Retail: 70
-30.22%
Retail: 94
-6.25%

Japanese Firms Look Ahead

By Bob Mcgee – May 15, 2017

ASICS America, which represents the brand in the U.S., Canada, Mexico and Brazil, had a number of significant developments in the first quarter ended March 31. Most notable were the establishment of a Product Creation Studio in Boston that expands the brand’s U.S. presence to both coasts, and the launch of ASICS’ first global social running initiative dubbed the SMSB Crew as the label aims to expand beyond performance running. SMSB (based on the Japanese brand’s founding philosophy of a sound mind, in a sound body) will create cultural communities of people with shared passion for fitness and sport. Two footwear styles, the fuzeX Rush and GEL-Quantum 360 Knit, were designed and introduced with the urban runner in mind.  

On the financial front, largely due to market forces and retail store closures, ASICS America generated a 3.1 percent decline in first quarter revenues with U.S. sales slipping 9.3 percent in the period. Parent ASICS Corp., citing strong sales in Brazil but weak results in the U.S., said AAG revenues fell more than 5 percent in Yen to the equivalent of $262.4 million. But, thanks to an improved cost of sales ratio, regional profitability soared 141 percent to the equivalent of $22.6 million.  

ASICS America realized 31 percent digital sales growth in the first quarter as the company opened 23 additional stores. Meanwhile, the Boston announcement followed AAG’s establishment of a Global Digital Hub in Beantown in Spring 2016 when it acquired FitnessKeeper, Inc. Last week, the company announced a partnership with PHIT America GO! Grants program that provides schools with funding for gear, programming or training for their physical activity programs.

Meanwhile, Mizuno Corp. has established a three-year strategy to rebuild its Americas’ and footwear businesses after a difficult FY16. Revenues in the Americas region fell 23 percent in Japanese Yen (-16 percent on a currency neutral basis) to the equivalent of $223.4 million last year, negatively impacted by U.S. retail bankruptcies and a sagging South American business, particularly in Brazil. Footwear, apparel and equipment segment revenues across the region each fell double-digits, led by a 30 percent drop in footwear to the $96.0 million for the 12 months ended March 31. Apparel sales were off 18 percent to $29.5 million; Equipment was down nearly 17 percent to $97 million.  

The Mizuno Americas region is projected to have another down year in FY17, with total revenues falling a forecasted 7 percent, before rebounding in FY18 and FY19. Year-over-year regional sales are projected to gain 2 percent in FY18 before accelerating to more than 17 percent growth in Yen in FY19. In footwear, Mizuno Corp. sees the improvement in the Americas combined with growth in Asian markets helping to lift the segment to 3 percent topline expansion this fiscal year, followed by 8 percent growth in FY18 and aggregate growth of more than 26 percent between FY16 and FY18 to approximately $692 million worldwide.  

Consolidated global revenues for Mizuno Corp., which reached $1.71 billion in FY16, are forecast to grow less than 1 percent this fiscal year before expanding more than 5 percent in FY18 and 10 percent further in FY19. During each of the periods, company profits are envisaged to grow steadily and reach the equivalent of $73.9 million in FY19.

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