Mizuno Corp. reported a steep drop in profits for the year ended March 31 due to its “struggling business” in the Americas.

The Americas region showed a loss of ¥2.54 billion ($22.4 million) in the period against a loss of ¥1.32 billion a year ago. In a statement, Mizuno said inventories in the region increased due to “performance running market deceleration.” Bankruptcies of some major accounts also pulled down the regional performance. In South America, Brazil’s economic challenges and the weak Brazilian real continued to impact results.

Sales in the year in the Americas region were down 23.4 percent to ¥24.2 billion ($213 million) and were down 16 percent on a currency-neutral basis.

The company expects improvement in the Americas region’s gross margin ratio in 2017 as inventories in the marketplace become more balanced.

Companywide, revenues in the year declined 3.8 percent to ¥188.7 billion ($1.66 billion). Net income gave back 65.9 percent to ¥0.7 billion ($6.2 million).

Gross margins eroded to 37.5 percent from 38.6 percent a year ago as the stronger dollar increased purchasing expense. SG&A expenses were reduced to 36.7 percent of sales from 37.1 percent in the same period a year ago. Operating income slumped 51.4 percent to ¥3 billion ($26.5 million).

In other regions, sales in its home market of Japan rose 1.7 percent to ¥128.5 billion ($1.1 billion) while operating profits declined 19.5 percent to ¥3.14 billion ($28 million).

The performance in the EMEA region was impacted by currency fluctuations. Sales declined 4.4 percent to ¥15.3 billion ($135 million) but grew 11 percent on a currency-neutral basis. The loss came to ¥200 million ($1.8 million) against a loss of ¥360 million in the prior year. The region was particularly hurt by weakness by the pound in the U.K. On the upside, positive sales were seen in indoor footwear categories such as handball and volleyball, as well as custom golf clubs.

In the Asia/Oceania region, sales declined to ¥20.8 billion ($183 million) from¥22.2 billion but grew 9 percent on a currency-neutral basis. Operating earnings improved to ¥1.08 billion ($9.5 million) from ¥760 million.

For 2017, Mizuno expects revenues of ¥190 billion, operating income of ¥5.5 billion and net income of ¥3.5 billion.

Photo courtesy Mizuno