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After Turbulent 2020, Asics Hopes to Build on Positive 2021 Start

The holiday season tripped up Asics to close out 2020, with the company seeing sales dip 12.3 percent year over year to 80.6 billion yen ($760 million) in the fourth quarter, with net losses totaling 12.7 billion yen ($119.7 million).

However, preliminary January sales have thus far delivered good news for the Japan-based footwear seller, increasing 6 percent year over year to an estimated 33.5 billion yen ($316.2 million) generated in the month.

Sales in Europe (up 40 percent), Greater China (up 35 percent) and Oceania helped buoy January’s preliminary growth total, while North America and Japan held it back with 20 percent and 29 percent declines respectively. North American sales decreased mainly due to delayed cargo handling at ports, while Japan’s fell due to the country declaring its second Covid-related state of emergency that month.

In a Nutshell: As Asics seeks a bounce back from is pandemic-driven woes, the footwear company has launched a new 10-year long-term roadmap called “VISION2030.” On the way to that goal, Asics has mid-term goals for Dec. 31, 2023, including consolidated operating income of 25 billion yen ($235.5 million), a consolidated operating margin ratio of more than 6 percent and a 4 percent total return on assets (ROA).

Over the next 10 years and beyond, Asics plans to expand its business in three domains: product, facility and community, and analysis and diagnosis. Using digital technology, the business domains will develop and offer personalized products and services with environmentally conscious sustainable methods.

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To close 2020, Asics shuttered its New York City Fifth Avenue flagship store only three years after it opened. In the U.S., there are still temporary closures at an unspecified number of stores, while in Europe, the number of stores that are temporarily closed increased again from the first half of November. In its other two major markets, China and Japan, all stores are open as usual.

For the full year, e-commerce sales continued to keep overall top-line numbers afloat worldwide by 112 percent in North America, 133 percent in Europe, and 86 percent overall. Overall, e-commerce as a percentage of sales doubled from 7.4 percent in 2019 to 15.7 percent in 2020.

As part of the company’s “Mid-Term Plan 2023,” which is the first phase of VISION2030, Asics plans to more than triple e-commerce sales from 2019 to 2023. In the same time span, the footwear company wants to more than triple its number of OneASICS members to 5 million.

Direct-to-consumer sales across the footwear company, counting the e-commerce site and stores, crept up from 30.4 percent in 2019 to 33.2 percent in 2020.

The company described the North America digital channel growth for the holiday quarter as “strong,” pointing out that Asics has seen online sales gains for 12 consecutive quarters in the U.S. Asics’ Performance Running category continued to shine with triple-digit digital growth year-to-year in the region in 2020. Digital growth was also seen in the Core Performance Sports and Sportstyle categories.

Asics’ digital success in Performance Running was driven by the continued popularity of the brand’s Legends Models as well as excitement surrounding the introduction of new footwear innovations, including the Blast Beyond series, the company said.

In the U.S., the company also said that its wholesale channel showed positive trends in the fourth quarter with year-over-year growth in the sporting goods and boutique fashion channels.

“We are very pleased with the remarkable progress in 2020, even more I am especially proud of how resilient the brand and our employees have been given the challenges created by the global pandemic,” said Richard Sullivan, president and chief operating officer of Asics America Corporation. “We have seen a sustained demand for our products across our owned and partner channels even given the circumstances of the last year and we look forward to continuing that momentum as we go forward.”

Asics offered guidance for the full 2021 year, forecasting companywide sales in the range of 370 billion yen ($3.5 billion) and 385 billion yen ($3.6 billion), representing a gain of 12.5 percent to 17.1 percent, as well as operating income of 7 billion yen ($65.9 million) to 10 billion yen ($94.2 million). Net income is expected in the range of 2 billion yen ($18.8 million) to 3.5 billion yen ($33 million).

As of Dec. 31, 2020, cash and cash equivalents increased 42.5 billion yen ($400.5 million) from the end of the previous fiscal year to 80.5 billion yen ($758 million).

Net Sales: Sales in the quarter were down 12.3 percent to 80.6 billion yen ($760 million) in the period, while they dropped 13 percent to 328.8 billion yen ($3.1 billion) for the full year.

By far, China performed the best for Asics on a growth basis, seeing sales in the quarter improve 5.5 percent to 10.2 billion yen ($96.1 million). In its other major regions, sales in Japan were down 18.1 percent to 23.4 billion yen ($220.5 million) for the quarter, while North American sales dropped 11.9 percent to 16.6 billion yen ($156.4 million). In the EMEA region, sales in the quarter fell 21.6 percent to 18.9 billion ($178 million).

Net Earnings: Net losses for the quarter totaled 12.7 billion yen ($119.7 million) against earnings of 169 billion yen ($159.2 million) a year ago, while operating loss widened to 7.2 billion yen ($67.8 million) from approximately 2 billion ($18.8 million) yen a year ago. The operating loss was actually worse than expected, with the company initially calling for a 6-billion-yen loss in November ($56.5 million).

For the full year, net losses were 16.1 billion yen ($151.7 million), including approximately 8 billion ($75.4 million) yen from the impairment costs related to permanent store closures and cancelled lease contracts, and losses from temporary store closures. Operating income fell 3.9 billion ($36.7 million) yen.