Fast Retailing Co Ltd, the parent company of Japanese fast fashion brand Uniqlo, lowered its full-year profit forecast for this fiscal year due to poor performance in the Asian market in the first quarter of the 2019/2020 fiscal year.
In the first quarter of fiscal year 2019/2020 from September 1 to November 30, 2019, the key financial data of Fast Retailing Group are as follows:
Total revenue was 623.5 billion yen, down from 644.5 billion yen in the same period last year
Operating profit increased from 644.5 billion yen in the same period last year Pre-tax profit of 102 billion yen fell to 91.7 billion yen in the same period, lower than analysts’ consensus forecast of 110 billion yen. 111.1 billion yen
Fast Retailing Group lowered its full-year forecast: In the fiscal year ending August 31, 2020, operating profit is expected to drop 5% to 245 billion yen Yuan. The previously expected annual operating profit was 275 billion yen.
In the first quarter of fiscal year 2019/2020, Fast Retailing Group and UNIQLO brands were affected by the weakening of the renminbi, social unrest in Hong Kong, China, and Korean consumers’ boycott of Japanese goods.
Markets such as Hong Kong and South Korea are particularly important to Uniqlo because its domestic market in Japan is close to saturation. Virtually any problem in Asia could hit Fast Retailing hard. The group opened its first local store in Vietnam last month, further underlining its focus on the Asian market.
The good news is that Fast Retailing Group’s business in the United States has improved, and the North American market finally began to make profits this year after experiencing some difficulties. The operating profit of the secondary brand GU (Excellent) increased by 44% year-on-year. New stores in Australia and India also boosted the group’s sales.
At the same time, Fast Retailing Group also announced the monthly sales of the Uniqlo brand in Japan in December 2019, once again demonstrating the brand’s dependence on the weather in the Japanese domestic market. For much of last year, Uniqlo’s monthly comparable sales were affected by weather changes, and in December, warm weather directly led to a decline in sales. Same-store sales, including online sales, fell 5.3% year-on-year, while total sales, including online sales, fell 5.5%. “Since mid-December, continued warm weather has led to weak sales of cold-weather clothing,” the company explained.
Uniqlo brand performance
In this quarter, Uniqlo’s specific performance is as follows:
Japanese domestic sales fell 5.3% year-on-year to 233 billion yen, and operating profit increased 1.6% year-on-year to 38.5 billion yen
Japanese domestic online Sales increased by 4.1% year-on-year to 24.7 billion yen
Sales in the international market fell by 3.6% year-on-year to 2,807 yen, and operating profit fell by 28.0% year-on-year to 37.8 billion yen
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Among them, if exchange rate factors are excluded, sales and profits in Greater China have increased. Strong sales of autumn and winter series products have boosted sales and profits in mainland China. E-commerce sales in this market have continued to grow, with a year-on-year increase of about 30%. Affected by Korean consumers’ boycott of Japanese goods, same-store sales in the Korean market have fallen sharply. Sales and profits in the North American market increased; sales in the European market achieved double-digit growth, but operating profits fell due to the depreciation of the local currency.
Performance of other brands
In this quarter, the performance of other brands under the Fast Retailing Group is as follows:
GU’s sales were 72.9 billion yen, a year-on-year increase of 11.4%; operating profit was 12.3 billion yen, a year-on-year increase of 44.4%
Global Brands (including New York Fashion brand Theory and French fashion brand Comptoir des Cotonniers, etc.) sales were 36.1 billion yen, down 11.4% year-on-year; operating profit was 1.8 billion yen, down 31.5% year-on-year
Note: 100 yen is currently equivalent to RMB 6.33</p
