mid-term plan 2023
TRANSCRIPT
Mid-Term Plan 2023
ASICS corporation
2
1) Review of previous Mid-Term Plan
2) Business environment
3) Relation between VISION 2030 and Mid-Term Plan 2023
4) Mid-Term Plan 2023
a) Key Direction of Mid-Term Plan 2023
b) Management Index
c) Business Portfolio
i. Category strategy
ii. Regional strategy
d) Strategic Objectives
e) Strategic Priorities :Expand profit driver
f) Strategic Priorities :Transform to profitable business
g) Strategic Priorities :Reinforce business foundation
1) Review of previous Mid-Term Plan
2) Business environment
3) Relation between VISION 2030 and Mid-Term Plan 2023
3
<AGP2020(Revised) ACTION PLAN overview>
Key Direction Sustainable growth by concentration on focus category
• Category structure management
• Priority to growth areas: Running shoes, China, Digital
• Profitability improvement: Apparel, Core Performance Sports, Retail
Review of previous Mid-Term Plan “ASICS Growth Plan(AGP)2020”
AGP2020(2016-2020)
Revised AGP2020(2018.2-2020)
FY2020 Actual
Sales (100 MJPY)7,500
and more5,000
and more3,287
Operating Income (OI) % 10% and more 7% and more - 1.2%
ROE 15% and more 10% and more - 11.6%
Achieved Not Achieved
• Reform organization with profitability and PDCA cycle in category structure management with collaboration across categories and regions
• COVID-19 made a huge impact, but decline of profitability was minimized by accelerating EC business growth through digital shift and cost control as one team
• Customer review in Running product improved, which can be a good sign for sales and profit further improvement
• Not achieved of financial targets in Revised AGP2020
• Not completed drastic reform of low profitable business due to long-term investment, which cannot be divested immediately
• To redefine retail business responding to digital shift in omnichannel strategy
Focus on transformation to be a high profitable company
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Business environment
Take actions on selected key social environment changes accelerated by COVID-19and increased consciousness about global environment as important changes for us
Social environment changesaccelerated by COVID-19
Increased interestin global environment
• Increase in health consciousness
• New lifestyle based on digital
• Changes of values and needs to consumption
• Actions for a decarbonized society
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What we want to be in 2030
1. Product- personalized product
2. Facility & Community- community through sports
3. Analysis & Diagnosis- coaching based on personal data
- Brand Tagline -
Sound Mind, Sound Body
- Corporate Founding Philosophy -
A SOUND MIND IN A SOUND BODY Anima Sana In Corpore Sano”
Business Domains
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Create Quality Lifestyle through Intelligent Sport Technology
Relation between VISION 2030 and Mid-Term Plan 2023
DIGITAL
PERSONAL
SUSTAINABLE
2023 2030
Sound Mind, Sound Body
Mid-Term Plan 2023
• Provide runners with attractive experience through digital
• Integrate sustainability into business activities
• Seed and Early stage in Facility & Community / Analysis & Diagnosis
• Establish strong financial foundation focusing on profitability
VISION 2030
• Provide values for lifetime athletes in all of us to enable healthy and fulfilled mind and body through life
• Further contribution to reduction in the effects on the environment in globe
• Achieve sustainable growth with profit
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As a first phase in VISION 2030:Focus on Running & Product domains supported by other 2 domains
4) Mid-Term Plan 2023
a) Key Direction of Mid-Term Plan 2023b) Management Indexc) Business Portfolio
i. Category strategyii. Regional strategy
d) Strategic Objectivese) Strategic Priorities :Expand profit driverf) Strategic Priorities :Transform to profitable businessg) Strategic Priorities :Reinforce business foundation
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Key Direction of Mid-Term Plan 2023
Sound Mind, Sound Body
Strategic Objectives
Management Direction
Strategic Priorities
Transformation to digital driven company
Realization of a sustainable societythrough business activities
Focus on profit to build a strong financial foundation for sustainable growth
Expand profit driver
• To be No.1 Performance Running & Racing brand
• Steady growth with profit in OT
• Accelerated expansion in Greater China
• Expansion in emerging market
