Mizuno Corp. cut its outlook for its fiscal year while reporting a loss on a steep sales drop in the Americas region in the nine months.
In the Americas region, sales slumped 24.7 percent in the nine months ended December 31, to ¥18.4 billion from ¥24.4 billion. Sales were down 17 percent on a currency-neutral basis.
The sales decline was attributed to the “deterioration of the sporting goods market,” marked by the bankruptcy of major retailers. Mizuno also said an “oversupply of running shoes and other products in the market intensified competition” in the running channel.
The brand also “struggled” in South America due to the sluggish Brazilian economy and the low value of the real.
The Americas region showed an operating loss of ¥1.74 billion against operating earnings of ¥78 million.
Companywide, Mizuno’s net earnings tumbled 94.6 percent to ¥121 million from ¥2.3 billion. The operating loss came to ¥288 million versus an operating profit of ¥2.5 billion in the same period a year ago. Mizuno noted that the weak British pound triggered by Brexit caused ¥600 million of non-operating exchange loss.
Revenues declined 5 percent to ¥136.4 billion, and declined 1 percent on a currency-neutral basis.
The Japan-based company noted that in each region, it “struggled in sales of golf equipment as the golf market shrank.”
In other regions, sales in its home market of Japan grew 1.6 percent to ¥91.6 billion from ¥90.1 billion. Sales of baseball items and competitive sports items continued to be strong. Operating earnings fell to ¥1 billion from ¥2.2 billion.
In the EMEA region, sales were off 6 percent to ¥11.2 billion from ¥11.9 billion, but gained 10.7 percent on a currency-neutral basis. Running shoes sales continued to be strong, while indoor shoes sales grew steadily. The operating loss came to $166 million against a loss of ¥608 million a year ago.
In the Asia/Oceania region, sales fell 11.3 percent to ¥15.3 billion from ¥17.2 billion, but gained 0.7 percent on a currency-neutral basis. Sales of running products continued to grow steadily while football boots revenues “continued to be brisk.” The region took a ¥400 million charge to cover restructuring expenses for its golf business in China. Operating earnings in the region slid 1.8 percent to ¥715 million from ¥728 million.
Looking ahead, Mizuno now expects sales of ¥187 billion for its year ended March 31, which represents a decline of 4.6 percent versus the prior year. Operating income is expected to be ¥1 billion, which would be down 66.3 percent versus the prior year. It expects break-even earnings for the year. Previously, sales were expected to reach of ¥193 billion, operating profit, ¥3 billion; and net income, ¥2.2 billion.
Image courtesy Mizuno