After a strong first quarter, especially on the bottom line, Mizuno Corp. is looking across the Sea of Japan for growth, planning to build a new distribution center in Shanghai before the start of the 2008 Olympics.
The company reported that net sales for the company's fiscal first quarter, which ended June 30, 2006, increased 10.1% to ¥43.6 billion ($381.4 mm) from ¥39.7 billion ($369.2 mm) for the same period last year. Gross profit decreased 10 basis points as a percentage of net sales, down to 43.1% from 43.2% last year.
Mizuno fought off the dip in gross profit to post a 137% increase in net income to ¥4.1 billion ($35.9 mm) from ¥1.7 billion ($16.2 mm) for last year's first quarter.
On the topic of growth in China, the company said it purchased space in the suburbs of Shanghai to build a new distribution center, which will be comprised of three stories and have a total of approximately 30,000 square meters (322,917 sq. ft.) of floor space. The facility will become the largest of Mizuno's distribution centers and will cost the company approximately ¥0.5 billion ($4.2 million). The company expects to increase its sales in China to approximately ¥16 billion ($135 million) in 2008, which is nearly double the sales total that came out of the country in 2005.
The new distribution center will handle sports apparel, golf clubs, baseball gloves, and other products which are currently being produced in Mizuno's own factory in Shanghai, as well as footwear produced by sub-contracting factories in China.
Part of the impetus for the new DC is for the cost savings to be found in moving completed product inspection closer to manufacturing and into a consolidated location instead of in various other distribution centers. Mizuno also hopes the new DC will help to increase the number of Mizuno shops in China from the current 700 doors to 1,200 by the end of 2008.
