ASICS Corporation

The company is exposed to intense competition from domestic and overseas competitors, and technological innovation by competitors, among other factors, could result in a decline in sales of ASICS brand products or a contraction of sales channels. In addition, research and development requires substantial upfront investment, and there is no guarantee that such investment costs will be recovered, which could adversely affect the financial position and results of operations. While the company currently possesses brand strength and product competitiveness, future superiority is not guaranteed.

The company manufactures and sells products globally, and prepares consolidated financial statements by translating local-currency financial statements of each region into yen, meaning that fluctuations in exchange rates affect the value after yen translation. The majority of product procurement is denominated in US dollars, and fluctuations in the exchange rates of other currencies against the US dollar could increase manufacturing costs, potentially adversely affecting the financial position and results of operations. The company seeks to reduce this risk through forward foreign exchange contracts within the scope of actual demand, but this does not completely eliminate foreign exchange risk.

A portion of product manufacturing is outsourced to external partner factories, mainly in Southeast Asia, which entails inherent risks such as delivery delays, product defects, labor issues, and production suspensions due to natural disasters. In addition, the procurement cost of raw materials for footwear products is linked to international crude oil prices, and significant fluctuations in crude oil prices could affect raw material prices several months later, potentially adversely affecting the financial position and results of operations. Furthermore, significant fluctuations in international logistics prices also pose a risk to product procurement costs.

If personal information or trade secrets are leaked or disclosed due to sophisticated cyberattacks, or if sales operations are suspended, this could adversely affect the financial position and results of operations through damage claims from customers, lost sales opportunities, and loss of credibility, among other factors. Although an Information Security Committee has been established and a dedicated security team is implementing countermeasures, complete protection cannot be guaranteed. Risks of hardware and software malfunctions and loss of critical data due to system failures also coexist.

The company has a policy of actively utilizing M&A as a means of expanding into new markets, and while due diligence is conducted, events not identified during the investigation stage may occur or come to light after the M&A is executed. If business development after an M&A does not proceed as planned, the initially expected contribution to performance may not be achieved. In addition, if a decline in profitability occurs with respect to goodwill and other assets recorded in connection with an M&A, an impairment loss must be recognized, which could adversely affect the financial position and results of operations.

In business activities in overseas markets, including the United States, Europe, and China, there exist risks specific to those regions, such as labor disputes including general strikes, rising wage levels in Asia, political instability, unforeseeable legal and regulatory changes, and changes in trade regulations and tariffs. Should these risks materialize, they could adversely affect the financial position and results of operations of the ASICS Group. As the countries and regions in which the company operates are expected to continue expanding, the scope of these risks may also increase.

If a contract manufacturing factory is found to be in non-compliance with labor standards or to have used hazardous or restricted chemical substances, this could damage the company's corporate image regardless of the actual facts. Delays in responding to climate change, such as reducing greenhouse gas emissions and transitioning to renewable energy, could also lead to a decline in social credibility. Furthermore, a shrinking market due to reduced time spent on sports as a result of natural disasters and climate change, suspension of operations at contract manufacturing factories, and fluctuations in raw material prices, among other factors, could affect the business and financial condition.

The company holds personal information of customers and employees on a global level, requiring compliance with personal information protection laws in various countries, including the EU's GDPR. Since violations of the EU General Data Protection Regulation could result in fines imposed on the company, potentially adversely affecting the financial position and results of operations, the company has applied to EU authorities for Binding Corporate Rules. The company seeks to reduce this risk by developing internal systems and processes and strengthening training, but this does not guarantee complete avoidance of the risk.

The "Medium-Term Management Plan 2026," formulated in November 2023, sets forth the goal of "transformation into a Global Integrated Enterprise" and the achievement of management targets; however, if global collaboration cannot be effectively implemented, or if market share expansion and market size growth in each country do not materialize as expected, the plan may not progress as planned. Should other various risk factors materialize, the company may also fail to achieve its targets within the initially planned period or thereafter.

In promoting global business activities, the development and retention of talented personnel who can perform effectively is an urgent priority, and the company is implementing measures such as active recruitment activities in Japan and overseas, enhanced training and education, and prevention of the loss of core personnel. Despite these measures, if the development and retention of human resources and the appropriate placement of personnel do not proceed as planned, this could, from a long-term perspective, adversely affect the financial position and results of operations of the ASICS Group.