Fast Retailing, the parent company of Uniqlo, has announced robust financial results for the first half of the year. Despite some struggles with smaller brands, the overall business is performing well. Revenue for the six months ending in February saw a slight decline of 0.5% to ¥1.2 trillion ($11 billion), but operating profit surged by 22.9% to ¥167.9 billion ($1.5 billion). Pre-tax profit also rose by 13.7% to ¥171 billion ($1.5 billion), while net profit increased by 5.6% to ¥109 billion ($995 million).
The success can mainly be attributed to the strong earnings generated by Uniqlo operations in Japan and Greater China. In Japan, revenue rose by 6.2% to ¥492.5 billion ($4.5 billion), with operating profit increasing significantly by 36.6% to ¥97.8 billion ($885 million). This growth was driven by the popularity of stay-at-home items like loungewear and HeatTech blankets, resulting in a 5.6% increase in same-store sales. Additionally, Uniqlo’s e-commerce sales skyrocketed by 40.5% to ¥73.8 billion ($670 million).
However, Uniqlo’s international performance faced challenges. Revenue dropped by 3.6% to ¥521.8 billion ($4.7 billion), but operating profit rose by 25.9% to ¥67 billion ($608 million). Europe and North America struggled due to the ongoing pandemic, although e-commerce sales remained resilient.
GU, another brand under Fast Retailing, achieved steady performance with a slight increase in revenue and operating profit. Revenue for GU rose by 0.3% to ¥132.6 billion ($1.2 billion), and operating profit increased marginally by 0.4% to ¥15.8 billion ($143 million). Despite a decline in customer visits, same-store sales remained stable, driven by the popularity of sweat-style knitwear, double-faced sweatshirts, loungewear, and other items.
On the other hand, Fast Retailing’s Global Brands, which includes labels like Theory, experienced a significant decline in revenue. Revenue plummeted by 22.2% to ¥54.5 billion ($495 million), with an operating loss of ¥8.1 billion ($73 million). Theory’s performance suffered in the US and Japan due to the impact of Covid-19, and other brands like PLST and Comptoir des Cotonniers also faced revenue declines and wider operating losses.
Despite these challenges, analysts remain optimistic about Fast Retailing’s future. The company’s strong focus on casualwear and its presence in Asia have been key factors in navigating the pandemic. Analyst Pippa Stephens highlighted that although European and North American operations have been heavily affected by lockdowns, the rapid vaccine rollout in the US and UK is expected to boost the company’s performance as restrictions ease and consumer confidence in physical stores returns.
Fast Retailing has also benefited from its regular collaborations with designers like JW Anderson and Marimekko, which have generated increased interest in the Uniqlo brand. The company’s recent report revealed that same-store sales for Uniqlo in Japan in March surged by 40.2%, with total sales rising by 41.5%. However, it’s important to consider that the comparison figures are skewed due to the height of pandemic lockdowns in March 2020.
Overall, Fast Retailing’s strong performance in the first half of the year, particularly with Uniqlo, paints a positive outlook for the company. While challenges continue to exist, the company’s focus on casualwear, successful partnerships, and the gradual recovery from the pandemic are expected to contribute to its future success.
Sources:
– https://www.reuters.com/business/retail-consumer/fashion-retailer-uniqlo-owner-fast-retailings-profit-climbs-37-nikkei-2021-04-09/
– https://www.business-standard.com/article/international/fast-retailing-falls-after-1h-results-miss-expectations-121040900134_1.html
