Japan's Asics to spin off popular Onitsuka Tiger sneaker business; shares rise
Asics' Strategic Move and the Impact of Onitsuka Tiger
By Mariko Katsumura and Chang-Ran Kim
Spin-Off Announcement and Details
TOKYO, June 10 (Reuters) - Japan's Asics on Wednesday said it will spin off its high-end Onitsuka Tiger business, a key driver behind four straight years of record profit thanks to a tourism boom and a surge in demand for its retro-inspired sports shoes.
Under the plan, the nearly 80-year-old Onitsuka Tiger business will be transferred to OT Group, a wholly owned subsidiary, via a company split that will be effective on January 1, Asics said. The deal does not require regulatory approval.
Objectives of the Spin-Off
The move is aimed at speeding up decision-making and boosting the brand's global competitiveness, it added.
Expert Opinion
"As organisations grow too large, decision-making often slows as approvals become more layered and time-consuming," said Tatsunori Kawai, chief strategist at Mitsubishi UFJ ESmart Securities. "So a spin-off is an ideal move for such fast-growing companies.
"Onitsuka Tiger has already established a solid and independent brand position and there's not much domestic competition. The spin-off is unlikely to erode Asics’ core business."
Market Reaction and Brand Performance
Shares of Asics, which competes with the likes of Nike, Adidas and Puma, rose nearly 2% in Tokyo, compared with a 0.7% fall for the broader TOPIX index. The stock has jumped roughly sevenfold over the past five years, giving it a market value of about $20 billion.
Onitsuka Tiger's Popularity and Growth
Onitsuka Tiger sneakers enjoyed something of a revival after they appeared in Quentin Tarantino's 2003 movie "Kill Bill," with actress Uma Thurman sporting a mustard yellow pair in the film.
Onitsuka Tiger has been a key growth driver for Asics in recent years. Sales of the brand jumped 43% from a year earlier to 136.5 billion yen ($851 million) in the year that ended in December, buoyed by strong demand in Europe, inbound tourism to Japan and a weaker yen.
The Onitsuka Tiger business posted a profit margin of nearly 38%, the highest among Asics’ five core categories.
Customer Appeal and Brand Heritage
Customer Experiences
In February, the Japanese maker of athletic and lifestyle footwear and apparel forecast another year of record profit this year.
Brazilian Ana Lebl, 18, was among scores of duty-free shoppers who bought a pair of the brand's yellow Mexico 66 SD trainers, which feature a black stripe pattern, last week at an Onitsuka Tiger store in Tokyo.
"I’ve always seen them online and they're so fun," she said, adding that shopping at Onitsuka Tiger was high on her bucket list for her Japan visit. "Even before my trip, some of my friends asked me if I was going to the store and told me about the shoes they got."
Brand Origins
Known for its minimalistic designs, Onitsuka Tiger traces its roots to Asics’ predecessor, founded in 1949 by Kihachiro Onitsuka, who sought to make sports shoes out of a belief that nurturing healthy young people was essential to rebuilding Japan after World War Two.
Onitsuka developed his first pair of basketball shoes and named the brand “Tiger,” inspired by the strength and agility of what he saw as Asia’s most powerful animal.
Additional Information
($1 = 160.3400 yen)
(Reporting by Mariko Katsumura and Chang-Ran Kim; Editing by Anne Marie Roantree and Thomas Derpinghaus)
