Written by Rocky Swift
TOKYO (Reuters) – The Japanese operator of fashion giant Uniqlo on Thursday raised its forecast for what would be a third straight year of record profit, helped by strong sales at home and some overseas markets.
The domestic market has been a bright spot for Fast Retailing, helped by increased sales of duty-free goods by tourists who took advantage of the yen’s slide to a 38-year low.
Meanwhile, the company said there were signs of maturity in China, its largest overseas market.
The company raised its full-year operating profit forecast to 475 billion yen ($2.94 billion) for the fiscal year ending in August from 450 billion yen, citing strong performance since the second half.
The company said that “the strong results were supported by Uniqlo Japan as well as Uniqlo’s international business, which saw strong performance in North America, Europe and Southeast Asia.”
Uniqlo is known for its quality, affordable basics, and Fast Retailing is benefiting from a weak yen that has boosted its overseas sales.
The company said the weaker yen also helped in Japan, where duty-free sales doubled during the nine-month period.
“If the number of incoming customers increases in the future, we will of course make every effort to try to attract that demand,” said Takeshi Okazaki, the company’s chief financial officer.
But a weaker yen and the domestic inflation it fuels contributed to very different results for Seven & I, the leading department store retailer, whose quarterly operating profit fell 28%.
Customers are becoming more cost-conscious due to price increases and other factors, said Seven & I’s head of domestic retail business.
Fast Retailing is planning an aggressive growth trajectory overseas, capitalizing on a post-pandemic shift among many consumers toward value over luxury.
With more than 900 stores in mainland China, Fast Retailing is a benchmark for global retailers operating in the world’s second-largest economy.
During the nine-month period, operations in Greater China saw a decline in revenue and a significant decline in profit, due in part to strong performance in the prior year and an overall slowdown in consumer appetite, the company said.
Fast Retailing now plans to open 50 to 80 stores in the market annually, compared with targets of up to 100 in recent years.
“The development of chain stores has matured and we are approaching a turning point,” said Pan Ning, CEO of Uniqlo Greater China.
Fast Retailing Group’s operating profit in the fourth quarter ended in May rose 31 percent from a year earlier to 144.7 billion yen, beating expectations of 127.1 billion yen, based on a poll of six analysts by the Tokyo Stock Exchange Group.
The company’s shares are up about 26% so far this year, roughly in line with the advance of the benchmark index.
(1 dollar = 161.7100 yen)
