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Fast Retailing Cuts Profit Outlook Despite Uniqlo Recovery

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Uniqlo

It’s third time unlucky for Japan’s Fast Retailing.

Uniqlo’s parent trimmed its profit outlook again on Thursday, after previously lowering guidance in April as well as January. Investors can blame it on the Brexit this time.

The company said it revised its forecast down from 60 billion yen ($564 million) to 45 billion yen ($423 million) for the year ending Aug. 31 due to a 37 billion yen ($348 million) loss resulting from a rising yen against the British pound and U.S. dollar.

But it wasn’t all bad news. Fast Retailing also reported a 6.4% year-on-year increase in consolidated revenue in the nine months ended May 31 to 1.4 trillion yen ($13.2 billion). This uptick was down to a rise in revenue in each of the company’s three segments—Global Brands, Uniqlo Japan and Uniqlo International.

After poor sales plagued Uniqlo stores in Japan, Greater China and the U.S. in the first six months of the fiscal year, performance improved in the three months from March to May. As a result, consolidated revenue rose 6.2% in that period and operating profit expanded 18.6% year-on-year.

“Same-store sales rose on the back of strong sales of trendy ranges and items featured in our sports campaign,” the company said of its Japanese locations. “With these strong trends continuing into the fourth quarter, second-half revenue and profit will likely rise.”

Profits also recovered in Greater China, while stores in Southeast Asia and Oceania and Europe generated gains in both revenue and profit. In the U.S., where Uniqlo has been quietly trimming its store count, operating losses shrank. One blight on the company’s books was South Korea, where profits continued to fall.

In the Global Brands segment, the low-priced GU line enjoyed double-digit growth in same-store sales, while Theory’s profits rose slightly. However, Comptoir des Cotonniers’ losses widened and Princesse Tam.Tam and J Brand reported similar losses to last year.

Looking ahead, Fast Retailing said it’s focusing its efforts on expanding Uniqlo’s global operations as well as GU. In fact, the company said it expects to accelerate GU store openings outside Japan going forward.

“On the product side, we have sought to boost awareness and visibility of the Uniqlo brand across global markets by offering exciting collaborations with well-known designers and artistic directors from other brands, such as Ines de la Fressange, Lemaire, and Carine Roitfeld,” Fast Retailing said.

It’s also set a target to expand e-commerce to 30 percent of total sales over the medium term, and it’s currently in the process of “aggressively transforming” its distribution systems.

As of May 31, Uniqlo had 1,774 locations worldwide.

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