Uniqlo owner reports strong growth in all markets but China
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Cooler winter weather in Japan boosted clothing sales and stronger brand recognition pushed up overseas sales.
PHOTO: AFP
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TOKYO – Uniqlo owner Fast Retailing reported strong growth in revenue and operating profit for the three months through November 2024, as robust demand across Japan, North America and Europe helped offset the sustained slowdown in China.
Operating profit rose 7 per cent to 157.6 billion yen (S$1.4 billion) for the three months ended November 2024 from a year earlier, with sales increasing to an all-time high of 895.2 billion yen, largely in line with analysts’ estimates.
Cooler winter weather in Japan boosted clothing sales and stronger brand recognition pushed up overseas sales, Fast Retailing said. The results show the company is on track to establish strong footholds for sales growth in new markets, in addition to Japan and China where it currently makes the majority of its revenue.
For China, where sales and profit declines extended into the latest quarter, the company is closing under-performing stores and revamping bigger and better-located outlets to drive sales.
“In China, we’ve reached a stage where we can focus on market penetration rather than expansion as the market has grown,” chief financial officer Takeshi Okazaki told analysts and reporters on Jan 9. “I believe we can deliver results. I’m not worried about it in the medium term.”
Weaker consumer spending and the warmer-than-expected weather so far in China were also reasons for the sluggish sales in the first quarter, he said.
The company kept its full-year forecast unchanged. Higher sales in North America, Europe and the Asia-Pacific region are expected to drive a 5.8 per cent increase in the company’s operating profit to 530 billion yen for the fiscal year ending August 2024 from a year earlier, it said in October 2024.
The stock jumped 54 per cent in 2024 while the benchmark Topix index rose 18 per cent.
Fast Retailing plans to raise salaries for new hires by 10 per cent to 330,000 yen a month and those of new store managers by 5.1 per cent to 410,000 yen a month, it said earlier this week.
The stronger-than-expected sales growth in Japan in the first quarter may persist through the second quarter due to cooler winter weather and offset potential revenue shortfalls from dampened buying sentiment in mainland China, according to Bloomberg Intelligence.
The main challenges are China sales and the company’s limited ability to reduce discounts and address stock shortages across all regions, said Ms Chelsey Tam, an equities analyst at Morningstar Inc. BLOOMBERG
