Premium denim brand J Brand Inc. liquidated in August, but its product will still be sold by parent company Fast Retailing Group, which recently saw Vietnam delays affect Uniqlo shipments.
In a Nutshell: After J Brand exited wholesale in November last year to focus on direct distribution, the Uniqlo owner planed to “rearticulate” the denim brand’s model, according to Kazumi Yanai, J Brand’s chairman and a senior executive officer at Fast Retailing, which acquired the label in November 2012 for $290 million. A direct-to-consumer approach now sells J Brand merchandise at channels operated by Fast Retailing, including stores and the website operated by sister brand Theory. Fast Retailing could potentially revive standalone J Brand stores down the road.
In fiscal 2022, Fast Retailing plans to focus on transforming its earnings structure through high-quality sales, turbocharging s e-commerce, diversifying global revenue, and pursuing a medium to long-term growth strategy.
Net Sales: The company said revenue for the year ended Aug. 31 rose 6.2 percent to 2.132 trillion yen ($18.77 billion) from 2.008 trillion yen ($17.7 billion).
By business group, Uniqlo Japan revenue rose 4.4 percent to 842.6 billion yen ($7.42 billion) from 806.8 billion yen ($7.10 billion). First-half profit rose on the back of strong sales, but second-half profits declined. While the third quarter profit rose, the fourth quarter saw declines due to “stronger inventory rundowns” and lower-than-expected sales due to Covid-19 restrictions on movement.
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At Uniqlo International, revenues were up 10.2 percent to 930.1 billion yen ($8.19 billion) from 843.9 billion yen ($7.43 billion). E-commerce sales rose 20 percent year-over-year to about 20 percent of total sales. The Greater China region—Mainland China, Hong Kong and Taiwan—saw large increases in both revenue and profit, while sales recovered in North America and Europe as Covid restrictions eased. South Asia, Southeast Asia and Oceana, which includes Australia and India, saw declines in revenue due to Covid-19.
Uniqlo’s GU business was up 1.4 percent to 249.4 billion yen ($2.19 billion), from 246.0 billion yen ($2.16 billion), although same-store sales fell slightly because of shortages of some strong-selling items, Covid-19 impact and a miss on some fashion merchandise. And its Global Brands division, which includes Theory and J Brand, slipped 1.3 percent to 108.2 billion yen ($952.2 million) from 109.6 billion yen ($964.5 million).
Earnings: Profits for the year rose 88.0 percent to 169.8 billion yen ($1.49 billion) from 90.3 billion yen ($794.7 million).
The company forecasts a 3.1 percent gain in consolidated revenue for fiscal year 2022 to 2.200 trillion yen ($19.36 billion), and a 3 percent gain in profits of 175.0 billion yen ($1.54 billion).
Fast Retailing said it expects revenue and profit to decline in the first half from Sept. 1, 2021 to Feb. 28, 2022 because it believes that Covid-19 restrictions and temporary store closures could still impact retail, as well anticipated negative impact from production or transportation delays. The company said it expects these concerns to ease in the second half from March 1, 2022 to Aug. 31, 2022, which in turn should see a rise in revenue and an expansion of profits.
Company’s Take: “We expect Uniqlo Japan will report lower revenue and profit in fiscal 2022 on the back of a temporary decline in business performance while structural reforms of the business, such as normalizing inventory and restricting discounting, are being carried out,” the company said. Uniqlo International is expected to generate increases in full-year revenue and profits.