• Growth of service business
Transform to profitable business
• Apparel business
• Concentration on focus sports category
• Redesign of own retail strategy
• Establishment of a profitable structure in mature
market
Reinforce business foundation
• Create innovation by future technology • Category structure management 2.0
• Supply chain and operation reform • Financial strategies with Balance Sheet management
• Strengthen human capital and diversity & inclusion • Further enhance corporate governance
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VISION 2030
Management index
• Build a strong financial foundation through increasing asset efficiency
• Set non-financial targets to realize VISION 2030, and take actions
FinancialIndex
Non-Financial
Index
FY19 FY20 FY21 FY23
OI (100M JPY) 106 -39 70-100 250
OI % 2.8% -1.2% 1.9%-2.6% 6.0% and more
ROA 2.3% -5.0% 0.6%-1.1% 4.0%
EC ratio FY2023 : more than triple (vs FY2019)
The number ofOneASICS membership
FY2023 : 5.0 million (more than triple vs FY2019)
Reduction ratio ofCO2 emission
FY2023 : Achieve about 15% reduction of CO2 emission per product (vs FY2015)
Ratio of female managersFY2023 : 35.0% (in global)※manager: defined as employees who have subordinate to evaluate including store manager
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Category Portfolio
<Sales>
SPS
CPS
APEQ
P.RUN
CPS
SPS
APEQ
P.RUNOT
OT
Category OI10 (100MJPY)
Category OI50 (100MJPY)
Category OI100 (100MJPY)
Category OI300 (100MJPY)
Expand profit driver
Transform to profitable business
Expand profit driver
Performance Running(P.RUN)
Concentrate resources, accelerate sales growth with profitability, and gain back No.1 position
Onitsuka Tiger(OT)
Steady growth with profitability
Transform to profitable business
Core Performance Sports (CPS)
Concentrate on focus sports category
SportStyle(SPS)
Establish brand image of SPS targeting young customers including Gen-Z
Apparel Equipment(APEQ)
Concentrate on Running and Training
<Category OI%>
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Maximize profit through concentration on focus category
FY23FY19
Regional Portfolio
<OI %>
AJP
AJP
OI10 (100MJPY)
OI30 (100MJPY)
OI50 (100MJPY)
ANA
ANA
AEG
AEG
AOP
AOPAGCAGC
ASEAAINAIDAAF
ASEAAINAIDAAF
AKR
AKR
ALA
ALA Improve profitability
Keep high profitability
Accelerate growth
Reform business model
Improve profitability
Japan (AJP)Concentrate on focus sports category and shift to profitable company
North America (ANA)Increase profitability and gain back No.1 running brand position
Europe (AEG) Drive growth focusing on profitability
Keep high profitability
Oceania (AOP)Further grow profit by leveraging No.1 brand position
Accelerate growth
Greater China (AGC)Lead entire company’s growth through accelerating sales growth with profitability
Southeast Asia, India, Indonesia, Middle East(ASEA, AIN, AID, AAF)
Accelerate growth in emerging market
Reform business model
Korea (AKR) Turnaround to be high profitable company
Latin America (ALA)Return to growth through rebuilding business in Latin America market
<Sales>
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Improve profitability in mature market and expansion in emerging market
FY23FY19
Strategic Objectives:Transformation to digital driven company
Personalized coaching
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Find suitable shoes quickly
Contribute to sustainable society
Support goal achievement
Connect to others
Prevent injury andcontinue to enjoy running
Best-in-class running experience enabling healthy and fulfilled livesthrough Running eco system collaborated with digital service
ASICS RUNNING APPS
・Expand touchpoints with customers
・Personalized running experience leveraging data
・Best-in-class shopping experience in omnichannel including EC
・Monetize digital services in the future
Strategic Objectives:Transformation to digital driven company
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EC Sales
FY19 FY23
EC ratio
Enhance value of own EC site,which will be personalized
Promote omnichannel structurebased on own EC site
Enhance customer loyalty based on OneASICS
Strengthen data driven marketing
more thanTriple
Accelerate EC business through expanded touch pointswith customers by leveraging digital
Strategic Objectives:Realization of a sustainable society through business activities
Sound Mind, Sound Body
Offer consistent sustainable brand experiencethrough product creation, communication, and customers’ participation.
