Mizuno saw its sales advance by 1.1 percent to 133.7 billion yen (€0.99bn-$1.12bn) for the nine months until the end of December but that amounted to a decline of 1.5 percent in constant currencies. While the Japanese group's gross margin improved by 0.4 percentage points, its operating income slumped by 11.7 percent to ¥ 3.2 billion (€23.6m-$26.9m) for the nine months, which are equivalent to the first three quarters of Mizuno's fiscal year.
Mizuno explained that fashion products related to running did well but the company was affected by rough conditions in the golf market in all regions. While its footwear sales advanced by 5.1 percent to ¥ 42.3 billion (€312.1m-$355.2m), apparel sales slipped by 0.4 percent to ¥ 41.0 billion (€302.5m-$344.3m) and equipment sales were reduced by 1.3 percent to ¥ 31.8 billion (€234.6m-$267.0m). Other services remained nearly stable, up by 0.2 percent to ¥18.5 billion (€136.5m-$155.4m).
The rise in reported sales chiefly came from Asian countries other than Japan. Mizuno's turnover in Asia and Oceania soared by 54.4 percent to nearly ¥ 14 billion, which amounted to an increase of 42.8 percent in constant currencies. The jump was chiefly due to the fact that Mizuno switched from distribution agreements to subsidiaries in South Korea and Singapore. Mizuno acquired its Korean distributor in 2013 and last year it set up an office in Singapore to coordinate its activities in Southeast Asia, India and New Zealand.
Regional sales were driven by running and lifestyle products, helped by the opening of an own store in Taiwan. Separately, the company narrowed its offering of lifestyle products and reviewed its sales channels in China – reducing the network to about 300 mono-brand stores. While this move downsized the sales platform it led to increased profitability for the brand in China. The company has also reduced its costs in China by merging two entities from the start of this year. Mizuno combined its Chinese sales and retailing arm with Shanghai Mizuno, an entity that comprises the group's own manufacturing facilities in China, serving that market and others. Operating profit for the region more than trebled to ¥ 1,062 million.
Europe contributed to the sales increase for the nine months on a smaller scale, with a rise of 10.6 percent to nearly ¥ 11.1 billion (€81.9m-$93.2m), which meant an improvement of just 1.2 percent in constant currencies. The company was most encouraged by its performance in footwear for running and indoor sports. The last quarter included the TCS Amsterdam Marathon sponsored by Mizuno, enabling it to sell more of its latest running products. Operating profit for Europe soared to ¥ 449 million, up from ¥ 180 million for the same period the previous year.
On the other hand, Japanese sales were down by 4.2 percent to ¥ 87.0 billion (€642.0m-$730.6m) and Mizuno's operating income for Japan slumped by 37.5 percent to ¥ 1,293 million (€9.5m-$10.9m). While inflating sales in the Asia and Oceania region, the opening of subsidiaries in South Korea and Singapore reduced Mizuno's turnover in Japan, as these two countries were previously reported under Japan.
Mizuno's sales in Japan were supported by running as well as swimming and football products. On the other hand, sales of baseball and golf products were unable to make up for the impact of a consumption tax hike, leading to a decline in sales for these products compared with the same period last year.
Sales in the Americas shrank by 2.8 percent to ¥ 21.6 billion (€159.4m-$181.4m), which was equivalent to a decline of 9.8 percent in constant currencies. Both the running and golf categories were affected, while Mizuno's volleyball business remained strong. Mizuno's operating profit in the Americas shrank by 60.8 percent to ¥ 428 million (€3.2m-$3.6m) for the nine months.
The overall decrease in operating income was blamed on inflated administrative and promotional expenses. Owing to reduced tax, net income still ended higher, up 15.1 percent to ¥ 2.4 billion (€17.7m-$20.2m) for the nine months. The company's forecast for the full fiscal year until the end of March is unchanged. It still predicts sales of ¥ 186.0 billion (€1,372.5m-$1,561.9m), yielding operating income of ¥ 5.9 billion (€43.5m-$49.5m) and net income of ¥ 3.4 billion (€25.1m-$28.6m).
