Uniqlo parent Fast Retailing Co. posted revenue and profit declines at all four business segments for the third quarter, citing the coronavirus’ impact.
In a Nutshell: Temporary store closures because of the COVID-19 pandemic weighed on the retailer’s results in the third quarter ended May 31. The company also said profit fell sharply as a result of impairment losses of 15.2 billion yen ($141.8 million) on “property, plant and equipment at loss-making stores and right-of-use assets.”
One early takeaway from early results in June, the start of the fourth quarter reporting cycle, was that the recovery in Greater China appears to be occurring faster than expected. The Japanese firm also noted early gains at its Uniqlo business in its home market.
The company revised fiscal year 2020 estimates, with revenue expected to decline 13.1 percent to 1.990 trillion yen ($18.57 billion) and profit seen dipping 47.7 percent to 85.0 billion yen ($793 million). The revision was due to third-quarter results coming in below plan because of COVID-19.
Net Sales: For the third quarter, revenue fell 39.4 percent to 336.4 billion yen ($3.14 billion), and it posted an operating loss of 4.3 billion yen ($40.12 million), the company said. For the nine months, revenue was down 15.2 percent to 1.545 trillion yen ($14.41 billion) from 1.823 trillion yen ($17.01 billion) in the comparable nine-month period.
By segment, Uniqlo Japan posted a 35.5 percent decline in revenue to 135.2 billion yen ($1.26 billion). Same-store sales fell 34 percent as 311 stores closed temporarily from late March through the May Golden Week holiday because of COVID-19. That was partially offset by a 47.7 percent increase in e-commerce sales. The company said sales “recovered robustly” in June, rising 26.2 percent.
At Uniqlo International, revenue fell 45.0 percent to 132.2 billion yen ($1.23 billion). Performance also fell short as many stores temporarily shuttered, also because of the coronavirus, and then reopened later than originally expected. E-commerce sales expanded for the business as the company also increased free delivery services. In Greater China, which includes Mainland China, Hong Kong and Taiwan, both revenue and profit fell “sharply overall but performance started to recover at a faster pace than we had expected.”
For Uniqlo South Korea and Uniqlo South, Southeast Asia and Oceania, the business saw a sharp decline in revenue, while North America and Europe also reported severely shrinking revenue, the company said. Fast Retailing has over 2,250 stores globally, but only about 50 doors in the U.S., which likely has helped provide a buffer to the COVID-19 impact given the resurgence in infections.
Operations at GU, a lower-priced sister brand to Uniqlo, reported a revenue decline of 19.1 percent to 55.1 billion yen ($514.0 million), while same-store sales fell 27 percent following the closure of 192 stores from late March through the May Golden Week holiday, also due to COVID-19. However, June same-store sales rose 16.4 percent as customers bought mass-trend fashion items, innerwear and loungewear.
At its Global Brands business, revenue was down 63.2 percent to 13.2 billion yen ($123.1 million), with both Theory and PLST reporting a decline in revenue and an operating loss and Comptoir des Cotonniers posting a wider operating loss.
Earnings: The loss in the quarter was 9.8 billion yen ($91.4 million).
For the nine-month period, profit fell 42.9 percent to 90.6 billion yen ($845.2 million) from 158.7 billion ($1.48 billion).