Mizuno Nine Months Impacted by Golf Struggles

February 6, 2015
SGB Update

Mizuno Corp. reported net sales totaled ¥133.7 billion ($1.68 bn) in the first nine months ended Dec. 31, up 1.1 percent year-over-year. Strength in lifestyle products, centered largely on running offset “harsh conditions” in golf.

The gross margin improved by 40 basis points to 40.8 percent, but operating income declined 11.7 percent to 3.17 billion ($40 mm) due to an increase in expenses. Net income before taxes declined 4.6 percent to ¥3.8 billion ($48 mm). After-tax net income after tax was up 15.1 percent to ¥2.4 billion ($30 mm) as a result of a reduction in tax expense.

In Japan, sales were down 4.2 percent to ¥87.0 billion ($1.09 bn). Walking and running shoes “continued its solid performance” and swimming and soccer products also grew. Baseball and golf products fell in the mid- to high-priced range, particularly hurt by the impact of the consumption tax hike. Revenue fell in part due to the impact of the transfer of the agency business  for the Asian region, which was conducted in Japan until last fiscal year, to two consolidated subsidiaries. Operating income in Japan was down 37.5 percent to ¥1.29 billion ($16 mm).

In Europe, sales were up 10.6 percent to ¥11.1 billion ($139 mm) and ahead 1.2 percent on a currency-neutral (c-n) basis. Operating earnings rose 149.4 percent to ¥449 million ($6 mm). Strength was seen in footwear in running and indoor sports.

In the Americas, revenues dipped 2.8 percent to ¥21.6 billion ($272 mm) and were down 9.8 percent c-n. Operating earnings declined 60.8 percent to ¥428 million ($5 mm). Running and golf “continued to face harsh conditions” while volleyball “remained solid.”

In the other Asia region, sales were up 54.4 percent to ¥13.97 billion ($175 mm) and gained 42.8 percent c-n. Operating profit reached ¥1.06 billion ($13 mm), a gain of 283.4 percent.

Mizuno didn’t change its outlook for the year. It expects revenues of ¥186.0 billion; operating income of ¥5.9 billion, and net income after tax of ¥3.4 billion. In the prior year, sales were ¥183.2 billion, operating profit was ¥5.7 billion and net income was ¥2.6 billion.

Mizuno Nine Months Impacted by Golf Struggles

February 5, 2015
SGB Update

Mizuno Corp. reported net sales totaled 133.7 billion yen in the first nine months ended Dec. 31, up 1.1 percent year-over-year. Strength in lifestyle products, centered largely on running offset “harsh conditions” in golf. Net  income after tax was up 15.1 percent but declined 4.6 percent before taxes. 

Other highlights of the quarter:

  • Operating income stood at 3.2 billion yen, down 11.7 percent. Net income before tax totaled 3.8billion yen, down 4.6 percent. The net income after tax was 2.4 billion yen, up 15.1 percent.
  • While lifestyle products, centered on running-related items, were solid, harsh conditions remained for the golf business in all regions.
  • The gross margin improved by 0.4 point, but operating income declined due partly to anincrease in A&P expenses. The quarterly net income after tax increased as a result of a reduction in tax expense.

Main regions

Europe – Sales up 10.6 percent
・ Specifically, the footwear business related to running and indoor sports put on a solid performance.
・ Promotions for the TCS Amsterdam Marathon (held in October), for which Mizuno is a sponsor, led to sales expansion of new running sports products.

The Americas – Sales down 2.8 percent
・ The running and golf businesses continued to face harsh conditions.
・ The volleyball business remained solid. Footwear and apparel were both strong, contributing to profitability in the Americas as a highly profitable business.

Asia – Sales up 54.4 percent
・ Performance remained healthy overall. Running and lifestyle sports product brands in particular continued to advance themselves in the region, contributing to earnings.
・ A directly-managed store opened in Taiwan. A major push was made centered on lifestyle products, leading to expanded sales.
・ Profitability improved in China, where success was seen from a narrowing of lifestyle sports products for sale and a review of sales channels.
・ Revenue ultimately increased substantially in part due to the impact of transferring the management of agency business in the Asian/Oceania region to subsidiaries in South Korea and Singapore.

Japan – Sales down 4.2 percent
・ The footwear business in the health arena, such as that for walking and running shoes,
continued its solid performance.
・ The sports facilities business remained solid as a result of orders for designated maintenance
and management businesses and sports facility construction.
・ Swimming and football products also contributed to revenue, with the brand image improving
through athletes with signed contracts.
・ Meanwhile, baseball and golf products, which fall in the mid- to high-priced range, were unable
to recover to levels to cover the impact of the consumption tax hike, resulting in a decline from
the same period in the previous fiscal year.
・ Revenue fell in part due to the impact of the transfer of the agency business for the Asian
region, which was conducted in Japan until last fiscal year, to two consolidated subsidiaries.

Forecast for Fiscal 2014
・ No change
・ Net sales: 186.0 billion yen; operating income: 5.9 billion yen; net income before tax: 6.0 billion
yen; net income after tax: 3.4 billion yen.

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