Fast Retailing logs record profits on strong Uniqlo sales overseas

Fast Retailing Co. has reported record profits and sales for the fiscal year through August, propelled by strong sales at its Uniqlo Co. casual clothing brand in Asia and Oceania.

The operator of the Uniqlo chain expects another the current business year to set another record, led by solid demand in China.

The fashion retailer said Thursday that group net profit rose 5.0 percent to a record ¥162.58 billion ($1.5 billion) in the fiscal year ended Aug. 31.

Group operating profit climbed 9.1 percent to ¥257.64 billion last fiscal year, on group sales of ¥2.29 trillion, up 7.5 percent, both also record highs.

Overseas sales of Uniqlo clothing rose 14.5 percent to ¥1.03 trillion — exceeding the ¥1 trillion mark for the first time — driven by robust demand in China, Southeast Asia and Oceania.

Solid growth in the markets offset a boycott in South Korea of Japanese products, amid a chill in Tokyo-Seoul relations, which hit sales there.

“I feel that our clothing is being accepted by countries around the world,” Fast Retailing Chief Executive Officer Tadashi Yanai said at a news conference.

Yanai said he has no plan to review the company’s business strategy for South Korea, even as sales there fell “substantially” in July and August.

“I don’t expect the difficult situation in South Korea to continue for a long time so I want to stay optimistic,” Yanai said.

Uniqlo clothing sales in Japan rose 0.9 percent to ¥872.9 billion but operating profit fell 13.9 percent to ¥102.4 billion, squeezed by fierce price competition. Demand for winter items was also slow in the first half due to relatively warm winter weather.

The retailer projects a 7.6 percent increase in net profit, to ¥175 billion, and a 6.7 percent rise in operating profit, to ¥275 billion, in the current fiscal year on sales of ¥2.4 trillion — up 4.8 percent.

Still, Chief Financial Officer Takeshi Okazaki said the company needs to pay close attention to the impact on consumer spending of the consumption tax hike, from 8 percent to 10 percent, from Oct. 1.

“We haven’t seen any big impact of the tax hike so far but the environment surrounding consumption seems to be severe,” Okazaki said.

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