Asics Corporation returned to profit for the full 2018 financial year, with net income reaching 7,097 million yen (€59.6m-$64.6m) against a loss of ¥20,327 million for the previous year.
The management claimed that 2019 was a year of revival, led by key sports events including the World Rugby Championship. It revised its operating structure and prioritized performance running, expanding the Onitsuka line, focusing more attention on the Chinese market and implementing a marketing plan more centered on digital operations.
Asics’ global revenues fell last year by 2.2 percent to ¥378,050 million (€3.4bn-$3.2bn) in reported terms, but they went up by 1.6 percent in constant currencies. The gross profit declined by 0.5 percent to ¥179,681 million (€1.5bn-$1.6bn), mainly due to the impact of the strong yen, despite an improved cost of sales ratio. Operating income was flat at ¥10,634 million (€89.3m-$96.8m).
In the fourth quarter, global sales rose by 1.0 percent to ¥91,884 million (€771.4m-$836.5m) in reported terms. Net profit reached ¥169 million (€1.4m-$1.5m) against a net loss of ¥28,615 million for the year-ago quarter.
We have already reported about Asics’ recent problems in Europe. In the past year, the Japanese company’s sales increased in all the regions on a currency-neutral basis except in Europe, where they fell by 3.7 percent, mainly due to weak sales of the Performance Running and the Sports Style categories. The region’s operating income dropped by 40.2 percent to ¥2,866 million (€24.1m-$26.1m).
Thus, the group made changes to its EMEA organization in 2019 to reflect a global category-led approach. It revamped its sales structure by combining the direct-to-consumer and wholesale businesses into one commercial organization. It also set up a new management team headed by a new chief executive, Carsten Unbehaun, who was previously in charge of Haglöfs, the group’s Swedish-based outdoor brand. The management said these organizational changes helped Asics to drive category-led strategies and take a more holistic view of the marketplace.
During the year, Asics EMEA introduced new technologies in Performance Sports, notably with the launch of Guidesole, featuring a curved sole designed to propel runners forward and create a more efficient stride. The group also launched an in-store merchandising concept to help customers choose the right shoe to avoid injury and improve performance. Following successful pilots, new initiatives, including a simplified shoe wall, were rolled out in 500 stores run by wholesale retail partners across the region. The management said that the total business increased on average by 16 percent and reorders by 98 percent in stores where the new initiatives had been implemented. Online, the group created a new digital shoe finder as well as a Facebook Messenger chatbot to simplify the browsing experience for consumers.
In terms of local currencies, the group’s sales were up last year by 2.3 percent in Japan, by 1.2 percent in North America, by 4.3 percent in Greater China, by 13.5 percent in Oceania, by 21.2 percent in South and Southeast Asia, and by 5.4 percent in the rest of the world.
In the Performance Running category, Asics’ global sales inched down by 0.4 percent to ¥170,765 million (€1.4bn-$1.5bn) for the year, mainly due to weak sales in Europe as well as the effect of foreign exchange rates, despite strong sales in Japan, North America, Oceania and South America. In local currencies, sales rose by 4.4 percent. The operating income decreased by 49.2 percent to ¥3,964 million (€33.3m-$36.1m).
On the same basis, sales went down by 7.7 percent in Sports Style, and by 10.4 percent in Apparel and Equipment. On the other hand, the Core Performance category delivered a currency-neutral increase of 4.4 percent, lifted by strong sales in Japan and North America.
The Onitsuka Tiger brand recorded growth of 10.1 percent in constant currencies to ¥45,597 million (€382.8m-$415.2m), with strong sales in Japan, Korea and southern Asian markets. It delivered an operating profit, up by 14.6 percent in constant currencies, of ¥8,303 million (€69.7m-$75.6m).
The company issued a forecast for 2020 that calls for sales to rise by 0.9 percent to ¥390 ,000 million (€3.2bn-$3.6bn) but operating earnings are expected to decline by 15 percent to ¥9,000 million (€75.5m-$81.9m). Net income is forecast to tumble by 43 percent to ¥4,000 million (€33.6m-$36.4m), reflecting in part the consequences of the coronavirus epidemic.
