Mizuno raised its sales by 5.6 percent to a total of 163.65 billion yen (€1.2b-$1.6b) in the financial year ended March 31, but its operating earnings (Ebit) fell by 34.4 percent to ¥3,604 million (€27.4m-$35.7m), with declines in all the regions. The company blamed higher operating costs and higher purchasing costs, especially for its running shoes and other types of footwear.
The end result for the year was an ordinary profit (pre-tax profit excluding extraordinary items) of ¥4,095 million (€31.1m-$40.6m), down 27.6 percent from the previous year and a net profit of ¥1,946 million (€14.8m-$19.3m), down 38.1 percent.
However, Mizuno points out that it launched an optimization program last January to obtain improvements on all fronts – from structural changes to systems and actual business operations – and the company is now forecasting increases of 11.8 percent in revenues and 70.9 percent in ordinary earnings for the current financial year. Most of the changes are taking place at Mizuno's headquarters in Japan, where global managers are being appointed to take care of footwear and apparel across all the product categories.
Mizuno is forecasting big sales increases of 39 percent in Europe and 26 percent in the Americas. Some of the growth in Europe is expected to come from the establishment of new sales subsidiaries in Italy and Spain. As previously reported, the Italian operation is already up and running, while the Spanish one is still under construction. In Spain, Philippe Bonnet Navarro, former senior key accounts manager for the Adidas Group in Spain, has been appointed sales and marketing manager of Mizuno's Spanish operation, and its local sales reps have already started taking new orders.
Of all the regions where the Japanese company operates, Europe fared the worst in the last financial year. In spite of efforts to increase demand for its footwear products in a sluggish economic environment, European sales declined by 2.9 percent to ¥10.42 billion (€79.2m-$103.4m) and generated 43.9 percent lower operating earnings of ¥304 million (€2.3m-$3.0m). Sales were down by 3.6 percent on a currency-neutral basis, but those of running shoes and various types of indoor sports footwear, including handball shoes, remained strong.
In the Americas region, which comprises the brand's flourishing business in South America, the company continued its strong growth of the last three years. Sales went up by 12.5 percent to ¥23.01 billion (€174.9m-$228.2m), although the operating earnings fell by 5.3 percent to ¥902 million (€6.9m-$8.9m). In terms of local currencies, sales increased by 12 percent, driven by running shoes and golf products. The running business recorded currency-neutral growth of 24 percent, and Mizuno came out as the fastest-growing brand of running shoes in U.S. specialty running stores. Golf sales rose by 7 percent, lifted by the innovative Mizuno Performance Fitting System, with a two-day shipment schedule, and its line of irons.
In Japan, Mizuno's sales increased by 5.9 percent to ¥121.66 billion (€925.2m-$1,207.m), but most of the growth was attributed to the acquisition of Senoh Corporation last July. There was growth in running shoes and training apparel. Operating earnings fell by 24.1 percent in Japan to ¥2,557 million (€19.4m-$25.4m).
The sales breakdown for the major product categories shows an increase only in footwear for the year, up by 10.7 percent to ¥37.48 billion (€285.0m-$371.9m). Apparel sales were off by 3.2 percent to ¥28.75 billion (€218.6m-$285.3m), golf by 1.4 percent to ¥22.19 billion (€268.7m-$220.2m) and baseball/softball by 3.3 percent to ¥35.45 billion (€269.5m-$351.7m). The figures for baseball and golf products include the related footwear and apparel.