Uniqlo operator Fast Retailing’s Q2 profit climbs 7.2%

Japan’s Fast Retailing said on Thursday (Apr 11) that second-quarter profit increased by 7.2 per cent, continuing momentum for what the Uniqlo operator expects to be a third straight year of record earnings.

Operating profit was 110.4 billion yen (S$976.09 million) in the three months ended in February, compared with 103 billion yen the prior year and the 114.3 billion yen average estimate of five analysts in an LSEG survey.

Fast Retailing left its full-year operating profit forecast unchanged at 450 billion yen.

Known for its fleece jackets and inexpensive basic clothing items, the company is benefiting from a recovery in China, its biggest foreign market, and a slide in the yen to a 34-year low that boosts the value of its overseas sales.

And as the company charts an aggressive growth trajectory in Greater China, North America and Europe to take on entrenched rivals H&M and Zara owner Inditex, it is taking advantage of a post-Covid shift among many consumers for value over luxury.

Its ambitious growth moves in Western markets comes as sales in its home market weaken, with seven flagship stores in the two overseas regions now among its top 10 best-selling Uniqlo stores.

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“The apparel market in Europe is worth 70 trillion yen, but Uniqlo’s share is still only about 0.5 per cent of that,” Uniqlo Europe CEO Taku Morikawa told a results press conference.

“In the central areas of London and Paris, Uniqlo has not caught fire in comparison to competitors.”

Fast Retailing said both North America and Europe reported large revenue and profit gains that were higher than expected, and anticipated record performances from the regions in its fiscal second-half to end-August.

The results follow a 25 per cent jump in earnings in the first quarter on the back of strong sales in China following years of pain during the coronavirus pandemic. With its 922 stores in mainland China, Fast Retailing is a bellwether for global retailers operating in the world’s second-biggest economy.

The company, founded and run by Tadashi Yanai, Japan’s richest man, has posted record results in the past two years and is projecting profits to climb again this year.

As in previous press conferences, Yanai dismissed on Thursday the positive impact of the yen’s depreciation on Fast Retailing, calling it a negative overall for Japan. “I think it’s a bit strange for people to be happy about a weakening yen,” he said. REUTERS