TOKYO — Fast Retailing Co. Ltd. lowered its full-year earnings forecasts, citing foreign exchange factors that bit into first-half profits and an expected rise in operating costs in its home market of Japan.
Uniqlo’s corporate parent warned that full-year net profit will be weaker than expected, dropping 2.6 percent to 88 billion yen, or $958.24 million at current exchange. When releasing first-quarter numbers in January, the company had forecast full-year net profit of 92 billion yen, or $1 billion.
The company did boost its sales forecast for the year. It now sees revenue climbing 19.9 percent to 1.37 trillion yen, or $14.92 billion. Previously, the company said it expected sales to come in at 1.32 trillion yen, or $14.37 billion.
While Fast Retailing said it was encouraged by the performance of its fast-growing Uniqlo operations internationally, particularly in China and Europe, the company expressed a more cautious view of its home market of Japan, where the group still does the bulk of its business. The retailer cut the full-year sales forecast for Uniqlo Japan, citing the weak first six months, and trimmed its operating profit forecast “on the expected increase in personnel, distribution and warehousing expenses.”
Fast Retailing said full-year operating profit on a consolidated level will grow 9.5 percent to 145.5 billion yen, or $1.58 billion. The previous forecast was for 156 billion yen, or $1.70 billion. RELATED STORY: Uniqlo Bows in Berlin >>
On a more positive note, Fast Retailing’s chairman, president and chief executive officer Tadashi Yanai brushed aside the potential impact of Japan’s sales tax hike, which went into effect at the beginning of the month. The tax rate rose from 5 to 8 percent.
“Our business basically didn’t have any rush buying [before the consumption tax increase], and there is no decline [after the tax increase]. So [our products] are selling in the same way as before; they’re selling as planned,” he said. “Naturally, I want to offer even better clothes, with things like function, added value, material and silhouette, but I don’t plan to hike prices. As much as possible I’d like to continue selling at our current prices, but the area in which we need our customers’ approval is not price, but value.”
The company said net profits for the six months ended Feb. 28 declined 1.4 percent to 64.56 billion yen, or $639.1 million at average exchange rates for the period. It reported a year-on-year fall in foreign exchange profits of 6.4 billion yen, or $63.4 million.
First-half operating profit increased 6.8 percent to 103.2 billion yen, or $1.02 billion. Sales for the six months grew 24.3 percent to 764.35 billion yen, or $7.57 billion.
Fast Retailing saw first-half sales increases in each of its main business channels: the domestic Uniqlo business, Uniqlo’s international operations and the global brands business, which includes such labels as Theory, GU, J Brand and Princesse Tam Tam. Uniqlo Japan’s net sales rose 4.7 percent on the year to 405.59 billion yen, or $4.02 billion. Uniqlo’s international sales shot up 77.6 percent to 232.04 billion yen, or $2.3 billion. Revenue from global brands was up 31 percent to 125.37 billion yen, or $1.24 billion.
At the press briefing, Yanai reiterated his plans to become a leading global retail chain, saying that he aims to have 1,000 Uniqlo stores in Greater China within 10 years. By the end of the current fiscal year, ending Aug. 31, the company expects to have 374 stores in China, Hong Kong and Taiwan, and plans to open 80 to 100 new ones each subsequent year.
Yanai said he also aims to have 100 Uniqlo stores in the U.S. within a few years, by opening 20 to 30 doors each year. He plans to continue targeting areas on the East and West Coasts, including Boston, Philadelphia and Los Angeles. Takeshi Okazaki, Fast Retailing’s chief financial officer, said losses at Uniqlo’s U.S. operation narrowed this year and the company is hopeful it should move into the black next year or the year after.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)