion ($17.8 million). Earnings per share declined 6.86 yen to 27.82 yen for the quarter.

Inventory was fairly flat at quarter-end compared to the fiscal 2023 year-end March 31. Inventory was ¥18.64 billion on June 30, compared to ¥18.83 billion on March 31.

Outlook
Looking ahead, Yonex is maintaining its forecast for the fiscal first half through September 30 and the full year ending March 31, 2024.

The company sees fiscal 2024 first-half net sales reaching ¥57.0 billion, representing 13.8 percent growth for the period. Operating income is expected to decline 12.9 percent in the first half to ¥6.2 billion, or 10.9 percent of revenues. Net profit is forecasted to reach ¥4.4 billion in the fiscal first half, a 21.4 percent decline from the fiscal 2023 first half.

Fiscal 2024 full-year net sales are expected to rise 8.4 percent to ¥116.0 billion. Operating income is seen performing well in H2, driving full-year operating income up 6.3 percent for the year to ¥10.7 billion, or 9.2 percent of revenues. Net income is forecasted at ¥7.8 billion for the full year, a 6.4 percent increase over fiscal 2023 results.

Photo courtesy Yonex