Uniqlo’s owner boosts profit outlook as overseas sales expand

[TOKYO] Fast Retailing raised its full-year operating profit outlook, thanks to strong margins and gains driven by strong Uniqlo demand in the US and Europe, reflecting the growing contribution of the apparel maker’s international business.

The Japanese clothing company now sees operating income of 700 billion yen (S$5.61 billion), compared with its previous guidance of 650 billion yen for the fiscal period through August. That’s well above analysts’ average estimate for 657 billion yen.

The results suggest that Uniqlo’s growth will become increasingly driven by overseas markets, particularly the US and Europe, while Japan remains a steady base.

As Fast Retailing founder and chief executive officer Tadashi Yanai pushes toward his 10 trillion yen sales target with global expansion at the core, the outlook upgrade is another indication of whether that momentum can hold as demand diverges across regions.

The full-year revenue forecast is now 3.9 trillion yen instead of 3.8 trillion yen, and higher than analysts’ prediction for 3.8 trillion yen. Fast Retailing said it now expects to achieve its full-year revenue targets of 500 billion yen in Europe and 300 billion yen in North America during this fiscal year, a year ahead of schedule. 

Asked about the impact of the Iran conflict in the Middle East, Yanai said that the impact has been limited so far and that the company has already secured supplies through August. “Much will depend on how long and how intense the conflict becomes – we’ll continue to closely monitor the situation and assess any potential impact,” he said.

For the three months ended February, operating profit was 190 billion yen. That compares with the 161 billion yen average projection by analysts, according to data compiled by Bloomberg.

Uniqlo’s sales in greater China saw strong sales and profit, supported by spring merchandise during the Lunar New Year shopping season. Revenue in the region rose 7.2 per cent year-over-year, while its North America revenue jumped 29 per cent in the same period to 177.6 billion yen.

The numbers also show that earnings momentum is being driven as much by margin expansion as by sales growth. For the first half, operating profit rose 32 per cent on revenue growth of 15 per cent, supported by improvements in both gross margin and cost controls, with the company trimming its selling and administrative expenses. 

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The shift toward overseas markets is also becoming more pronounced, with international operations delivering a 37 per cent jump in profit, far outpacing Japan. The strongest performance came from North America, Europe and parts of Asia outside China, where double-digit growth reflects traction for the brand’s core products and marketing strategy. 

Although sales and profit in Japan remain stable, its share of revenue continues to decline, highlighting the increasingly international nature of its results. 

Last month, the company struck a landmark deal with Major League Baseball that brought the Japanese company to the forefront of the newly renamed Uniqlo Field at Dodger Stadium. Founder Tadashi Yanai previously told Bloomberg that he is targeting 3 trillion yen in annual US sales, with a goal to expand deeper into Middle America. BLOOMBERG