Asics Corp. beat its expectations in China last year, bucking a trend that has seen footwear titans like Nike and Adidas stumble in the world’s most populous country.
The Japanese footwear company released a revised business forecast Tuesday upgrading its 2021 net sales estimate to 400 billion yen ($3.48 billion). In its prior forecast, released Nov. 5, it had projected revenue of 395 billion yen ($3.44 billion). In 2020, it recorded 329 billion yen ($2.86 billion) in sales.
Asics’ estimated operating income, 21.5 billion yen ($187 million), also exceeded its prior forecast, 20 billion yen ($174 million), as well as 2020’s loss of 3.95 billion yen ($34.4 million). The company bumped up its net profit estimate 125 percent from 4 billion yen ($34.8 million) to 9 billion yen ($78.4 million). In 2020, it recorded a net loss of 16.1 billion yen ($140 million).
Regionally, both Greater China and Europe exceeded expectations, Asics said. By category, performance running and “core performance sports” surpassed its prior forecast.
The company also revealed that it anticipates its business performance in the future will exceed the “Mid-Term Plan 2023” it unveiled last February. This improved outlook prompted the additional booking of deferred tax assets, which also affected the company’s revised sales, income and profit estimates, it said.
Asics’ better-than-expected performance in China comes at a time when several sportswear brands have seen sales slip following a consumer boycott of prominent Western brands for their statements on sourcing from Xinjiang, the region linked to the forced labor of Uyghurs and other Turkic minorities that produces 85 percent of China’s cotton output, which accounts for 25 percent of the world’s supply.
In the months after the boycott began last March, unofficial data initially painted a dire picture, with early Tmall sales data showing Adidas and Nike down 78 percent and 59 percent, respectively, in April. Reported earnings, though not nearly as grim, have also reflected a tough environment for foreign brands.
In August, Adidas reported a 16 percent decline in Greater China sales amid what it described as “geopolitical tensions.” The company again blamed geopolitical tensions—as well as the resurgence of Covid restrictions and natural disasters—when it reported a 15 percent decline the following quarter.
At Nike, China sales remained positive in the quarter ended May 31, rising 9 percent in constant currency. The following quarter, however, sales only rose 1 percent versus the prior-year period. In the quarter ended Nov. 30, China revenue declined 24 percent on a currency-neutral basis. On a call with investors, Nike’s leadership blamed the drop on reduced supply due to pandemic-related factory closures in Vietnam last summer. As supply normalizes, chief financial officer Matt Friend said, Nike expects to see sequential improvement in the quarters ahead.
At Puma, Greater China sales dropped 5 percent in the second quarter and 16 percent in the third. Skechers, meanwhile, saw revenues boom last year. In the second quarter, its China sales rose 51 percent year over year and 68 percent versus 2019. The following quarter, sales in the country rose 10 percent year-over-year, on top of 24 percent growth a year earlier.
Asics launches ‘Live Uplifted’ campaign
Asics North America announced the launch of “Live Uplifted,” Wednesday. The brand campaign will spotlight a different leader in the running community every month, starting in February with Lance Woods, the Detroit native who co-founded WeRun313, a local run club with more than 2,000 participants.
The campaign will continue next month with Craig Mitchell, a Los Angeles judge who created the Skid Row Running Club as an outlet for those who want to overcome alcohol and drug abuse problems. In April, Asics plans to spotlight Kim Rossiter, the founder of Ainsley’s Angels, a national nonprofit dedicated to providing opportunities and experiences for disabled athletes. The following month, it will tell the story of Lupita Hernandez, a U.S. Marine who runs ultra-marathons to raise money for PTSD awareness. In August, Asics will highlight Tenia Fisher, the lead captain of F.E.A.R. (Forget Everything And Run), a group aimed at ensuring runners of color feel welcome and accepted.