Arthur Continues To Slump And Reinvigorate The Overseas Market. China Should Not Be Underestimated.

This year, when the brand was set up 70th anniversary, the earnings of Asics, a Japanese sports product group, was not satisfactory. (Arthur)

A few days ago, Arthur announced the first quarter of fiscal year 2019 data show that the overall net sales and net profit to the mother have varying degrees of decline.

However, in recent years, Arthur's performance has been sluggish.

In 2018, the increase in the cost of Arthur and US direct market stores led to a decline in operating profits in the two markets.

In this regard, Arthur said that in the future, it will boost the sales growth of the US market and adjust Arthur's mission objectives in 2020.

However, the performance of the Chinese market has surprised Arthur.

In 2018, Arthur's sales in China increased by more than 20% over the same period last year. The sales of OnitsukaTiger ghosts continued to grow by 25% compared with the same period last year. The group is optimistic about the Chinese market and said it would make China the fourth pillar Market after North America, Europe and Japan as soon as possible.

According to the insiders, Arthur's goal in 2020 is not only necessary to revitalize the US market, but also with the upgrading of consumption, and the strength of the Chinese market should not be underestimated.

Target shrink 1/3

In April 24th, Arthur released the first quarter financial results in 2019. The group's consolidated net sales fell 7.4% to 104 billion 600 million yen compared with the same period last year, down 9.4% from the fixed exchange rate, and the operating profit dropped 35.4% to 8 billion 500 million yen. The main factors including sales cost, general expenses and administrative expenses (SG&A) grew 7.9%, and the opening of new retail stores. The profits attributable to the parent company fell 43.2% to 5 billion 300 million yen.

It is noteworthy that Arthur had launched a medium-term reform strategy in order to seek new growth points. The target reached 750 billion yen in 2020 and about 43 billion 500 million yuan in 2020.

However, in recent years, performance has continued to slump.

Arthur also had to cut the sales target of the medium-term business plan to 500 billion yen, operating profit rate of over 7%, and return on equity of more than 10%.

This means that Arthur has shrunk 1/3 of his previous target.

Looking back on Arthur's achievements in recent years, we can also find that since 2012, after sales of Arthur sales declined for the first time in 2016, Arthur's performance has been in a doldrums.

In the 1-9 month of 2017, Arthur's net profit was about 920 million yuan, 15% less than that of the same period last year.

In 2018, Arthur's overall sales fell 3.4% to 386 billion 600 million yen, or 23 billion 700 million yuan, and its operating profit decreased by 46.3% to 10 billion 500 million yen compared with the same period last year, resulting in a loss of 20 billion 300 million yen. This is also the biggest loss suffered by Arthur in 20 years.

The industry believes that Arthur's performance downturn is related to its slow pace of development and the difficulty of winning a wide range of young consumer groups. At the same time, Arthur is also conservative in promoting new and signing new spokesmen.

All these make it difficult for Arthur to respond to the market quickly and effectively, and at the same time, the brand loyalty of consumers is decreasing, which leads to the fact that only a few people remain loyal to them.

The main battlefield is "dumb fire".

In fact, the continued downturn in Arthur's performance is closely related to its core market, the Americas.

Among them, America contributed nearly 25% of sales to Arthur.

In the first quarter of 2019, sales in the US fell 26.8% year-on-year due to the sluggish sales of wholesale channels.

In 2018, Arthur, Japan's domestic market, European market and the Americas market all showed varying degrees of sales decline. The decline included categories of sportswear and running shoes, as well as the increasing cost of Direct stores.

Among them, in November 2018, Arthur's performance in the first 9 months of fiscal year 2018 has slipped.

Among them, Arthur net sales fell 4.7% to 295 billion 680 million yen compared with the same period last year, operating profit fell 37.1% to 15 billion 360 million yen, net profit fell 47.55% to 8 billion 288 million yen.

The sales of the core market in the Americas decreased by 17.8% to 67 billion 670 million yen compared with the same period last year. In addition, the US Department suffered a loss of 958 million yen due to the low sales and higher cost of sales.

For the 2018 annual performance, Arthur pointed out that, especially in the Americas market, Arthur is facing increasingly fierce competition, running shoes sales fell 14.2% year-on-year, which led directly to the group's performance decline significantly.

In addition, the business restructuring, reassessment and allocation of domestic and business activities such as Japan and overseas assets, which had been implemented before, also resulted in a total loss of 24 billion 300 million yen, or about 1 billion 500 million yuan.

Arthur president and COO Hiroda Yasuhito also pointed out in an interview with reporters: "as a result of a substantial loss, all the directors and executive officers who are responsible for performance matters will be returned to zero.

But I believe that the 2020 Olympic Games and Paralympic Games in Tokyo should be a year of Arthur's leap. In 2019, we will also launch an offensive.

However, Arthur's decline in the core market is also related to its genes.

Prior to the establishment of ASICS, its predecessor, Onitsuka, has started producing marathon running shoes for middle and long distance runners in Japan.

However, Onitsuka lacks skilled footwear experience.

Later, in order to expand production and market, in 1977, Onitsuka merged with the Japanese fishing and sporting goods brand GTO and sportswear manufacturer JELENK, and established a new company with the concept of "Anima Sana in Corpore Sano (a healthy spirit in a healthy body"). This company is the Arthur who has developed so far.

It is the "synthetic" Arthur of the Japanese company, and the products are not entirely suitable for Americans.

Until the launch of TARTHER in 1983, the design of the pyramid sole has opened up a new way for a large number of American running shoes.

Guo Bin, Secretary General of the national sports industry research base at Peking University, said that in the past, Arthur could win dividends in the American market with lightweight attributes. But nowadays, Nike, Adidas, Under Armou and so on all pay more attention to the quality, weight and technology content of products. Arthur is not easy to continue to split the market in the Americas market.

Hiroda Yasuhito also said recently: "the US market has been changing frequently, and the market of easy running (easyrunning) category has increased rapidly, but we have not planned ahead of this piece.

For Arthur, the US market is the key and must not lose.

New pillar not yet established

In sharp contrast to the American market, the Chinese market is growing wider, and Arthur has also gained dividends.

Data show that in 2018, Arthur's sales in China increased by more than 20% over the same period, and the sales of OnitsukaTiger ghosts continued to grow by 25% compared with the same period last year. The group is optimistic about the Chinese market.

In addition, Arthur will help the Chinese market achieve more rapid growth through brand image upgrading and store design.

"Actively promoting growth in the growing market and making China the fourth pillar Market after North America, Europe and Japan as soon as possible."

Hiroda Yasuhito is also aware of the importance of the Chinese market.

But insiders say that the Chinese market has not yet become a pillar Market for Arthur, and needs closer policies and products to Chinese consumers in the future.

In addition to placing hope in the Chinese market, Arthur also hopes to break through the performance bottleneck with the 2020 Tokyo Olympic Games and Paralympic Games.

But in Guo Bin's view, if Arthur wants to break through the bottleneck of performance, the first thing to break through is its own bottleneck.

In this regard, the reporter interviewed Arthur in the form of mail. As of press release, the other side did not reply.

However, in order to achieve the goal of 2020, Arthur has developed a new marketing strategy: gradually returning the strategic focus from the pursuit of millennial generation lifestyle to the foundation of professional running.

At the same time, Arthur has begun to diversify in recent years.

In the past, Arthur products were mainly composed of three colors, blue, white and silver.

In August 2017, Arthur reinvented the brand image. In the logo of the brand, he added bright bright pink, bright purple, green and lemon yellow to the main colors. At the same time, he put forward a new slogan of I moveme (moving out of my world).