Onitsuka Tigerfamous for its sneakers yellow and black, is embarking on a global expansion to take advantage of growing demand for its retro sneakers, but analysts warn that this ambition could put its impressive profit margins at risk.
Onitsuka Tigerwhose sneakers the actress wore Uma Thurman in the 2003 hit movie “Kill Bill,” is opening flagship stores in Europe and the United States, an expansion it aims to accelerate as the brand becomes an independent company.
asicswhose market value is around $20 billion, announced Wednesday that Onitsuka Tiger would be transferred to OT Groupa subsidiary it owns, through a spin-off of the company, and that the current director of the brand, Ryoji Shodawould lead the new company.
Onitsuka It has already benefited from tourism attracted to Japan thanks to the depreciation of the yen, which boosts purchases. Sales grew by a third in the January-March quarter, with an operating profit margin of around 40%, the highest among companies in asics.
These margins are at “a level much closer to that of luxury brands than to that of traditional sporting goods companies,” he stated. Mark Chadwickanalyst who publishes in smartkarmawarning that the brand’s new structure could jeopardize its high margins.
Onitsuka plans to return to the US market next February with a flagship store in Los Angeles, three years after closing the one it had in New York.
Kateryna Illyushenkoa portfolio manager at Union Investment in Frankfurt, which owns shares of asicsstated that the split would be positive for both brands, as they have their sights set on the world’s largest sportswear market, dominated by Nike.
“The great objective of asicsthe next big step, is to be successful in the United States,” Illyushenko said. “If they succeed so much to Onitsuka Tiger as for asicsthat would take the company to another level.”
According to Illyushenkothe greater independence of Onitsuka could help the brand adopt a more controlled distribution strategy, with flagship stores and only select retailers, while asics It has a more massive distribution model.
Onitsuka benefits from retro revival
The brand Onitsuka Tigerwith almost 80 years of history, traces its origins to a footwear company founded in the city of Kobe in 1949 by Kihachiro Onitsukabut the Mexico line, which features its iconic stripes, wasn’t launched until 1966, after products like basketball shoes.
During that decade, Nikeopens a new tab. The co-founder Phil Knight met with directors of Onitsuka and began importing and distributing the company’s running shoes in the United States.
After a period of inactivity, asics relaunched Onitsuka Tiger in Europe in 2002, recovering its classic design as a fashion brand. Its Mexico 66 model sells for 16,500 yen (US$102.76) in Japan and 160 euros in Europe.
The popularity of Onitsuka Tigerwhich named K-pop group TWICE’s Momo as its brand ambassador in 2022, has risen sharply in recent years, thanks to the resurgence of retro-style sneakers and the shift from bulky basketball models to narrower, lower-profile shoes.