Production by sustainable
design and material
Supply chain reform for inventory reduction and zero
waste
Production in factoriesthat meet human rights and
environmental policy
Eco-friendly
shopping experience
Reduction of CO2 emissions by sustainable products
and digital service
Collect and Recycle
used products
Responsible sourcing, Reduce CO2 emissions through building circular business model
FY2050: Net-zero greenhouse gas emissionsFY2030: Achieve 55% reduction of CO2 emission per productFY2023: Achieve about 15% reduction of CO2 emission per product (vs FY2015)
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Contribute to enabling healthy and fulfilled mind and bodyfor people all over the world, and to providing them with
sustainable environment where they can play sports
Contribute to enabling healthy and fulfilled mind and
body for people
Expand profit driver:To be No.1 Performance Running brand
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Increase market share
Focus on digital marketing, Invest on young consumers and emerging markets
Enhance brand position in Marathon
Launch innovative top models, Gain elite runners
Increase profitability
Increase GP through EC shift, S&OP management by supply chain optimization
Build a Running ecosystem
Offer personalized value by leveraging data
Provide every runner with best-in-class running experience
Expand profit driver:Steady growth with profit in OT
17
Further premium of brand and product value
Offer more premium products both in terms of quality and price,and expand communication with customers
Channel strategy focusing on own channel
Maximize brand value through Flagship stores,and expand omnichannel along with digital shift
Regional strategy toward steady growth
Further growth in each Asian country, and enhance brand imagein Europe and USA
Enhance brand value as Premium Lifestyle brand
Expand profit driver :Accelerated expansion in Greater China
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Sales and profit growth in Greater China marketas one of main profit drivers leading company’s growth
Sales growth in Running
Offer innovative products, Enhance brand awareness through Marathon events
Further Digital reinforcement
Further customer data driven, Enhance customer experience EC growth and digital contents
Build new profit driver
Accelerate growth of SportStyle and Kids business in addition to OnitsukaTiger
Expand Distribution areas
Expand distribution channels in strategic growth cities speedily by collaborating with distribution partners and local production
Expand profit driver :Expansion in emerging market
Further accelerate growth through investment in India, Indonesia and Middle East
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Growth toward main profit drivers in the future
Expand profit driver :Growth of service business
Expand existing services
• Low-oxygen training facility(ASICS Sports Complex)
• Functional exercise-specific day care(Tryus)
• Support for companies’ health management
(ASICS HEALTH CARE CHECK)
• Facility management
New business development targeting Women and Kids
20
Growth of service business to become next profit drivertoward VISION2030
Transform to profitable business:Apparel business
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Concentrate on Running and Training
Concentration management resources, Differentiated product development
Channel strategy as per each region’s performance
Accelerate EC shift and reform wholesale and retail business
Review global SCM structure
Improve the efficiency of supply chain process
To be breakeven in Apparel profitability
Transform to profitable business:Concentrate on focus sports category
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Concentrate on focus sports categorybased on each category's strategy and profitability
Focus on Tennis
Increase market share as a brand driver to be No.1 position in Tennis
Growth of Indoor sports in global
Execute strategy considering characteristics in each region
Contribute to brand value with profitability in focus sports category as per market size and market position in each region
Profit management by sports category
Further SG&A control based on improvement of profitability by each sports category
Increase market share in global in Indoor sports and contribute to brand value
Transform to profitable business :Redesign of own retail strategy
23
Improve profitability of own retail throughstrong control of store opening and closing
Store opening and closing carefully considering with/post COVID-19, and close unprofitable stores
Best-in-class store experience collaborated with digital service in omnichannel strategy
Promote customers to sign up for OneASICS membership program,and offer personalized services in retail
New role of Factory Outlet stores
Touchpoint with customers and inventory control for all channels leveraging Factory Outlet stores
Redefine the role of own retail in omnichannel strategy including EC strategy
Transform to profitable business :Establishment of a profitable structure in mature market
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Japan
NorthAmerica
Europe
Sales breakdown
OI %
Sales in mature marketaccounts for about 65%
of total
Japan (AJP)• Focus on Running• To be breakeven in Apparel profitability• Concentrate on focus sports category• Further focus on EC
North America (ANA)• Gain back No.1 in running brand position• To be breakeven in Apparel profitability• GP improvement by inventory control• SG&A control responding to EC shift
Europe (AEG)• Increase market share in running• To be breakeven in Apparel profitability• Strengthen SG&A control
Strengthen profitability of entire company by improving profitability in Japan, North America, and Europe, which have big impact on consolidated profit
Europe
FY19 FY23(%)
Japan
North America
0%
Reinforce business foundation:Create innovation by future technology
Innovative products
Offer personalized value and experience
as well as personalized products
Improve speed & accuracy and reduce cost through process improvement
in design and production
Sustainable design,
Recycling-oriented system
Develop universal designed products,offer contents for supporting
companies’ health management
Contribute to building Running ecosystemthrough collecting and utilizing data.
