Business / Corporate

Fast Retailing profit increases as chain expands overseas

Bloomberg

Uniqlo operator Fast Retailing Co.’s second-quarter profit surged as Asia’s largest clothing chain accelerated its overseas expansion.

Operating income gained about 80 percent to ¥42.1 billion in the three months through February, based on first-half earnings the clothing retailer released Thursday. That compares with the ¥38.5 billion average of estimates by four analysts. The company left full-year forecasts unchanged.

The results show cost cuts by Chairman Tadashi Yanai are allowing the retailer to push margins up amid sluggish demand that caused sales to drop in two of three months last quarter. While lowering spending for its retail network, Yanai is also investing in better distribution and faster delivery of online orders to fend off rivals.

Fast Retailing sales slipped in December and January as warmer-than-expected weather sapped demand for winter clothes. Same-store monthly sales, including online purchases, dropped 5 percent from a year earlier at domestic stores in December and 2.5 percent in January. Domestic sales rose 5.2 percent in February.

Stagnant demand in Japan and underperformance at some overseas stores led Yanai to scale back his annual revenue goal last year to ¥3 trillion by fiscal 2020 from an earlier target of ¥5 trillion.