On July 9, Japan’s Fast Retailing Group, the parent company of Uniqlo, released a financial report stating that due to the impact of the global new crown epidemic, it suffered a net loss of 9.82 billion yen in the third fiscal quarter as of the end of May. Its Japanese Uniqlo business had an operating profit of 9.82 billion yen in the third fiscal quarter. It plummeted 74%, and revenue fell 36%. The news of huge profit losses does not seem to have a big impact on Fast Retailing’s stock price. As of the close of trading on July 9, Fast Retailing’s stock price rose 0.37% to 62,360 yen per share. Since hitting bottom on March 19 this year, Fast Retailing’s stock price has surged 53%.
Japan’s Uniqlo third-quarter profit plummeted 74%
The parent company’s net loss was 9.82 billion yen
On July 9, Japan’s Fast Retailing Group, the parent company of Uniqlo, released a financial report showing that mainly due to the impact of the new coronavirus epidemic, most stores were temporarily closed in the first half of the year, resulting in each business segment of the group recording revenue and profits. A sharp decline. The report showed that the company had a net loss of 9.82 billion yen in the third fiscal quarter as of the end of May, with revenue of 336.41 billion yen. The operating profit of Japan’s Uniqlo business plunged 74% in the third fiscal quarter, and revenue fell 36%. Uniqlo’s business revenue and profits have declined significantly in all major overseas markets.
From late March to early May, 311 of 813 UNIQLO stores in Japan were temporarily closed, and single-quarter same-store net sales fell by 34% year-on-year. Since mid-May, stores have gradually resumed operations, and revenue in June has increased. At the same time, in terms of online sales, Japan’s Uniqlo’s single-quarter sales in the third quarter increased significantly by 47.7% year-on-year. Gross profit margin increased by 3.3% year-on-year. Since April this year, Uniqlo has opened three new stores in Japan.
In addition, Fast Retailing Group also released its performance report for the first three quarters of 2020. Data shows that in the first three quarters of this fiscal year as of the end of May, the company’s net profit fell by 43%. It fell to 90.64 billion yen (approximately US$845 million) from 158.67 billion yen in the same period last year. Revenue fell 15% to 1.545 trillion yen.
The company announced that the decline in revenue and net profit was mainly affected by factors such as the COVID-19 epidemic. Fast Retailing Group’s brand stores temporarily closed or shortened their business hours, resulting in a decline in the performance of the group’s business segments. Decline; due to sluggish performance, the properties, plants, equipment and right-of-use assets of loss-making stores recorded impairment losses of 15.2 billion yen.
In the first three quarters, Japan’s Uniqlo division’s cumulative revenue was 598.8 billion yen, a year-on-year decrease of 14.6%, and operating profit was 79.1 billion yen, a year-on-year decrease of 18.1%. .
Image source: Company financial report
In the first three quarters of fiscal year 2020, the overseas Uniqlo business segment’s cumulative revenue was 673.5 billion yen, a year-on-year decrease of 17.9%, and operating profit was 51.8 billion yen, a year-on-year decrease of 58.5%. In the third quarter, affected by the epidemic, all regions of the overseas UNIQLO business division recorded a decrease in revenue and profit, but online sales revenue in each region recorded growth.
Image source: Company financial report
In terms of regions, Greater China’s revenue in the first three quarters was 362.7 billion yen, accounting for 23.5% of the total. Although both revenue and operating profit in Greater China declined in the first three quarters, as the epidemic prevention and control situation improved, single-month revenue and profit increased year-on-year in May, and performance began to recover steadily. In Southeast Asia, South Asia and Oceania, the performance of the Vietnamese market, which was unblocked earlier, is steadily recovering; in North America, from mid-March to the end of May, most stores have not resumed operations, resulting in a sharp decline in revenue and an expansion of operating losses; In Europe, as most stores in the UK, France, Russia and other markets had not resumed operations from mid-March to the end of May, revenue fell and operating losses expanded.
Uniqlo expects its net profit to be cut in half this fiscal year
During the epidemic After gradually slowing down in some regions, the performance of Japan’s Uniqlo and GU business divisions has rebounded since mid-May. Uniqlo in Greater China also achieved revenue and profit growth in May, and the recovery effect was higher than expected.
Fast Retail Group stated that it was mainly due to the temporary closure of stores in most regions, including Japan, due to the epidemic, and impairment losses recorded in the first three quarters, and it is expected that there will be additional impairment losses in the fourth quarter. Loss risks, and revised downward many indicators of full-year performance forecast. Fast Retailing Group expects net profit for the current fiscal year as of the end of August to fall 48% to 85 billion yen, and revenue to fall 13% to 1.99 trillion. JPY.
The man behind Fast Retailing Group Japan’s richest man
Fast Retailing Group (FAST RETAILING CO., LTD.) is a Japanese holding company mainly engaged in the clothing business. Uniqlo is part of Fast Retailing, founded by Japan’s richest man Masaru Yanai. Uniqlo has 2,200 stores around the world, 75% of which are located in China and Japan. Fast Retailing also owns brands such as Theory, Helmut Lang, J Brand, and GU. However, Uniform� is the money tree. Fast Retailing’s financial report shows that 80% of the company’s annual revenue comes from Uniqlo.
Currently, Fast Retailing Group still lags behind the world’s largest Spanish Inditex Group (Zara is the group’s star brand) and the world’s second Swedish H&M. The former’s annual sales was US$31.6 billion, and the latter was US$24.8 billion.
Since the release of the Forbes Global Billionaires List in March, Yanai Masaru has added US$9.2 billion in personal wealth, with a net worth of US$28.9 billion, ranking among the richest billionaires in the global apparel industry. The second of the millionaires. The founder of Inditex Group is the richest billionaire in the global apparel industry, ranking first with a net worth of 64.6 billion. Ranking third is Stefan Persson of H&M, with a net worth of 16.4 billion.
