Key facts
- Asics' Onitsuka Tiger brand is launching a global expansion to meet surging demand for its retro sneakers.
- Onitsuka Tiger will be transferred to a new wholly-owned subsidiary, OT Group, through a company split.
- The brand achieved a profit margin of approximately 40% in the January-March quarter.
- Onitsuka Tiger plans to open new flagship stores in Europe, the U.S., China, Italy, and South Korea.
- Analysts express concerns that the expansion strategy could put Onitsuka Tiger's high profit margins at risk.
Asics' Onitsuka Tiger brand is embarking on a global expansion to capitalize on booming demand for its retro shoes, with plans to open flagship stores in Europe and the United States. The brand, known for its yellow and black sneakers featured in the movie "Kill Bill," will be transferred to OT Group, a wholly-owned subsidiary, via a company split, with Ryoji Shoda leading the new entity.
Onitsuka Tiger has seen significant growth, with sales increasing by a third in the January-March quarter and achieving an operating profit margin of approximately 40%, the highest among Asics' businesses. Analysts, however, caution that this ambitious expansion strategy, including capital-intensive flagship store openings, could put these impressive margins at risk. Becoming a standalone business will incur costs, and execution risk is present.
The brand aims to re-enter the U.S. market in February with a Los Angeles flagship store. This move is seen as positive for both Onitsuka Tiger and Asics, potentially elevating the company to a new level, especially in the competitive U.S. sportswear market. The increased independence could allow Onitsuka Tiger to pursue a more controlled distribution strategy, differentiating it from Asics' mass-distribution model.
Onitsuka Tiger's origins trace back to 1949, with its iconic Mexico line launching in 1966. Asics relaunched the brand in Europe in 2002 as a fashion label. Its popularity has surged due to a revival of retro-inspired trainers and a consumer shift towards minimalist shoes. The brand also benefits from growing consumer interest in alternative sneaker brands and fatigue with the dominance of Nike and Adidas. Onitsuka Tiger plans to open more stores globally, including in China, Italy, and South Korea.