Asics recorded solid growth in sales and operating income in the nine months ending September 30, as the strong showing of its Performance Running business in North America, Europe and Greater China and cost-cutting efforts more than offset the continuing effects of Covid-19.
For the third quarter alone, Asics reported in its financial highlights a net profit of 6,723 million yen (€51.3m-$59.3m), up sharply from ¥2,858 million a year earlier. Sales increased by 11.2 percent to ¥112.7 billion (€860m-$990m) from 101.3 billion, and they were 14 percent higher than two years earlier. The gross margin rose by 4.6 percentage points to 49.5 percent and the operating margin improved to 10.5 percent from 7.1 percent in the year-ago period.
The company did not specify the regional results, but calculations show that revenues rose year-on-year by 13 percent in Japan, by 16 percent in North America, by 6 percent in Europe, by 5 percent in Greater China and by 21 percent in the rest of the world. Performance Running remained the fastest-growing category in all the geographies, up by 6 percent from a year ago, while tennis and other Performance Sports were up by 8 percent.
The quarterly progress was softer than in the first half of this year. From January through September, sales were up by a stronger rate of 29.8 percent to ¥322,207 million (€2.4bn-$2.8bn), reflecting 36 percent growth in North America and a 33 percent increase in both Europe and Greater China. . E-commerce revenues advanced by 28 percent, with 47 percent growth in Europe, 23 percent in Greater China and 12 percent in North America.
The operating income for the entire nine-month period rocketed to ¥35,785 million (€272.1m-$314.5m) from ¥3,279 million, and the company reported a net profit of ¥19,073 million (€145.0m-$167.6m) against a loss of ¥3,408 million the year earlier. Asics highlighted successful cost-cutting efforts, with its selling, general and administrative (SG&A) ratio declining to 39 percent of sales from 46 percent.
Progress on the profitability and sales fronts came despite continuing challenges tied to the Covid-19, which led to temporary closures of some Asics stores during the period and the cancellation or scaling down of athletic competitions such as the Tokyo Olympics, which were held without spectators this summer.
Among the product categories, Performance Running revenues increased by 38.0 percent to ¥167,426 million (€1.3b-$1.5b), with significant gains in all regions, led by 46 percent growth in Greater China. The segment’s operating profit rose by 97.1 percent to ¥40,060 million (€305.0m-$351.9m), making for an operating margin of 23.9 percent, helped by growth in sales and an improvement in the gross margin.
Revenues from other Performance Sports grew by 29.7 percent to ¥35,269 million (€268.5m-$309.8m), also supported by strong sales in all regions. Operating earnings soared by 146.1 percent to ¥6,619 million (€50.4m-$58.1m), equivalent to an operating margin of 18.8 percent, as the gross margin grew and SG&A expenses declined. .
Sales of Onitsuka Tiger products increased by a more modest rate of 19.5 percent to ¥30.386 million (€231.3m-$266.9m) , supported by strong sales in Greater China and Southeast and South Asia. Operating profit grew by 38.5 percent to ¥5,379 million (€40.9m-$47.2m), leading to an operating margin of 17.7 percent. The company is gradually expanding the scope of the Onitsuka Tiger brand’s presence in Europe, mainly in London and Milan.
Sports Style sales increased by 19.5 percent to ¥25,561 million (€194.6m-$224.5m), with strong sales in Japan, Europe and Oceania, and the segment’s operating profit surged by 192.2 percent to ¥4.722 million (€36.0m-$41.5m), leading to an operating margin of 18.5 percent.
Sales of apparel and equipment rose by 18.6 percent to ¥25,375 million (€193.2m-$222.9m) thanks to strong sales in Japan, North America and Europe. The operating loss narrowed to ¥67 million (€510,261-$588,530) from ¥3,259 million the year earlier.
Sales growth was well-balanced among regions, with Europe accounting for the largest share of the revenue pie. The company reported that its sales in Europe increased by 32.9 percent to ¥90,959 million (€692.8m-$799.0m) amid strong sales in the Performance Running and Sports Style categories. The segment’s income surged by 167.6 percent to ¥14,576 million (€111.0m-$128.0m).
In a separate press release, Asics EMEA said revenues increased by 23 percent in terms of euros across all distribution channels in the first nine months, leading to a significantly higher operating profit rose of €111 million.
Across EMEA’s revenues from the wholesale channel rose by 24 percent, with growth of 26 percent in Germany, 27 percent in France, 8 percent in the U.K., 49 percent in Italy and 42 percent in Iberia. E-commerce growth stood at 37 percent.
Carsten Unbehaun, CEO of Asics EMEA, said the business environment remains “challenging” as Covid continues to impact suppliers. Citing “unprecedented” demand for its products and the capacity constraints, the company said it is prioritizing wholesale suppliers over its own direct-to-consumer (DTC) channels. It is thus following the same philosophy as Puma.
In Japan, Asics’ sales grew by 21.7 percent to ¥86,356 million (€657.6m-$758.5m). They rose by 35.8 percent to ¥66,267 million (€504.5m-$582.0m) in North America and climbed by 32.6 percent to ¥41,046 million (€312.5m-$360.5m) in Greater China. Asics returned to a profit in both Japan and North America, while its operating profit in Greater China jumped by 115.6 percent to ¥9,181 million (€69.9m-$80.6m) as the gross profit margin improved in both the retail and wholesale channels.
Sales in the Oceania region rose by 36.4 percent and operating income went by 52.2 percent. In Southeast and South Asia sales grew by 26.1 percent and operating profit soared by 477.6 percent. In other regions, sales and operating profit climbed by 27.6 percent and 435.9 percent, respectively.
Asics maintained its forecast for sales of ¥395 billion (€3.0bn-$3.5bn) for the full financial year. Operating income is now seen reaching ¥20.0 billion (€152.2m-$175.9m), up from ¥14.5 billion previously, and net profit should hit a level of around ¥4.0 billion (€30.5m-$35.1m ) against prior guidance of ¥2.5 billion.
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