Uniqlo’s Fast Re­tail­ing blames warm win­ter for sur­prise profit de­cline

The Star Malaysia - StarBiz - - