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Fast Retailing Posts Record FY18 Profits After International Sales Outstrip Domestic

Fast Retailing reached record highs in both revenue and profits for the fiscal year 2018 due to strong growth in sales, particularly international, which eclipsed domestic sales for the first time.

From August 2017 to August 2018, Fast Retailing saw a profit of 236.2 billion yen ($2.1 billion), a 33.9% increase over FY2017. The organization also reported a revenue increase of 14.4%, to 2.13 trillion yen ($19 billion) for the same time period.

FY2018 saw “significant profit contributions” from Uniqlo international, according to Fast Retailing’s earnings report, and a near match in profit to its domestic operation. Profit for Uniqlo Japan increased by 6.7%, to 119.0 billion yen ($1.06 billion), while Uniqlo International pulled in a 118.8 billion yen profit to clock an increase of 62.6% year-over-year.

Revenue for Uniqlo increased by 6.7% domestically, to 864 billion yen ($7.7 billion), and by a healthy 26.6% internationally for a total of 896.3 billion yen ($7.9 billion).

Fast Retailing attributes the growth in international sales for its flagship brand to “favorable new store openings” and steady sales in all regions. Greater China experienced double-digit growth in online sales, which contributed to 15 percent of Uniqlo International revenue. Uniqlo USA reported an operating loss, as was expected, but was able to reduce the losses by half in FY2018 by “reviewing a tailored mix for consumers on the East and West coasts and achieving more accurate sales planning.”

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Uniqlo Japan grew its same-store sales by 8.4% in the first half of FY2018, compared to 3.3% for the latter half, which Fast Retailing attributes to an unseasonably cold winter and “timely” production of its best-selling products. A waning yen was counteracted by enacting fewer discount rates and fewer expenses in advertising, distribution and personnel.

In what Fast Retailing called a “concerted shift towards a business format that relies less heavily on discounting,” discounts were cut for Uniqlo both domestically and internationally. Along with cost-cutting, the company says this strategy helped increase gross profit margins by 0.4% and 1.1%, respectively.

The Global Brands unit also reported an increase in profit but gains were hampered by an operating loss due to impairment costs. Fast Retailing attributed a significant portion of the unit’s growth in revenue, 9.5% for the year, to profit gains from its Theory brand.

For 2019, Fast Retailing predicts another record-breaking performance. It sees revenue increasing by another 8 percent across all brands, with a profit increase of 14.3%. As a result, dividend payments will increase by 40 yen (36 cents) per share compared to the most recent forecast, and Fast Retailing has claimed a total per-share value of 440 yen ($3.93), a 20.5% increase over 2017, at year’s end.