In the third quarter of the fiscal year, Fast Retailing’s clothing brands, Uniqlo and GU, had contrasting performances. While Uniqlo Japan experienced significant increases in revenue and profit, GU struggled to meet business estimates. Overall, Fast Retailing has lowered its annual profit outlook due to the impact of Covid-related government restrictions on footfall in Japan and other countries.
Uniqlo Japan had a revenue expansion of 12.7% YoY to ¥675.1 billion, with operating profit rising by 51% to ¥119.5 billion in the first nine months. The brand’s success in the first half of the fiscal year was driven by strong sales of stay-at-home items and core Fall/Winter ranges. Additionally, the popularity of Uniqlo U T-shirts, Kando pants, loungewear, and other summer collections contributed to significant revenue and profit growth in the third quarter. Uniqlo’s e-commerce revenue also saw an increase as its online sales operations expanded. However, the brand fell short of its business plan in Q3.
Uniqlo International experienced a rise in revenue of 9.8% to ¥739.6 billion and a significant increase in operating profit by 88.7% to ¥97.7 billion in the first nine months. The growth in profit was mainly driven by improved profitability in its East Asia operations. All regions, including Mainland China, reported significant recoveries in the third quarter, with substantial increases in both revenue and profit. South Korea also returned to profitability in terms of operating profit. North America and Europe saw major revenue gains and smaller operating losses as the Covid situation improved in those regions.
On the other hand, GU’s performance remained steady year-on-year, with revenue climbing 7.1% to ¥200.8 billion and operating profit increasing by 18.9% to ¥24.3 billion in the nine months. The brand saw a rise in revenue from March to May, driven by the popularity of items such as chef’s pants, airy shirts, and colored flared trousers. However, GU faced challenges recently as its products failed to fully capture the prevailing trend. The announcement of another state of emergency in Japan further impacted GU’s performance.
Fast Retailing’s Global Brands segment experienced a decline in revenue, falling 3.3% to ¥80.5 billion, and widened operating losses in the first nine months. The segment reported an operating loss of ¥8.9 billion compared to ¥6 billion the previous year. The performance of Global Brands worsened significantly during the first half of the fiscal year due to the impact of Covid-19. However, in Q3, there were signs of improvement driven primarily by the growth of Theory. Revenue rose sharply, and the operating loss shrank to ¥0.7 billion.
Fast Retailing has adjusted its annual profit outlook, expecting operating profit for the year to be ¥245 billion, down ¥10 billion from previous predictions. The company faced challenges due to government restrictions related to Covid-19, particularly in Japan where a state of emergency was declared ahead of the Olympic Games. Despite these challenges, the strong performances of Uniqlo and Theory in the first nine months provide some optimism for Fast Retailing’s future. The company plans to continue adapting and expanding its online sales operations to navigate the evolving retail landscape.
Useful Links:
1. Uniqlo Official Website
2. Fast Retailing Official Website
