While consolidated revenue fell in the first half, profit rose for the period for Fast Retailing Co. Ltd., helped by Uniqlo operations in Japan and the Greater China region.
In a Nutshell: “Uniqlo operations in Japan and the Greater China region (Mainland China market, Hong Kong market, Taiwan market) reported large profit gains that were higher than expected,” Fast Retailing said.
The company said same-store sales at Uniqlo Japan rose 5.6 percent year-on-year. It saw strong sales of products for stay-at-home demand, along with Fall-Winter offerings. E-commerce sales rose 40.5 percent in the half to 73.8 billion yen ($676.5 million).
At Uniqlo International, even though revenue declined, operating profit jumped 25.9 percent to 67.0 billion yen ($614.2 billion). The retailer said it posted strong profit gains from the Greater China region, and saw its South Korea operation move back into the black for the reporting period, after posting a loss in fiscal 2020. East Asia operations were strong overall, but the markets that were most impacted by the Covid-19 pandemic continued to struggle. South Asia, Southeast Asia and Oceania and Europe regions reported large declines in revenue and profit. In the U.S., the business posted a decline in revenue and a wider operating loss.
Net Sales: Total net sales for the first half ended February 2021 fell 0.5 percent to 1.202 trillion yen ($11.02 billion) from 1.208 trillion yen ($11.07 billion).
For its core Uniqlo business, Uniqlo Japan saw revenues rise 6.2 percent to 492.5 billion yen ($4.51 billion) from 463.5 billion yen ($4.25 billion). The company said it saw strong sales in loungewear and its HEATTECH blankets, as well as ultra stretch active jogger pants and other items in its sport utility wear range from the Fall-Winter line.
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At Uniqlo International, revenue fell 3.6 percent to 521.8 billion yen ($4.78 billion) from 541.2 billion yen ($4.96 billion), hurt mostly by Covid-19 conditions. However, e-commerce sales remained strong with online sales rising in each market, the company said. Fast Retailing also noted that Vietnam, where the impact of Covid was low in the first half, saw ongoing strong sales and a large rise in profits as the popularity of the Uniqlo brand increased. “Russia achieved double-digit growth in first-half same-store sales and a large rise in operating profit as stores were not required to close temporarily in that market and sales of Winter items proved strong” Fast Retailing said.
Earnings: Net profit for the year was up 5.4 percent to 105.8 billion yen ($969.8 million) from 100.4 billion yen ($920.3 million).
For fiscal year 2021, Fast Retailing raised guidance, expecting consolidated revenue to rise 10 percent to 2.210 trillion yen ($20.26 billion) on a forecasted profit jump of 82.6 percent to 165.0 billion yen ($1.51 billion).
Company Update: “We revised up our full-year business estimates to reflect the higher-than-expected performance in the first half. Second-half forecasts remain unchanged,” the company said.
Fast Retailing added that revised guidance has incorporated risk of further impairments in the second half, such as “losses on retirement on non-current assets and store-closure losses linked to our intended scrap and build strategy of replacing smaller, less profitable mainly Uniqlo stores with larger ones.”
The company expects that its total store network will expand to 3,663 stores by the end of the fiscal year in August 2021. In addition to its core Uniqlo operation, it also operates its GU stores and Global Brands stores, consisting of Theory and Comptoir des Contonniers.