Retail in Asia


Uniqlo owner sets record profits

The Japanese retailer Fast Retailing, which owns Uniqlo, reported a 60.9 percent increase in net profit of JPY 273.3 billion (HKD 14.6 billion) in the 12 months through August.

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In the first three quarters of its fiscal year, Japan’s biggest retailer posted strong results in North America and Europe, but investors look towards China, where it has nearly 900 stores. This new and rising high comes as a result of the decline in the JPY and a steady recovery in clothing demand as people learned to cope with pandemic restrictions.

Furthermore, the company’s revenue increased 7.9 percent to JPY 2.3 trillion, and its operating profit rose 19.4 percent to JPY 297.3 billion, from 249 billion last year. For the fourth quarter, analysts predict profits will decline by 7 percent.

Its founder, Japan’s richest man, Tadashi Yanai, is a bellwether for global retailers operating in China, the world’s second-largest economy, where COVID-19 controls have hurt sales and profits.

Thus, Fast Retailing has focused more on North America as its Chinese operations slumped and expects to turn a profit for the first time in the region this year.

“China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking down are the North America growth and the JPY depreciation” wrote LightStream Research analyst Oshadhi Kumarasiri.

“Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation” he stated.

Over the past fiscal year, the JPY exchange rate against the US dollar weakened by about JPY 29 to reach the period end rate of JPY 138.7, gaining JPY 114.3 billion in foreign exchange gains.

As a result of the weakening JPY, Uniqlo’s international business saw a 20.3 percent increase in revenue year-over-year, and JPY 158.3 billion increase in operating profit.

Despite stricter Covid-related controls, Fast Retailing’s operating profit fell 17 percent in Mainland China despite a slight increase in Uniqlo sales. Despite lingering weaknesses in the Chinese market, the company said sales picked up from the fourth quarter as curbs were eased in the region.

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Over 900 Uniqlo stores are located on the mainland of China, making it the company’s biggest overseas market. The company plans to open 100 stores in Greater China each year as Covid curbs relax in the second half of next year, and Fast Retailing expects large sales and profit gains there.