Asics Results Up on Weaker Yen, Running Boom

Asics Corp. lifted its guidance for the third quarter of fiscal 2014 after favorable currency movements, strong momentum in running and higher online sales drove a better-than-expected result for the nine months ended Dec. 31.

Management lifted its guidance for operating profit for the full year to 25.5 billion yen, or $252 million, from 24.5 billion yen, or $242 million, at current exchange rates. 

Asics reported a 19.6 percent rise in net income for the nine months ended Dec. 31 to 15 billion yen, or $148 million.

Total revenues for the period rose 25.1 percent to 238.3 billion yen, or $2.3 billion.

“The guidance increase is partly due to Asics revising its U.S. dollar, euro and Australian dollar exchange rate estimates in favor of a weaker yen, but we note that the company also has raised its local currency sales growth estimate for the U.S., from 13 percent to 16 percent,” Credit Suisse retail analyst Taketo Yamate wrote in a note to clients.  

The analysts said strong sales of Asics’ running shoes in the quarter were  due to the expansion of sales channels and a spike in online sales via its e-commerce platform, launched in April 2013.

“We understand margins on products sold online remain high. Asics is beginning to succeed in turning online sales into a new driver by leveraging the strong consumer support its brand commands,” Yamate said.

By area, sales in the Asia-Pacific region showed the most gains, growing 74.1 percent currency-neutral. The Americas rose 37.1 percent, Europe gained 36.4 percent and the domestic Japanese market advanced 4.2 percent.

The company said in a statement that sales growth was partly driven by opening directly operated stores in Osaka, Japan, and Sydney, and Onitsuka Tiger brand’s flagship stores in Sydney and Kobe, Japan.

“Overseas sales increased 35.5 percent to 172 billion yen [or $1.7 billion], due to strong sales of running shoes in the Americas, Europe and other regions, and the effect of foreign exchange rates,” the company said.