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CEO Out at Asics America After Poor Sales Stifle FY18 Earnings

Asics announced its year-end financial data for FY18 Wednesday, revealing poor sales performance and announcing sweeping changes for the company including a new CEO for the Americas and a new corporate structure in the region.

Koichiro Kodama will become the new CEO of the newly created Asics North America division, which will be comprised of the United States Canada and Mexico. Previously, the North American division included Latin America.

Kodama joined Asics in 2016 and has 30 years of experience in the industry working with U.S., U.K. and Japanese brands. He most recently served as executive vice president of sales in the North American region.

In a Nutshell: The Japanese footwear company has been looking to reposition the brand since it announced a new growth plan in October 2018. As a result, Asics has reformatted its category structure to prioritize its performance toward performance running, core performance sports and sport style.

“We are pleased about the momentum that closed out 2018, with continued growth in our direct-to-consumer investments, both in retail and online, across our performance footwear categories” Alistair Cameron, executive officer Asics Corporation and senior GM of the Geography Strategy Division, said. “More importantly, as we go forward in 2019, we are strategically implementing a new category structure to drive growth across the region, in particular within performance running.”

Additionally, Asics is building a separated organization in North America to focus on performance running and plans to accelerate the company’s revenue in China, which grew by 17.3 percent in 2018.

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Sales: Net sales for Asics across all categories and regions was 386.6 billion yen ($3.49 billion) in FY18. 99.3 billion yen ($898.6 million) of that came from direct-to-consumer retail, one of the brand’s fastest-growing channels with 4.3 percent growth over FY17, representing 25.7 percent of total sales. Sales in the United States were down 15 percent, year-over-year, at 90.2 billion yen ($816.23 million).

Earnings: As a result of an extraordinary loss of 24.3 billion yen due to the review and revamp of the company’s business model domestically and overseas, in conjunction with the poor sales performance, Asics has reported a net loss in earnings per share of 107.59 yen (97 cents). The company will not change its scheduled dividend plan and the loss will be charged as a temporary loss due to structure reform.

Neither the board of directors nor the CEO will receive bonuses for FY18.

CEO’s Take: As Asics America transitions into new leadership and a new structure, Alistair Cameron praised the outgoing CEO of the region, Gene McCarthy.

“Gene made countless contributions to ASICS America as he navigated the brand through an incredibly turbulent time for our industry and implemented numerous changes that set the region on course for success,” Cameron said. “We thank him for his energy, spirit and being a true champion of the brand during his time with the ASICS.”