Business / Corporate

Fast Retailing cuts profit estimate as slowing Uniqlo sales in Japan offset brisk business abroad

Kyodo

Fast Retailing Co. said the brisk performance of its Uniqlo casual clothing brand in overseas markets helped lift the group’s profits in its first half, but the firm also downgraded full-year estimates due to slowing sales at home.

For the six months through February, its consolidated net profit rose 9.5 percent from a year earlier to a record-high ¥114.03 billion ($1.02 billion) on robust Uniqlo sales in China and Southeast Asian countries.

Operating profit grew 1.4 percent to ¥172.94 billion on sales of ¥1.27 trillion, up 6.8 percent, both record highs.

But for the year ending in August the company lowered its operating profit forecast to ¥260 billion from the ¥270 billion it had projected in January due to a slump in domestic Uniqlo sales for the first half, in which relatively warm weather dented demand for autumn clothing, the company said Thursday.

It maintained its outlook for a net profit of ¥165 billion and sales of ¥2.30 trillion for the 12 months.

“I believe our sales will not decline in China because of its very thick layer of middle-income households and we can achieve our target of opening 1,000 stores (in the country by fiscal 2021),” President and CEO Tadashi Yanai told a news conference in Tokyo.

The company said sales at more than 600 stores in China increased about 20 percent in the first half despite a slowdown in the world’s second-largest economy.

Overseas stores helped Uniqlo post ¥88.49 billion in operating profit, up 9.6 percent, on sales of ¥580 billion, up 14.3 percent.

Domestic operating profit in Uniqlo operations, however, fell 23.7 percent to ¥67.74 billion on sales of ¥491.34 billion, down 0.5 percent, the company said.

“Overseas sales continued to surpass those in the domestic market. We have established a firm basis as a global firm and reached a new stage of growth,” said Yanai, adding that the company would open its first Uniqlo store in India later this year.

As of the end of February, the company operated 825 stores in Japan and 1,311 abroad.

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