In 1984, when Uniqlo was born, it was catching up with Japan due to the real estate bubble. Due to the economic shutdown caused by the collapse, ordinary people generally “tightened their belts” to get by. At that time, UNIQLO’s strategic positioning was a “simple, cheap and popular” brand image. With this strategy, UNIQLO also ushered in an initial stage of rapid development in Japan.
Uniqlo first landed in Shanghai in 2002 and continued its low-price strategy in Japan. However, Uniqlo’s performance was still easily surpassed by ZARA and H&M, which arrived four years later. In 2005, UNIQLO made a big move into the Beijing market, but it also failed. All 9 UNIQLO stores in China suffered losses.
Organization: Sales may recover in the future
But the worst is judged It’s too early to pass
In January this year, China implemented lockdown and anti-epidemic measures, and half of Uniqlo’s 748 stores in China closed. In late April, all UNIQLO stores will be open for business. In May, 40% of stores in Japan were temporarily closed, but they have also reopened. Last month, the company opened two new Uniqlo stores in Ginza, Tokyo’s high-end market, and Harajuku, a shopping hub.
Uniqlo released AIRism masks in June, which attracted a lot of enthusiasm. The number of visits to the official website increased sharply, almost paralyzing it. New product releases also attract shoppers to physical stores, and Uniqlo focuses on affordable daily clothing all year round. For example, short skirts range in price from $9.90 to $39.90.
As the epidemic is gradually brought under control and restrictions are gradually lifted around the world, people go out for shopping again, and a shopping wave emerges in Asia. Maureen Hinton, director of research at GlobalData, a London-based data analysis consulting company, said: “Retailers in Asia have performed better. In markets such as China, blockade measures have been basically lifted, the population base is huge, and demand is growing.”
JP Morgan analyst Dairo Murata predicts that Japan’s domestic Uniqlo same-store sales will increase by 20% in June % -30%, helped by demand for the company’s Airism masks, which sold out quickly after going on sale that month. Murata said in a June 29 research report: “We estimate Airism mask sales will grow 3%, and these masks are also very effective in attracting consumers to stores.”
But some industry insiders believe that strong sales in June may also highlight the company’s relative advantage. The strength of global fast-fashion players focused on practical clothing and strength in the Asian market, but it’s too early to say the worst is over.
Some analysts warn that June’s rebound may be driven by pent-up demand from consumers who have tightened domestically in previous months, and given the impending recession, The sales recovery may be short-lived.
Is the demise of fast fashion accelerating? Two more major U.S. retail giants have gone bankrupt
On July 9, in addition to the news of Uniqlo’s huge single-quarter losses, the news of the bankruptcy of two major U.S. retail apparel giants also shocked the global retail apparel market.
The two clothing retailers that have recently announced that they are about to file for bankruptcy protection and that they have already filed for bankruptcy are both well-known American companies. Among them, the North American retail clothing giant Ascena owns several women’s clothing brands such as Ann Taylor and LOFT. It will close at least 1,200 stores. Brooks Brothers has a long history, dating back to 1818. 40 former U.S. presidents, including Lincoln and Roosevelt, and countless investment bankers have been its loyal customers. This company will permanently close 51 stores. store while actively seeking new buyers.
In the past six months, fast fashion brands such as UNIQLO, Zara, H&M, GAP, and La Chapelle have announced the closure of some stores. From capital enthusiasm to store closures, stocks are on the verge of collapse. , the story of domestic fast fashion is becoming increasingly difficult to tell.
In the first quarter of 2020, La Chapelle achieved revenue of 1.002 billion yuan, a year-on-year decrease of 57.75%. Prior to this, La Chapelle had experienced two consecutive years of performance decline. . In 2019, there was a large-scale store closure and liquidation, with about 4,400 stores closed throughout the year. The large number of brands, difficult operations, difficulty in making profits in the main business, failed overseas acquisitions, defaults, debts and other financial pressures put La Chapelle in a delisting warning.
Coincidentally, the American fast fashion giant GAP has temporarily closed most of its stores around the world due to the epidemic. Although there is still 20% of online revenue, during the epidemic period, most consumers There is no desire to buy. With large-scale store closures, obstacles to online transformation, and stagnant revenue, GAP suffered a fatal blow.
The situation of H&M and Zara is also not optimistic. Affected by the epidemic, H&M’s sales dropped by 46% in March this year and 3,778 stores were closed. The 2019 annual report released by Zara also shows that 50% of the group’s stores worldwide are temporarily closed.
However, the epidemic is only the trigger for fast fashion to press the pause button.
On the same competitive track, the Chinese market was once a battleground for every fast fashion brand. However, as more and more entrants enter the market, the remaining space in China’s fast fashion market is getting smaller and smaller. The industry saturation period is gradually approaching, and the glory of fast fashion brands in the Chinese market has long ceased.
��No desire to buy. With large-scale store closures, obstacles to online transformation, and stagnant revenue, GAP suffered a fatal blow.
The situation of H&M and Zara is also not optimistic. Affected by the epidemic, H&M’s sales dropped by 46% in March this year and 3,778 stores were closed. The 2019 annual report released by Zara also shows that 50% of the group’s stores worldwide are temporarily closed.
However, the epidemic is only the trigger for fast fashion to press the pause button.
On the same competitive track, the Chinese market was once a battleground for every fast fashion brand. However, as more and more entrants enter the market, the remaining space in China’s fast fashion market is getting smaller and smaller. The industry saturation period is gradually approaching, and the glory of fast fashion brands in the Chinese market has long ceased. </p
