On a net basis with the benefit of the weaker yen, Asics America net sales increase was higher coming in at 12.5 percent, compared to the same quarter in 2012, while operating income and net income before taxes had significant increases of 27.7 percent and 30.9 percent.
Asics America Group‘s double digit growth in top-line sales and slight increase in profit levels were due to the fact that Asics America spent more on marketing expenses in Q1 expecting further growth later in 2013. This quarter sales increase was largely driven by strong momentum in the running footwear category. Additional growth in fast rising categories such as tennis and Onitsuka Tiger brand played a significant role in Asics America Group financial progress in Q1 2013.
Asics America Group said it is on pace to show continued growth throughout 2013 and is on track to reach its billion dollars sales goal by 2015.
“In Q1, Asics America expanded its offerings with a new line of training products through a national advertising and integrated marketing campaign built around the concept of “Next”,” said Asics America Group President and CEO Kevin Wulff. “The entrance into this category demonstrates our commitment to evolve the brand by continuously offering innovative and relevant athletic performance products.”
Companywide, Asics Corp. reported sales rose 15.8 percent to ¥76.6 billion ($779.18 mm) from ¥66.1 billion. Operating income grew 2.4 percent to ¥8.52 billion ($86.7 mm). Net income jumped 33.4 percent to ¥6.58 billion ($66.9 mm).
In the Americas, revenues rose 26.7 percent to ¥21.87 billion ($222.4 mm), and were up 10.2 percent on currency-neutral (C-N) basis. The gain reflects strong sales of running shoes. Operating income jumped 15.3 percent to ¥2.66 billion ($27.1 mm), and 0.3 percent on a C-N basis. The smaller gain on a C-N basis despite the top-line growth was mainly due to an increase in advertising expenses.
In Japan, sales inched ahead 3.9 percent to ¥27.6 billion ($280.8 mm) but operating earnings slumped 34.0 percent to ¥980 million ($10 mm), mainly due to the strong sales of walking shoes and Onitsuka Tiger shoes accompanying the expansion of directly managed sales venues, in addition to the strong sales of running shoes.
Overseas sales increased 21.5 percent to ¥54.4 billion ($553.4 mm)due to the strong sales of running shoes in the Americas, Europe and other regions and the effect of foreign exchange rates.
In its Europe division, revenues were up 18.1 percent to ¥21.44 billion ($218.1 mm), and increased 3.1 percent on C-N basis, thanks to the strong sales of running shoes. Operating earnings were down 6.1 percent to ¥3.33 billion ($33.9 mm), and decreased 18.1 percent on C-N basis. The decline on C-N basis was mainly due to a rise in purchasing costs and an increase in selling, general and administrative expenses due to new openings of directly managed stores, etc., in spite of a decrease in advertising expenses.
In the Oceania region, sales were up 23.2 percent to ¥3.89 billion ($39.6 mm) and grew 8.6 percent on C-N basis. Operating profit reached ¥1.00 billion ($10.2 mm), a gain of 14.1 percent versus the year-ago period on a reported basis although only an increase of 0.7 percent on a C-N basis. The smaller C-N profit gain was mainly due to an increase in personnel expenses
The East Asia division saw sales jump 46.1 percent to ¥4.67 billion ($47.5 mm), and grew 22.6 percent C-N. Operating profits were down 10.4 percent to ¥223 million ($2.27 mm) and dropped 23.9 percent C-N due to the recording of commission paid to distributors as commission fee at the Korean subsidiary and an increase in personnel expenses and advertising expenses, etc., at the Chinese subsidiary.
In its Other Business segment, which includes the Haglöfs outdoor brand, revenues increased 17.5 percent to ¥2.55 billion ($25.9 mm) but decreased 1.6 percent on a C-N basis. Asics said in addition to the effect of foreign exchange rates, revenues benefited from “steady sales” of outdoor shoes that compensated for “weak sales of outdoor wear under the Haglöfs brand and other products.”
The Other Business segment showed a loss of ¥176 million ($1.8 mm) against operating income of ¥25 million.
Companywide, gross profit rose 15.7 percent to ¥34.3 million ($348.9 mm), mainly due to an increase in net sales. Selling, general and administrative expenses increased 20.9 percent to ¥25.76 billion ($262 mm), primarily due to increases in personnel expenses, advertising expenses and Korean subsidiaries’ commission paid to distributors. As a result, operating income increased 2.4 percent to ¥8.52 billion ($86.7 mm).
Ordinary income increased 22.5 percent to ¥9.53 billion ($96.9 mm), mainly due to the recording of exchange gain in the first quarter of fiscal 2014, in contrast to the recording of exchange loss in the same period of fiscal 2013. Net income rose 33.4 percent to ¥6.58 billion ($66.9 mm) primarily due to the recording of gain on sales of tangible assets arising from the sale of the land of former Kanto Kashiwa Distribution Center.
Asics forecast sales for the first half of its year ended March 31, 2014 is expected to grow 21.2 percent to ¥153.5 billion, operating income to increase 23.1 percent to ¥13.5 billion, and net income 29.0 percent to ¥7.5 billion. For the full year ended March 31, 2014, sales are expected to rise 21.1 percent to ¥315.0 billion; operating income is projected to rise 31.3 percent to ¥24.5 billion, and net income 5.3 percent to ¥14.5 billion.
In its statement, Asics said, “In the first quarter of fiscal 2014 (cumulative from April 1, 2013 to June 30, 2013), despite lingering concerns about the risk of downturn mainly due to the sovereign debt problems in Europe, the global economy continued to advance along a weak recovery track and showed some underlying strength. The Japanese economy has recovered owing to the improvements of corporate earnings and consumer spending, result from the Japanese government’s economic and financial policies.
In the sporting goods industry, business was steady on the back of a high level of interest in sport owing to rising health consciousness, as well as a running boom."
Under these conditions, the ASICS Group continued its efforts to reinforce and expand its business on a global scale based on the Five-Year Strategic Plan, “ASICS Growth Plan (AGP) 2015”. The ASICS Group took actions to heighten the value of the ASICS brand and enhance the corporate image. Such actions include launching GEL-Nimbus 15 and GEL-Cumulus 15, the high-function running shoes, onto the market, expanding the apparel lineup on a global level with
an emphasis on running apparel, and supporting marathon events
held in different parts of the world including Paris and Stockholm."
On the sales front, the ASICS Group strived to expand sales through such measures as opening flagship stores of the ASICS brand and opening directly managed stores of the Onitsuka Tiger brand, respectively, in Osaka and Sydney. In addition, Retail and Leisure International’s “International Retailer 2013” award which is intended to recognize retailers that have achieved excellence on a global level was presented for its retail business concept and strong financial performance."
By press release through sportsOnesource
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