Asics unveils new organisational structure as it falls into the red
today Feb 14, 2019
Asics is approaching 2019 as a year of “revival”, after global sales fell 3.4% to ¥386.6 billion ($3.4 bn) and extraordinary costs dragged the company into a ¥20.3 billion loss ($182m) during 2018.
On Wednesday it announced a new category-led organisational structure with the aim of driving growth in its Running, Core Performance Sports and Sports Style categories. Running will become the main priority, with the company targeting growth in Japan, America and China.
It comes after a tough year for the high performance brand. Its latest financial report reveals sales declines across most of its regions, partly due to currency movements. In Japan, sales fell 1% to ¥118.2 billion, while a weak performance in the US sent revenue in the Americas down 15% to ¥90.2 billion (or down 13.5% on a currency-neutral basis).
Europe also delivered less revenue last year, down 0.6% (or 3.3% on a currency-neutral basis) to ¥105.6 billion, but Asics said running shoes continued to sell well. Sales in Oceania, Southeast Asia and South Asia fell 1.8% (or 0.7% at constant currency) to ¥27.1 billion as strong sales in the Southeast and South Asian regions could not offset a decline in Australia.
Finally, East Asia delivered an 8.6% sales increase (or 8.2% at constant currency) to ¥53.3 billion as a result of a strong performance of Asics’ casualwear brand Onitsuka Tiger.
On a currency-neutral basis, all emerging market territories realised significant growth, led by the Middle East with a 99% increase and Russia with a 19% increase. Additionally, e-commerce sales grew by 105% in the EMEA region.
And while loss attributable to shareholders reached ¥20.3 billion yen (from a profit of nearly ¥13 billion in the previous year), the report also revealed some good news. During 2018, Asics kept a close eye on operating costs, improving its cost of sales ratio. Unfortunately, this was not enough to lift gross profit, which decreased by 1.4% to ¥180.6 billion due to the lower sales.
NEW LEADERSHIP TEAM FOR EMEA
In addition to the new business structure, Asis’ EMEA business announced a new leadership team. The new category organisation will combine the Product, Marketing, and Merchandising functions, and will be led by Gary Raucher, who joins ASICS on 1 March.
Meanwhile, the new commercial organisation will combine the Planning, Buying, and Sales functions for both Wholesale and Direct-to-Consumer, and will be led by Scott Wakefield, who previously led the Direct-to-Consumer business within Asics.
Both Raucher and Wakefield will be part of the new management team, which also includes Robert Vermin, who will continue in his role as chief administrative officer, and Melinda Brooks Bray, who will continue in her role as VP of HR. All four will report directly to Alistair Cameron, CEO of Asics EMEA.
He commented: “I am encouraged by the growth we are continuing to see in key strategic areas, and I am confident for the future. The changes we’ve made to our organisation will enable us to drive category-specific strategies and take a more holistic view of the market. I’m excited to work with my new management team to drive growth across the region.”
Based in Tokyo, Asics Corporation said the new structure will unify its current teams and help category leaders reach their goals. For 2019, the sportswear manufacturer is targeting a 0.9% increase in sales to ¥390 billion, while operating income is expected to grow 14.1% to ¥12 billion.
The Onitsuka Tiger brand, which performed strongly in Japan and China, will drive growth, with Asics expecting it to increase sales by 12.4% to ¥48 billion during the year. Introduced in 1949, the shoe brand has a vintage aesthetic and its designs are geared towards the casual sneaker trend.
Meanwhile, the performance running category will continue to generate the largest chunk of revenues, increasing by 1.5% to ¥173 billion, Asics said.
The company is expecting the rise in sales and improved operating margins to help it return to profitability this year, targeting a ¥6 billion profit attributable to shareholders.
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