Create innovative products by designing function with Big data and AI analysis.
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Utilize strategic intellectual property rightsEstablish a Patent portfolio
Create innovative technologybased on DIGITAL / PERSONAL / SUSTAINABLE
• Responding to market change speedily by shortening lead time
Short lead time of development and production by leveraging digital
• Optimization of inventory turnover
Optimize inventory and reduce clearance through improving accuracy
of demand forecast by leveraging digital
• Reduction of logistics cost
Build optimal logistics structure responding to EC growth
Reinforce business foundation:Supply chain and operation reform
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Optimization of Inventory turnover
Product cost reduction Logistics costreduction
Concept/Design/Development Production/Inventory/Logistics
EC, Retail
Wholesale
ExperienceReview
DIGITAL
Maximize efficiency of operation and profitability by leveraging digital
Reinforce business foundation:Strengthen human capital and diversity & inclusion
27
Realize “Sound Mind, Sound Body” by employees
Implement advanced work-style reform by enhancing productivity through digital transformation
Develop talent to lead the business globally
Invest in employees as the next generation leader
Embrace and foster a diverse & inclusive organization
Utilize the diversity of employees to cultivate a culture where all opinions can be freely exchanged and respected to further enhance the company.
Ensure 35% of all management positions are filled by women.
Realization of high performance by strong and fully-engaged employees
Reinforce business foundation:Category structure management 2.0
28
Maximize category profit and controlcorporate expense(non-category cost) by cost owners
SalesGP
CategorySG&A
Categoryprofit
Corporateexpense
OperatingIncome
Maximize category profit
Implement regional and channel strategy
as per each category’s business environment
• Collect and analyze data in a timely manner
• Implement PDCA cycle in business
• Role and Responsibility, Organizational structure
Enhance category structure management
Control corporate expense
Further control corporate expense(non-category
cost) across categories by cost owners
Optimize corporate activities
Concentration on support of category business
and cost reduction
P.RUN CPS SPS APEQ OT
Reinforce business foundation:Financial strategy, Balance Sheet management
29
Plan conservative financial management
to support any business during Mid-Term Plan 2023
Shareholder returns
Financial discipline
In addition to stable distribution of dividends, we will flexibly acquire and retire treasury stock according to the stock price level and market environment, aiming for a total return ratio of 50% and more (throughout the period).
• Maintaining the current equity ratio• Aim to generate cash through continuous working capital improvement activities
30Reinforce business foundation:Financial strategy, Balance Sheet management
Maximize ROA by ROA tree management
Sales
COGS
Advertising exp.
Personnel exp.
Rent
Logistics exp.
Working CapitalTurnover
Fixed costTurnover
GP %
SG&A %
Profit
Efficiency
ROA
Increase market share
and profitability
・Accelerate growth of EC business
・Improve accuracy of demand
forecast and control supply amount
SG&A control by cost owners
・Marketing investment in focus area
・Headcount control
・Redesign of own retail strategy
・Build a optimal logistics structure
・Invest in digital with cost management
Balance Sheet management
・Shorten Cash Conversion Cycle
・Inventory control
・Redesign of own retail strategy
Build profitable structure
Improve asset efficiency
Computer exp.
・・・
Reinforce business foundation:Further enhance corporate governance
31
Ensure execution and monitor Mid-Term Plan 2023
Expedite management decisions ⇒Reduce the number of boards of directors and separate management and execution thoroughly
Strengthen the supervisory function of the board of directors
⇒Grant voting rights to directors who are Audit and Supervisory Committee members
Enhance management transparency ⇒The majority of directors are independent external directors (Internal 3 persons: External 5 persons)
Increase diversity of directors ⇒ Appointment of two female directors
(March, 2020-)
Board of Directors:Monitoring of Mid-Term Plan 2023
Internal 3 persons / External 5 persons
Audit & Supervisory Committee
Internal 1 person / External 2 persons
Executive Board :Planning of Mid-Term Plan 2023 and Certain execution
Audit,Super-vise
Audit, SuperviseMonitor,Supervise
ENDEEND