TOKYO — Fast Retailing reported first-quarter net profit fell by 0.7 percent, while its sales dropped by 0.6 percent. By contrast, first-quarter operating profit at Uniqlo’s parent grew by 23.3 percent.
For the three months ended Nov. 30, 2020, the company’s net profit slipped by 0.7 percent to 70.3 billion yen ($677.26 million), which it attributed to a foreign exchange loss and tax reasons.
Operating profit for the quarter gained 23.3 percent, totaling 113 billion yen. Consolidated revenue came in at 619.7 billion yen, down 0.6 percent compared with the same period a year prior. Both figures exceeded Fast Retailing’s own forecasts.
A spokeswoman for the company said the reason for the rise in operating profit despite the decline in sales was mainly due to the strong performance of Uniqlo operations in Japan and Greater China, as well as the GU brand. Both Uniqlo Japan and Greater China achieved a higher gross profit margin than the same period a year earlier, as well as a lower expense ratio.
Uniqlo Japan saw its first-quarter revenue increase by 8.9 percent to 253.8 billion yen. Same-store sales rose by 7.3 percent on the year, while online sales grew by 48.3 percent to 36.7 billion yen.
“Products such as loungewear and Heattech blankets that fulfilled customer demand for stay-at-home were especially popular. Ultra Stretch Active Pants and other items in the Sport Utility Wear range also sold well,” the company said in a release, referring to Uniqlo’s business in Japan. “The +J collection with designer Ms. Jil Sander and strong demand for Airism masks also contributed to the rise in sales.”
Revenue from Uniqlo International declined by 7.2 percent year-on-year to 260.6 billion yen, due largely to business conditions brought on by the coronavirus pandemic. Uniqlo’s operations in North America, Europe, South Asia, Southeast Asia and Oceania (which includes Southeast Asia, Australia and India) were hit hard by the COVID-19 pandemic, resulting in considerable declines in both revenue and profits.
“Uniqlo operations in the U.S. reported a large decline in revenue and an operating loss due to the temporary closure of some stores and restrictions on people’s outside activities. Within the Europe region, a recovery in business seen through October was cut short by renewed restrictions and store closures in the U.K., France, Belgium and Italy. This resulted in a considerable decline in both revenue and profit for the quarter,” Fast Retailing said. “At the same time, the Russia market achieved significant rises in revenue and profit in local currency terms thanks to strong sales of winter clothing and products that satisfied stay-at-home demand.
GU, the retailer’s lower-priced, trend-driven casualwear brand, reported a 4.9 percent increase in revenue, totaling 76.5 billion yen. The company cited strong demand for sweatshirts and loungewear.
Fast Retailing left unchanged its guidance for the current fiscal year, ending Aug. 31. It expects net profit will jump 82.6 percent to 165 billion yen.
The company forecasts operating profit growth of 64 percent, for a total of 245 billion yen.
Full-year revenue is being forecast at 2.2 trillion yen, representing growth of 9.5 percent.
“Despite the rapid expansion of the COVID-19 pandemic since November, thanks to those higher-than-expected first-quarter results, our first-half consolidated performance is currently trending above plan,” Fast Retailing added.