The Japanese operator of fashion giant Uniqlo on Thursday raised its forecast for what would be its third consecutive year of record profits, buoyed by strong sales at home and some overseas markets.
The domestic market was a bright spot for Fast Retailing, aided by a surge in duty-free sales from tourists taking advantage of the yen’s slide to a 38-year low.
Meanwhile the company said there were signs of maturing in China, its largest overseas market.
It lifted its full-year operating profit forecast to 475 billion yen ($2.94 billion) for the year ending in August from 450 billion yen, citing strong performance since the second half.
“The solid results were fuelled by Uniqlo Japan as well as the Uniqlo International business segment, which saw strong performances in North America, Europe and Southeast Asia,” the company said.
Uniqlo is renowned for its quality and affordable basics, and Fast Retailing is benefiting from a slide in the yen that has boosted the value of its sales abroad.
The weak yen helped in Japan too, as the proportion of duty free sales doubled in the nine-month period, the company said.
“If the number of inbound customers increases going forward, we will of course make every effort to try to capture that demand,” CFO Takeshi Okazaki said.
But the weak yen and the domestic inflation it fosters contributed to very different results at convenience store leader Seven & i, whose quarterly operating profits fell 28 percent.
The president of Seven & i’s domestic convenience store business said customers had become more cost-conscious due to price increases and other factors.
Fast Retailing is plotting an aggressive growth path overseas, taking advantage of a post-pandemic shift among many consumers for value over luxury.
With more than 900 stores in mainland China, Fast Retailing is a bellwether for global retailers operating in the world’s second-biggest economy.
Through the nine-month period, operations in Greater China saw a decline in revenue and a large drop in profit, partly due to strong performance the previous year and a general slowdown in consumer appetite, the company said.
Fast Retailing now plans to open 50 to 80 stores in the market annually, compared with targets of up to 100 openings in recent years.
“Chain-store development has matured and we are approaching a turning point,” Uniqlo Greater China CEO Pan Ning said.
For the most recent quarter ended in May, Fast Retailing’s group operating profit rose 31 percent to 144.7 billion yen from a year ago, beating the consensus forecast of 127.1 billion yen, based on a LSEG poll of six analysts.
The company’s shares have risen about 26 percent so far this year, nearly in line with the advance in the benchmark Nikkei gauge.
By Rocky Swift and Maki Shiraki; Editing by Kim Coghill, Miral Fahmy and Arun Koyyur
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