Uniqlo’s Fast Retailing blames warm winter for surprise profit decline
TOKYO: Uniqlo operator Fast Retailing Co Ltd reported an unexpected decline in quarterly profit, blaming warm weather for hurting winter clothing sales even as its Chinese business shrugged off concerns of a decelerating economy.
Uniqlo has become Asia’s biggest clothing retailer, helped in part by the popularity of its basic items such as ultra-light down coats and Heattech thermal underwear.
However, stores in Japan struggled to sell such items in October and November due to unseasonably warm weather, the company said.
Overall operating profit fell 8% to 104.7 billion yen (US$970.16mil) in SeptemberNovember. That compared with a 118 billion yen average of four analyst estimates compiled by Refinitiv Eikon.
Fast Retailing’s Uniqlo business in Japan performed particularly badly, with operating profit down 30% from a the same period year earlier.
“We did extremely well domestically and ran out of stock on winter clothing in the previous year, so we went into this season with extra,” chief financial officer Takeshi Okazaki told reporters.
“As a result, we were hit squarely by the mild weather.” Analysts have been concerned that Uniqlo faces two major risks: saturation in Japan, still its main market, and possible slowdown in China, where the company currently logs an increasing proportion of growth.
The company said the latter, at least, was not yet happening with operating profit in mainland China growing by double digits.
“I believe Chinese economic growth is slowing down but it’s not showing an impact as far as our business is concerned,” Okazaki said, adding that he remained on alert.
The firm opened a net 78 stores in China in the last fiscal year, expanding to 633 locations there, while it closed a net four stores in Japan, ending the year with 827 stores. But analysts have been concerned how long growth momentum in China would last.—
Unexpected decline: Uniqlo has become Asia’s biggest clothing retailer, helped in part by the popularity of its basic items such as ultra-light down coats and Heattech thermal underwear. — Reuters