Uniqlo owner Fast Retailing reported its third quarter financial results with a 43% fell in net profit due to Covid-19.
Uniqlo Japan reported large declines in both revenue and profit in the first nine months of fiscal 2020, with revenue declining to US$5.5 billion (−14.6% year-on-year) and operating profit contracting to US$737 million (−18.1% year-on-year) due to COVID-19 impact.
In March to May 2020, UNIQLO Japan same-store sales (including e-commerce sales) declined by 34.0% year-on-year following the temporary closure of a maximum 311 out of a total 813 stores during the period from late March through to early May. However, sales subsequently started to recover from the middle of May onwards once stores reopened for business, resulting in a significant recovery in sales for the month of June.
Meanwhile, e-commerce sales continued strong, recording a very healthy 47.7% year-on-year rise in the third quarter as digital advertising and TV commercials drew more customers to online store. The gross profit margin improved 3.3 points year-on-year in the third quarter. In light of the large decline in revenue, UNIQLO Japan’s selling, general and administrative expense ratio increased by 9.5 points year-on-year in the third quarter, but those expenses declined year-on-year in monetary terms.
UNIQLO International reported a sharp decline in both revenue and profit in the first nine months of fiscal 2020, with revenue falling to US$6 billion (−17.9% year-on-year) and operating profit contracting to US$483 million (−58.5% year-on-year).
In the three months from March to May 2020, all markets reported large declines in revenue and profit as a result of COVID-19, but e-commerce sales expanded strongly thanks to concerted efforts to strengthen digital marketing and expand free delivery services in all UNIQLO International operations.
Breaking down the third-quarter performance into individual regions, while Greater China reported a large decline in revenue and profit for the quarter, both revenue and profit actually increased year-on-year in May and the region is now exhibiting a favorable pace of recovery. In South Korea, same-store sales declined sharply as Japan-Korean tensions and COVID-19 knocked customer visits lower, resulting in an overall operating loss for the quarter. UNIQLO South, Southeast Asia & Oceania, which includes Southeast Asian nations, Australia, and India, reported a sharp decline in revenue and an operating loss for the quarter after stores had to temporarily close their doors due to COVID-19 from the middle of March and tourist numbers also declined as a result of the virus. However, performance recovered favorably and exceeded expectations in Vietnam after that nation lifted its lockdown relatively quickly compared to other markets. Nearly all stores in North America remained closed from the middle of March through end May, resulting in a large decline in revenue and a wider operating loss for the quarter. UNIQLO Europe also reported a sharp fall in revenue and an expanding operating loss as stores in the region’s larger markets of the UK, France, and Russia remained closed for business from the middle of March through to the end of May.
Fast Retailing’s new estimates for the full business year through end August 2020 are that FY2020 consolidated revenue to total US$18 billion (−13.1% year-on-year), consolidated business profit to total US$1.3 billion (−43.4% year-on-year), consolidated operating profit to total US$1.2 billion (−49.5% year-on-year), and profit attributable to owners of the parent to total US$792 million (−47.7% year-on-year). These new forecasts include a US$932 million downward revision in revenue and a US$139 million downward revision in operating profit compared to its most recent estimates issued in April.
The dividend forecast remains unchanged and it is still scheduled to pay an annual dividend per share in FY2020 of US$4.48, split equally between interim and year-end dividends of US$2.24 each. This dividend is the same as the FY2019 level.