While reporting a double-digit sales increase in Europe for its last financial year, ended on March 31, Mizuno Corporation announced that all its European operations outside the golf sector – running, indoor sports, football and performance underwear – will be based at the company's German subsidiary at Ascheim, near Munich.
The European head office will remain in the U.K., in Reading, under the leadership of Yasuhiko Kishimoto. The office will continue to be responsible for Mizuno's golf operations in Europe, which are being boosted with the appointment of Scott Hosie as European golf apparel and softgoods manager. As managing director of TH Group, Hosie was previously responsible for the start-up of three sports brands and the design and development of many apparel lines.
The other European sports operations will continue to be run by Mitsuhiro Okamoto, who has already spent almost 25 years with the Japanese group. He moved to U.K. one and a half years ago to run the the related product and marketing operations, and he has now moved to Germany because of its more central location and the growing size of the business.
Okamoto told us that he wants to build up a team around him to be operational from the month of August. One of the goals is to better adapt the products to the market. In this context, Daljat Gill, who became European marketing manager in January 2011, based in Reading, is going to leave the company by the month of July.
In another change of management, the German subsidiary is now headed up by a new country manager, Ulf Giehl, who previously took care of its financial side. In this position, he replaces Kishimoto, who ran the business on a temporary basis following the transfer of the former German country manager, Mark Kaiway, to the company's new Italian subsidiary established at the beginning of 2013.
The Japanese company's European revenues grew by 38.4 percent to 14.4 billion yen (€104.12m-$141.62m) in the past fiscal year, with an increase of 17.3 percent in local currencies, representing 7.9 percent of the total turnover. They generated a 16.1 percent higher operating profit (Ebit) than in the previous year at ¥353 million (€2.55m-$3.47m), although the figures indicate an apparent decline in profitability during the fourth quarter.
The increase in Europe was partly due to the higher turnover achieved by the company's new subsidiaries in Italy and Spain. In terms of products, running shoes and footwear for indoor sports were the drivers of the growth in the region. While its golf operations continued to be affected by difficult economic conditions, the inventory situation is “about to become more sound” in Europe, Mizuno stated.
In the Americas, the company's sales rose by 32.9 percent to ¥30.6 billion (€221.24m-$300.92m), up by 9.6 percent in constant currencies, delivering an 86.7 percent increase in operating earnings to ¥1,684 million (€12.17m-$16.56m). Healthy performance was reported in all product categories, especially in running where Mizuno recorded market share gains in specialty stores due to proactive brand marketing. The company also made a push forward in the area of sand volleyball (or beach volley) apparel.
The Japanese market made up 68.4 percent of the total turnover, but sales there inched up by only 3.0 percent to ¥125.3 billion (€905.85m-$1,232.07m), with particular strength in running and walking shoes. Operating profits rose by 22.3 percent to ¥2,557 million (€18.48m-$25.14m) in the domestic market.
The biggest growth took place in the rest of Asia and the Pacific, where sales increased by 30.5 percent to ¥12.9 billion (€93.25m-$126.85m), or a currency-neutral rise of 30.5 percent. They generated operating income of ¥380 million (€2.75m-$3.74m), up sharply from ¥53 million in the prior year. The strongest contributions to the growth in sales and profits came from Mizuno's subsidiary in South Korea and its business in Taiwan and Australia.
The global sales of the group were up by 6.3 percent in terms of constant currencies in the past financial year. They rose by 11.9 percent in reported terms to ¥183.2 billion (€1,324.39m-$1,801.51m) and delivered a 57.9 percent higher operating profit (Ebit) of ¥5,692 million (€41.14m-$55.97m) in spite of a decline of 1.5 percentage points in the gross margin, due to the weaker yen. Net income increased by 35.6 percent to ¥2,640 million (€19.08m-$25.96m).
Mizuno has redefined the various product categories. Driven by running shoes, the footwear segment enjoyed the strongest growth last year, rising by 24.6 percent in yen and representing 30.7 percent of the total turnover at a level of ¥56.3 billion (€406.96m-$553.58m). Apparel came next with a share of 30.1 percent, but grew by only 3.7 percent. Equipment sales, which comprise golf clubs, baseball bats and other products, increased by 6.2 percent to ¥42.6 billion (€307.92m-$418.87m), taking a share of 23.3 percent in the total turnover. The remaining share of 15.9 percent consisted of services such the construction of facilities and other operations.
For the current financial year, Mizuno's management is anticipating increases of 6.4 percent in revenues, 40.5 percent in operating earnings and 89.4 percent in net income
