Business / Corporate

Fast Retailing sharply cuts earnings outlook due to virus outbreak

KYODO

Fast Retailing Co. on Thursday sharply cut its earnings outlook for its business year ending in August as the global outbreak of the new coronavirus forced the casual clothing retailer to close most of its overseas stores in Asia, Europe and North America.

In its interim earnings report, the operator of the Uniqlo chain slashed its group net profit forecast to ¥100 billion ($918 million) from the earlier estimate of ¥165 billion, saying its guidance is based on an assumption that sales will gradually recover from June.

It lowered the operating profit outlook to ¥145 billion from the previously expected ¥245 billion and sales to ¥2.09 trillion from ¥2.34 trillion.

As of April 7, a total of 412 Uniqlo stores were temporarily shut globally, it said.

Tadashi Yanai, chairman and CEO of Fast Retailing, said in a news conference that suspension of production in Bangladesh and India could affect its future product supplies.

In China, its business is recovering with almost all of its some 740 stores in China reopened, including 12 in Wuhan where the virus outbreak originated.

For the six months to February, the company reported a net profit of ¥100.46 billion, down 11.9 percent from a year earlier.

Its operating profit fell 20.9 percent to ¥136.74 billion, and sales declined 4.7 percent to ¥1.21 trillion.

Overseas sales during the six-month period declined mainly due to the effect of the coronavirus epidemic in China and South Korea, while domestic sales on a same-store basis slipped 4.6 percent as winter clothing sales fell short of expectations because of a warmer winter.

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