TOKYO — Fast Retailing on Thursday raised its full-year outlook after a strong first half in which its profit increased by double digits, despite a slight decline in sales. The growth was driven by profit increases from Uniqlo Japan and Uniqlo Greater China, regions that were less severely impacted by the coronavirus pandemic.
For the six months ended Feb. 28, Fast Retailing’s net profit rose 5.4 percent year-on-year to 105.8 billion yen, or $963.56 million. Operating profit was up by 22.9 percent to 167.9 billion yen.
“The rise in profit can be attributed primarily to large increases in profit from Uniqlo operations in Japan and Greater China [mainland China, Hong Kong and Taiwan markets],” Fast Retailing said in a release. “On the other hand, due to the especially severe impact of COVID-19, the Uniqlo South Asia, Southeast Asia and Oceania [Southeast Asia, Australia and India], Uniqlo North America, Uniqlo Europe regions and our Global Brands segment reported considerable declines in both revenue and profit.”
The company’s first-half net sales slipped by 0.5 percent on the year, for a total of 1.2 trillion yen. Tadashi Yanai, Fast Retailing’s chairman, president and chief executive officer, has said his aim is for the company to become the world’s number-one apparel retailer, as well as Asia’s “overwhelming number one.”
“In pursuit of this aim, we focus our efforts on expanding Uniqlo International, as well as our GU brand and our global e-commerce operation,” the company said. “We continue to open multiple new Uniqlo stores in all markets and areas in which we operate and strive to instill deeper and more widespread empathy for Uniqlo’s LifeWear concept of ultimate everyday wear.”
Uniqlo’s operations in its home market of Japan exceeded Fast Retailing’s expectations in the first half. Revenue from the segment rose by 6.2 percent over the same period a year earlier, coming in at 492.5 billion yen. Operating profit grew by 36.6 percent to 97.8 billion yen.
The company said products such as loungewear and Heattech blankets were especially popular, as customers continued to spend more time at home. Uniqlo’s online sales in Japan also increased, shooting up 40.5 percent to 73.8 billion yen.
In the Greater China region, Uniqlo saw strong performance in mainland China and Taiwan, while its profitability improved in Hong Kong. Uniqlo saw strong growth in both sales and profit in the region.
GU, the trend-focused sister brand to Uniqlo, also recorded steady performance in the first half of the fiscal year. Its revenue grew by 0.3 percent to 132.6 billion yen, while operating profit was up by 0.4 percent to 15.8 billion yen.
“While the number of customers declined primarily in urban areas, due to COVID-19, same-store sales held steady, fueled by strong demand for its sweat-style knitwear and aided by promotional activities including TV commercials,” Fast Retailing said. “Other popular products included double-faced sweatshirts that successfully captured mass-fashion trends, as well as loungewear that met customer needs for at-home products.”
In response to first-half results that were stronger than expected, Fast Retailing also revised its full-year outlook, slightly raising its revenue and operating profit forecasts. The net profit guidance, however, remains unchanged at 165 billion yen.
The company now expects its operating profit to gain 70.7 percent over the previous year, for a total of 255 billion yen. The previous guidance had operating profit at 245 billion yen.
Fast Retailing is now predicting year-on-year sales growth of 10 percent, with yearly revenue coming in at 2.21 trillion yen. This is slightly higher than the company’s previous forecast of 2.2 trillion yen.