Fast Retailing proves strong in latest year, expects growth to continue
Uniqlo, Theory and GU owner Fast Retailing has overcome some challenges to report a higher full-year profit for the 12 months to August as the second half countered first-half weakness.
Its operating profit was up to ¥297.3 billion (€2.09bn/£1.83bn/$2.02bn) from ¥249 billion a year earlier, beating its guidance and analysts’ expectations. In the pre-pandemic year to August 2019, operating profit had been ¥263 billion, a record figure at the time.
And profit should rise to ¥350 billion in the current fiscal year, the company said.
Net profit for the latest year was up 61% at ¥273 billion and annual sales rose 7.9% to ¥2.3 trillion and it expects revenues in the current year to rise more than 15%.
Looking at its business units in detail, Uniqlo Japan reported a decline in revenue but an increase in profit with revenue down 2.8% to ¥810.2 billion and operating profit up 0.6% to ¥124 billion. Full-year same-store sales (including e-commerce) fell by 3.3% year-on-year, but that was largely due to a weak first half. The second half was much more positive.
Uniqlo International recorded “significant increases” in both revenue and profit, with revenue rising 20.3% to ¥1.1 trillion and operating profit up 42.4% to ¥158.3 billion. That was boosted by the progressive weakening of the yen over the year, but the segment also managed to generate stronger revenue and significantly higher profits in local currency terms.
The Greater China region reported revenue up 1.2% at ¥538.5 billion but operating profit down 16.8% at Y83.4 billion. However, sales recovered once the restrictions on movement were eased, resulting in higher revenue and a large increase in profit in Q4.
Uniqlo S/SE Asia & Oceania reported large increases in both revenue and profit, with revenue rising by approximately 60% to approximately ¥240 billion, the operating profit margin improving sharply to approximately 19%, and operating income more than tripling.
North America achieved “a large increase in revenue, a move into the black”, and an operating profit margin just below 10% for fiscal 2022.
Europe (excluding Russia) also saw a big revenue rise and a move to profits, with an operating profit margin of approximately 12%. The region is “enjoying greater support for Uniqlo’s LifeWear concept and a rise in the number of new customers, and sales are proving strong”, especially in the regional flagship stores it’s opening in major cities.
But the company’s GU segment reported a decline in revenue and a sharp dip in profits with revenue down 1.4% to ¥246 billion and operating profit down 17.4% to ¥16.6 billion .
In the first half, it said “we were not able to sufficiently tighten the number of product types offered and we suffered some shortages in strong-selling items caused by delays in production and distribution. By contrast, revenue increased in the second half thanks to a tighter range of product types, stronger marketing, and strong sales of products that successfully captured mass fashion trends, such as colour slacks and sweatshirt-style T-shirts”.
As for its Global Brands, the segment reported a 13.8% increase in revenue to ¥123.1 billion but an operating loss of ¥0.7 billion, although this was better than a loss of ¥1.6 billion in the previous fiscal year.
Its Theory operation reported “significant increases in revenue and profit thanks to a recovery in performance in both the United States and Japan”. The label was able to “successfully expand its customer base by offering comfortable, highly finished lightweight clothing and strategically expanding products with revised price lines”.
Its PLST label reported a decline in revenue and a wider operating loss and its Comptoir des Cotonniers label reported an increase in revenue with a “much smaller” operating loss. The brand’s selling, general and administrative expense ratio also improved significantly following the closure of unprofitable stores “and some determined structural business reforms”.
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