Uniqlo owner Fast Retailing Co. said profit climbed in the fiscal second quarter, topping analysts’ projections on improved demand, and raised its forecast for the full year.
(Bloomberg) — Uniqlo owner Fast Retailing Co. said profit climbed in the fiscal second quarter, topping analysts’ projections on improved demand, and raised its forecast for the full year.
Operating profit rose 48% to ¥102 billion ($765 million) for the three months ended February, compared with the ¥90 billion, projected by analysts on average, the apparel maker said in a statement Thursday. Net sales jumped 27% to ¥751 billion, compared with analysts’ prediction for ¥687 billion.
The retailer raised its forecast for operating profit to ¥360 billion for the 12 months through August, compared with the prior outlook of ¥350 billion. The dividend outlook was raised to ¥125 a share, from ¥115 a share.
- The retailer is entering a new phase for growth as consumers live with Covid and will accelerate the expansion to eventually reach ¥10 trillion in sales to become “a true global player,” Chief Executive Officer Tadashi Yanai said in a briefing in Tokyo Thursday. The company is targeting ¥5 trillion in sales in about five years.
- China ended its Covid curbs in the retailer’s latest quarter, reversing three years of its Covid Zero policy, raising prospects for increased retail spending in the world’s second-largest economy.
- The decline in Uniqlo’s greater China sales likely persisted through the quarter, as the surge in Covid-19 infections in the mainland from mid-December to January hurt local buying sentiment, Catherine Lim, a Bloomberg Intelligence analyst wrote on April 10.
- Higher sales probably bolstered Uniqlo’s Japan operating margin in the quarter, according to Lim. Costs likely rose from the prior year on higher yen-based procurement costs and salaries for Japan-based employees, she said.
- Fast Retailing in January announced a raise of annual pay for full-time employees in Japan by as much as 40%, seeking to retain and motive staff as the nation faces the fastest pace of inflation in decades.
- The company is shifting its focus to markets such as North America and Europe where the outlook is relatively stable. It’s betting on North America and Europe to deliver annual revenue of ¥300 billion and ¥500 billion respectively, with an operating margin of 20%, by 2027.
- The stock has advanced about 13% this year to Thursday, before the earnings announcement. The company conducted a 3-for-1 stock split effective March 1 to boost liquidity and its investor base.
(Updates with CEO’s comments in fourth parargraph.)
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