Asics Corp.'s consolidated net sales declined by 5.0 percent to 210.68 billion yen (€1.86bn-$2.10bn) in the second quarter, hit by weak demand in Japan and the effects of the strong yen on international sales.
As a result, operating earnings fell by 8.8 percent to ¥19.4 billion (€171.7m-$193.5m) and net income slid by 18.4 percent to ¥11.85 billion (€104.2m-$118.2m) in the three months to June 30.
In Japan, the company's sales decreased by 3.4 percent to ¥65.79 billion (€582.1m-$656.4m) due to weak sales of sportswear and equipment. The drop occurred despite strong sales of running shoes as well as Onitsuka Tiger sneakers and Asics Tiger lifestyle footwear.
Domestic sales also shrank because the group decided to withdraw from low-margin products and to implement a leaner management structure in Japan. As a result, operating income jumped in the country by 68.5 percent to ¥5,186 million (€45.9m-$51.7m).
Overseas sales dipped by 6.4 percent in terms of yen, down to ¥154.51 billion (€1,367.1m-$1,541.8m), hit by weak sales in the U.S. and the effect of the foreign exchange rates caused by the strong yen, which offset strong sales of running shoes and Asics Tiger footwear in Europe and East Asia.
In Europe, the Middle East and Africa, sales decreased by 1.8 percent to ¥55.76 billion (€493.4m-$556.5m) in yen, but rose by 6.3 percent using the previous fiscal year's foreign exchange rate (see the other article in this issue). The regional operating profit rose by 12.7 percent to ¥5,988 million (€53.0m-$59.8m), and it went up by 21.9 percent on a currency-neutral basis, thanks to a higher gross margin.
In the Americas region, sales declined by 17.3 percent to ¥59.29 billion (€524.8m-$591.8m), with a drop of 11.8 percent in constant currencies, reflecting changes in the retail market – evidently referring to recent bankruptcies - and intensifying competition in the U.S., in addition to the effect of the strong yen. The operating result fell by 84.4 percent to ¥717 million (€6.3m-$7.2m).
In terms of local currencies, sales increased by 26.7 percent in Oceania, Southeast and South Asia, and by 24.1 percent in East Asia, thanks in particular to continuing strong growth for running shoes, also in China.
The group established local subsidiaries in Dubai and Bangkok, aiming to strengthen sales and brands in the Middle East and Thailand. The number of retail stores directly operated by the group reached 909.
The Other business segment, which includes Haglöfs, showed a drop of 18.5 percent in sales to ¥4.1 billion (€36.3m-$40.9m), resulting in a loss of ¥517 million (€4.6m-$5.2m). In local currencies, sales declined by 12.6 percent due to lower sales of outdoor apparel, partly offset by strong sales of outdoor shoes under the Haglöfs brand.
Asics reported an equity ratio of 58.8 percent at the end of the period, up from 57.8 percent last Dec. 31. The company still predicts that its net income will be down by 11.2 percent to ¥20 billion (€177.1m-$199.6m) for the full financial year, with sales declining 6.0 percent to ¥403 billion (€3,568.7m-$4,022.8m) and operating earnings down by 16.2 percent to ¥23 billion (€203.6m-$229.6m).
