Europe drives sales expansion at Asics

Asics saw its sales advance by 10.5 percent on an adjusted basis to 428.5 billion Japanese yen (€3,465.3m-$3,820.3m) last year, with strong underlying expansion in Europe, but the Japanese company's profit margin was affected by exchange rates.

The adjusted basis refers to the fact that Asics changed its financial year, so some of the figures for 2014 have been restated to provide a comparison over a full year. This adjustment applies for the comparisons below in terms of sales.

Apart from its continued focus on running, the company has been raising its investments in the tennis category. The group's sales rise in the sports fashion business was driven by the Asics Tiger brand, which was relaunched as its third brand along with Asics and Onitsuka Tiger.

Own store openings continued with a flagship store in Paris, offering a wider merchandise assortment including running, training and tennis categories, as well as a dedicated retail space for women. Another flagship store was opened in Madrid. The company ended the year with more than 1,900 controlled spaces, consisting of 444 retail stores and other partner stores.

Asics' sales in Europe, the Middle East and Africa (EMEA) were up by 10.7 percent to ¥116,022 million (€938.5m-$1,034.5m). That amounted to a rise of 15.7 percent in constant currencies, which was fueled by increased sales of running and tennis shoes, along with the Asics Tiger brand. The group's operating income in EMEA moved up by 26.4 percent to ¥10,939 million (€88.5m-$97.5m), due to an improved cost of sales ratio.

Among the markets that boasted the strongest sales increases in EMEA was South Africa, which achieved triple-digit growth. The three Scandinavian countries delivered double-digit growth, along with France, Spain, Austria, Poland, the Benelux countries and Russia. The U.K. and Germany managed robust single-digit sales growth and Asics lifted its turnover by 26 percent in its own stores in EMEA.

Asics Europe points out that it sales have more than doubled in the last five years. The group estimates that it gained market share in running, while it made strong inroads in the tennis category and enjoyed sharply increased sales of Asics Tiger shoes.

Asics Europe said its sales inflated by 17 percent in running last year, with a 19 percent rise for women's footwear – making it the fastest-growing brand among female European runners, based on NPD Sports Tracking figures quoted by Asics for the year until June 2015.

From a smaller basis, Asics Europe raised its sales by 26 percent in tennis footwear and by 12 percent in tennis apparel. Again based on NPD figures, Asics was the number one in performance tennis footwear in Germany, France, Spain and Italy in the full year. The latest additions to its roster of tennis players are David Goffin, Julia Goerges and Johanna Konta.

Rugby was another target for marketing investments, with sponsorship of the Australian and the South African national teams, which both competed at the Rugby World Cup held in England and Wales. The Japanese brand's sales of rugby apparel tripled in Europe.

The performance of the lifestyle category was driven by Asics Tiger, which achieved triple-digit growth in Europe after its relaunch early last year. The company has been revamping some iconic footwear for the lifestyle category. A revitalized version of a performance running shoe from 1993 achieved the strongest sell-through to date for Asics Tiger with European sports fashion retailers.

Another breakdown provided by Asics points to a sales increase of 16.9 percent in constant currencies for running products in EMEA, reaching ¥77.2 billion (€624.5m-$688.2m). This compared with growth of 9.4 percent to ¥12.4 billion (€100.3m-$110.5m) for athletic shoes and 27.4 percent to ¥13.6 billion (€110.0m-$121.2m) for Onitsuka Tiger and Asics Tiger shoes – both comparisons in constant currencies. On the same basis, the breakdown between these two brands comprised a decline of 40.2 percent for Onitsuka Tiger, which was more than compensated by a rise of 166.3 percent for Asics Tiger to ¥9,292 million (€75.2m-$82.8m).

Alistair Cameron, chief executive of Asics EMEA, described the performance as outstanding. This year the company wants to build on the launch of Metarun running shoes, with technologies that should trickle down to other footwear. The training category and young consumers are strong targets for growth in EMEA. The Japanese group has budgeted a sales increase of 3.7 percent in EMEA in reported terms, with a rise of 7 percent in euros.

The Japanese company's turnover in America was up by 14.5 percent to ¥136.1 billion (€1,100.8m-$1,213.2m), but it inched up by 0.6 percent in constant currencies. Asics pointed to the impact of a weakening Brazilian real against the dollar and steady sales of running, tennis and Asics Tiger shoes in North America.

Then again, the group's operating income in America shrank by 86.3 percent to ¥1,499 million (€12.1m-$13.4m), which was chiefly blamed on an increase of purchasing costs due to the weaker Brazilian real and a rise in costs relating to more own retail stores and allowances for doubtful receivables.

Japanese sales reached ¥ 122.8 billion (€993.2m-$1,094.9m), which was a decline of 1.5 percent, and operating income in the country amounted to ¥2,291 million (€18.5m-$20.4m). The group's turnover in East Asia reached ¥41.9 billion (€339.0m-$373.5m), which was an increase of 33.2 percent in yen and 23.2 percent in constant currencies. It was supported by strong sales of running and Onitsuka Tiger shoes in China. East Asian income nearly doubled to ¥4,642 million (€37.6m-$41.4m), spurred by an ample increase in China.

Oceania, South East and South Asia generated sales of ¥22.5 billion (€182.0m-$200.6m) for Asics, up by 20.8 percent in yen and 24.2 percent in constant currencies. Operating income for the region jumped by 11.0 percent to ¥3,572 million (€28.9m-$31.8m).

The other business division saw its sales slump by 5.5 percent to ¥11,176 million (€90.4m-$99.6m), but that was an increase of 1.2 percent in constant currencies as sales of the Haglöfs outdoor brand were stable. It suffered an operating loss of ¥666 million (€5.4m-$5.9m), an improvement compared with the loss of ¥821 million from April to December 2014.

Due to the strong demand for Asics footwear, the category made up 80.7 percent of the group's turnover last year, up by 2.7 percentage points. The share of apparel decreased by 2.7 percentage points to 14.4 percent while the share of equipment was down by 0.7 percentage points to 4.9 percent.

The entire group's gross profit margin dipped by 1.0 percentage point to 42.5 percent on an adjusted basis. Its operating income margin amounted to 6.4 percent, down by 1.3 percentage point. Asics ended the year with net profit of ¥10,237 million (€82.8m-$91.3m), down by 52.4 percent.