After ending the first quarter in the red, Asics posted steep losses again in the second quarter. They reached 11,700 million yen (€92.5m-$109.5m), versus a profit of ¥2,100 million for the same quarter last year. Sales were off by 21.5 percent to ¥146,800 million (€1.16bn-$1.37bn) in the period, or by 18.7 percent in constant currencies, hampered by store closures related to the pandemic. However, online sales doubled to ¥23,300 million (€184.3m-$218.2m). And while overall sales declined, the company experienced a rebound in June, led by North America as well as Greater China, where revenues jumped by 12.8 percent from the year-ago quarter. In Japan and Europe, nearly all stores reopened by the middle of June, while in America many stores are still closed. In China, all stores reopened by the end of March.
Asics’ revenues dropped by 24.0 percent in Japan. They were down by 17.4 percent in Europe in the local currency, because of store closures resulting from Covid-19. The management of Asics EMEA said it took action to drive online sales. It has recorded growth in e-commerce of 139.6 percent for the first half of the year, compared with the same period a year ago. However, growth in online sales did not compensate for the loss in earnings from wholesale and retail channels.
Currency-neutral sales decreased in all regions except China and Oceania, where they gained 3.8 percent and 9.6 percent, respectively. They tumbled by 31.2 percent in South and Southeast Asia, and by 25.7 percent in the rest of the world. In North America, revenues were down by 25.7 percent.
In the Performance Running category, sales were off by 11.3 percent in constant currencies, going down in all regions except China. However, online sales of running shoes performed well, especially in North America and Europe, where they increased by 174 and 178 percent, respectively. Currency-neutral sales went down by 3.1 percent in Sports Style, despite strong e-commerce growth in China. They fell by 6.8 percent in Apparel and Equipment and by 5.1 percent in the Core Performance category, which includes football.
The more lifestyle-oriented Onitsuka Tiger brand took a hit from store closures in Europe and America, with sales falling by 6.6 percent in constant currencies to ¥16,300 million (€128.9-$152.6m). However, the brand’s sales in Greater China improved by 5.8 percent during the period.
Overall, the company’s gross margin inched up by 0.4 percentage points to 48.0 percent, but the group posted a negative operating margin of 2.6 percent for the quarter, compared with an operating margin of 4.6 percent in the year-ago period.
The highlights for the latest quarter include a prize received at the JEC World Composites Innovation Awards in the Sports and Healthcare category. It was granted for the advanced molding technology behind its new spikeless track shoe, Metasprint, designed to improve speed over short distances. Asics also announced an investment in a material sciences start-up producing a manmade spidersilk that is durable, sustainable and biodegradable.
The group announced it will launch a new line of running and Sportstyle shoes, called the ‘Edo Era’ Tribute Pack, that use recycled polyester made from PET bottles for the upper.
Asics will continue in the months ahead to focus on strengthening digital sales, while working more closely with marketplaces and other e-tailers. For the full year 2020, the company expects sales of ¥300,000 million (€2.37bn-$2.8bn), including an 18 percent drop in Europe. Profit attributable to owners of the parent company is forecast to be down by 22.0 percent.