Fast Retailing, the parent company of popular fashion brands Uniqlo, Theory, and GU, has reported a stronger full-year profit for the 12 months ending in August 2022. Despite the challenges faced by the retail industry due to the ongoing pandemic, Fast Retailing’s performance in the second half of the year offset weaknesses in the first half. This resulted in higher operating profits, exceeding the company’s own guidance and analysts’ expectations.
The flagship brand, Uniqlo, saw a significant increase in operating profit, reaching ¥297.3 billion (€2.09bn/£1.83bn/$2.02bn) compared to ¥249 billion the previous year. This even surpassed the pre-pandemic record of ¥263 billion in 2019. Looking ahead, Fast Retailing expects Uniqlo’s profit to continue growing and has set a target of ¥350 billion for the current fiscal year.
In terms of net profit, Fast Retailing reported a 61% increase to ¥273 billion, while annual sales rose by 7.9% to ¥2.3 trillion. Looking ahead, the company anticipates revenues to grow by over 15% in the current year.
Analyzing the performance of its business units, Uniqlo Japan experienced a decline in revenue but managed to increase profit. Despite a 2.8% decrease in revenue to ¥810.2 billion, operating profit saw a modest 0.6% increase to ¥124 billion. Full-year same-store sales, including e-commerce, fell by 3.3% year-on-year, mainly due to a weak first half. However, the second half showed more positive results.
Uniqlo International reported significant increases in both revenue and profit. Revenue rose by 20.3% to ¥1.1 trillion, while operating profit increased by 42.4% to ¥158.3 billion. These gains were partly attributed to the progressive weakening of the yen over the year. Additionally, the segment generated stronger revenue and significantly higher profits in local currency terms.
In the Greater China region, revenue increased by 1.2% to ¥538.5 billion, although operating profit decreased by 16.8% to ¥83.4 billion. Once the restrictions on movement were eased, sales recovered, leading to higher revenue and a significant increase in profit in the fourth quarter.
The Uniqlo S/SE Asia & Oceania region reported substantial increases in both revenue and profit. Revenue rose by approximately 60% to around ¥240 billion, while the operating profit margin improved sharply to approximately 19%. Operating income more than tripled during this period.
Fast Retailing also saw positive results in North America and Europe (excluding Russia). North America achieved a “large increase in revenue” and moved into profitability, with an operating profit margin just below 10%. Europe experienced a significant revenue rise and turned a profit, boasting an operating profit margin of approximately 12%. Uniqlo’s LifeWear concept received greater support, attracting new customers and driving strong sales, particularly in flagship stores located in major cities.
However, the GU segment faced a decline in revenue and a sharp dip in profits. Revenue decreased by 1.4% to ¥246 billion, while operating profit fell by 17.4% to ¥16.6 billion in the latest fiscal year. The first half saw shortages in strong-selling items caused by delays in production and distribution, as well as an insufficient tightening of the product range. Conversely, revenue increased in the second half, attributed to a tighter range of product types, stronger marketing efforts, and successful sales of products capturing mass fashion trends.
Fast Retailing’s Global Brands segment, including Theory, reported a 13.8% increase in revenue to ¥123.1 billion. However, it recorded an operating loss of ¥0.7 billion, which was an improvement compared to the previous fiscal year’s loss of ¥1.6 billion. Theory’s recovery in performance in both the United States and Japan contributed to the segment’s positive results. The brand’s strategic expansion of products with revised price lines and the offering of comfortable, highly finished lightweight clothing helped expand its customer base.
Fast Retailing’s PLST label experienced a decline in revenue and a wider operating loss, while the Comptoir des Cotonniers label saw an increase in revenue but a smaller operating loss. The closure of unprofitable stores and structural business reforms contributed to a significant improvement in the selling, general, and administrative expense ratio for the brand.
Overall, Fast Retailing has demonstrated its resilience and ability to adapt to challenges, as evidenced by its strong financial performance. With expectations of continued growth in the current fiscal year, the company’s diverse brand portfolio and strategic initiatives position it well for future success in the global retail market.
Useful links:
1. Fast Retailing Investor Relations Library
2. Uniqlo Official Website
