With the spread of the global epidemic, Fast Retailing Group, the parent company of Uniqlo, has handed over what can be called the worst report card in history.
On April 9, Fast Retailing Group, the parent company of Uniqlo, released the first half of fiscal year 2020 (the six-month period from September 1, 2019 to February 29, 2020) performance announcement.
Data show that during the reporting period, Fast Retailing’s total revenue was 1,208.5 billion yen (a decrease of 4.7% compared with the same period last year), and its total comprehensive profit was 136.7 billion yen (a decrease of 20.9% year-on-year). , profits both fell.
The explanation given by Fast Retailing is that due to factors such as the new coronavirus epidemic, revenue and profits in South Korea and Greater China have dropped significantly.
In the past few years, when fast fashion brands have failed one after another and peers have generally encountered growth difficulties, Uniqlo has still maintained an enviable growth momentum year by year and is regarded as an industry benchmark. Now under the force majeure of the epidemic, Uniqlo has no choice but to suffer a rare decline in performance.
At present, the global epidemic prevention and control situation is still unclear, which has intensified the concerns of global apparel retail companies represented by UNIQLO about future growth.
Fast Retail admitted frankly that whether the global epidemic can be controlled will affect its performance prospects. Since the specific scope of the rapidly expanding impact of the epidemic around the world cannot be determined for the time being, it is currently difficult to reasonably estimate the financial situation, operating results, cash flows and their impact after the end of the first half of this fiscal year.
Uniqlo China’s performance is abnormal, and its overseas market performance is divided
As we all know, the Greater China and Southeast Asian markets are the pillars of UNIQLO’s overseas business, especially Greater China. region, and has contributed outstanding performance to Fast Retailing Group’s financial reports over the years.
In the early days of the epidemic, China, as the most severely affected country, faced the need for epidemic prevention and control. All walks of life came to a standstill, and economic development almost stagnated. After the passenger flow was completely cut off, the offline physical retail business suffered a critical blow. , the store closing trend swept across catering, retail and other industries, and Uniqlo was inevitably affected.
As early as January 23, Fast Retailing Group stopped the operations of 17 UNIQLO stores in Wuhan, Hubei Province. As the epidemic situation became increasingly severe, UNIQLO subsequently closed a large number of stores urgently. During February, a maximum of 395 stores were temporarily closed, more than half of the total number of stores in the country (as of the end of December 2019, Uniqlo had 750 stores in China).
Mainland China is Uniqlo’s second largest market, after Japan. Such a large market has been hit by large-scale store closures, and the losses have become a reality. Although strong sales were maintained in late January 2020, revenue fell sharply after the impact of the new coronavirus epidemic at the end of January.
Fast Retail Group specifically mentioned in its financial report that the large-scale store closures in Greater China have resulted in a significant decrease in revenue, and it also recorded a decline in both revenue and profit in the first half of the year.
Fortunately, since March, UNIQLO’s stores in mainland China have gradually reopened, gradually showing a recovery trend.
After the rare failure in the highly relied-upon Chinese market, what is the performance of UNIQLO in other overseas markets?
The financial report shows that due to the dual impact of Japan-South Korea relations and the new coronavirus, same-store net sales in the South Korean market dropped significantly and losses expanded.
What is gratifying for UNIQLO is that the brand recorded substantial double-digit growth in revenue and profit during the reporting period in Southeast Asia, South Asia and Oceania (including Southeast Asian markets, Australia and India). In particular, Indonesia, the Philippines, and Thailand have recorded double-digit growth in revenue and profit, and their business is expanding steadily.
In India, after opening its first store in October 2019, UNIQLO opened its third store in New Delhi in February 2020, with eye-catching sales performance. In Vietnam, Uniqlo’s performance exceeded expectations after opening its first store in December 2019.
Compared with the remarkable performance of the Asian market, Uniqlo’s North American market is still sluggish. In the United States, affected by the mild winter, winter clothing sales are not smooth and revenue is in the red.
Although the current epidemic is raging in various European countries, given that it was affected late by the epidemic, UNIQLO’s performance in the European market was not affected during the reporting period. On the contrary, both revenue and profit recorded double digits increase. Among them, Italy and Spain have the strongest sales. Same-store net sales in Russia also recorded double-digit growth.
The epidemic continues to affect UNIQLO’s global stores and enters a “war period”
As the new coronavirus pneumonia epidemic spreads around the world, in mid-March 2020, governments of various countries Traffic control, activity restrictions and self-restraint requirements have been promulgated one after another, which forced UNIQLO to implement store closing policies throughout the channel (except China).
Since April 7, Uniqlo has temporarily closed all 28 stores in Singapore and all 22 stores in Australia since April 2. Going forward, Uniqlo has closed a total of 192 stores in Asian markets including the Philippines, Malaysia, Thailand, India, Indonesia, and Vietnam throughout March. All 62 stores in the United States and Canada have also been temporarily closed since March 17. Europe has also complied with the requirements of various governments since mid-March 2020 and closed a total of 97 Uniqlo stores in countries other than Sweden.
The epidemic has caused Uniqlo to suffer from difficulties in the domestic and foreign markets.Japan is currently in an escalating stage of the epidemic. On April 7, the Japanese government declared a state of emergency. All UNIQLO and GU shopping mall stores in designated areas were temporarily closed. Even if the remaining stores are still in operation, Stores have also been forced to shorten their business hours.
Obviously, it is foreseeable that as the epidemic expands, stores will be temporarily closed, resulting in a decline in business income. Fast Retailing Group stated in its financial report that because it is temporarily unable to determine the specific scope of the epidemic’s rapid expansion around the world, it is currently difficult to reasonably estimate the financial situation, operating results, cash flows and their impact after the end of the first half of this fiscal year. and its effects.
It is worth mentioning that as a fashionable and affordable brand promoted by Fast Retailing Group in recent years, GU (Excellent) performed well in the first half of this fiscal year, with total revenue of 132.2 billion yen (year-on-year) A year-on-year increase of 12.9%), with a profit of 15.8 billion yen (a year-on-year increase of 12.0%), recording substantial growth in both revenue and profit. </p
