Fast Retailing's Uniqlo strong in H1 and March, but Theory struggles
Fast Retailing released first-half results on Thursday, as well as its Japanese Uniqlo performance for March. And both reports showed that the business is doing well in general, even if the H1 figures showed some smaller brands struggling.
It said the six months to the end of February saw revenue falling only 0.5% to ¥1.2 trillion (€9.2bn/£8bn/$11bn). And operating profit rose 22.9% to ¥167.9 billion. Pre-tax profit rose 13.7% to ¥171 billion and net profit was up 5.6% at ¥109 billion.
This was mainly due to rising earnings at its Uniqlo operations in Japan and Greater China, even though other markets had a tougher time.
Looking at the Uniqlo performance in Japan, it saw revenue rising 6.2% to ¥492.5 billion with operating profit up 36.6% to ¥97.8 billion. Same-store sales increased 5.6%, thanks to “strong sales of products such as loungewear and HeatTech blankets that fulfilled customer demand for stay-at-home items, as well as buoyant sales of core Fall/Winter items along with ultra stretch active jogger pants and other items in our sport utility wear range”. And e-commerce expanded significantly, with online sales rising 40.5% to ¥73.8 billion.
But at Uniqlo International, revenue fell 3.6% to ¥521.8 billion, although operating profit rose 25.9% to ¥67 billion. Europe and North America struggled most due to the pandemic yet e-commerce sales remained strong, rising in each market.
Meanwhile GU achieved a steady performance in the first half with revenue up 0.3% to ¥132.6 billion and operating profit edging up 0.4% to ¥15.8 billion. The pandemic caused a decline in customer visits, but same-store sales were steady due to “strong sales of the sweat-style knitwear that featured in our TV commercials, double-faced sweatshirts that successfully captured mass fashion trends, and loungewear and other items”.
Global Brands, meanwhile saw a large decline in revenue with a 22.2% drop to ¥54.5 billion. The operating loss was ¥8.1 billion compared to only ¥0.7 billion a year earlier. The Theory fashion label saw large declines in revenue and profit as its performance worsened in the US and Japan because of Covid. The Japan-based PLST brand also reported a large revenue decline and a slight operating loss as customer visits plummeted. And its French Comptoir des Cotonniers brand saw a large revenue decline and a wider operating loss due to store closures.
But overall, analysts were impressed with the results with GlobalData highlighting the importance of the company’s casualwear focus during the pandemic period.
Retail analyst Pippa Stephens said: “Fast Retailing has reported yet another impressive set of results, with its strong Asian presence and specialism in casualwear. Its European and North American operations have been particularly badly hit by the pandemic in recent months, with national lockdowns forcing Fast Retailing to temporarily shutter many of its stores in these regions. Though a third wave of the virus throughout mainland Europe is likely to cause further challenges over the coming weeks, the fast vaccine rollout across the US and UK will be highly beneficial to its performance, as not only will this give consumers greater confidence to visit physical stores again, but the recommencement of social occasions will also provide shoppers with more reasons to purchase new outfits.”
While she thinks brands such as Theory could continue to struggle, she feel Uniqlo has a rosy future and that it has been helped by regular partnerships that have allowed it to be “top of mind appeal in recent months, with Uniqlo’s repeat collaborations with designers like JW Anderson and Marimekko driving heightened interest in the brand”.
Meanwhile, the company also said that March same-store sales including online for Uniqlo in Japan powered ahead by 40.2% while total sales rose 41.5%.
That said, the comparison figures do flatter this year's numbers as the March 2020 period came at the height of pandemic lockdowns so the figures of a year ago wouldn't be hard to beat.
But ignoring that, the company said that it saw strong sales of spring/summer ranges, particularly for products designed for a stay-at-home lifestyle and its collaboration ranges.
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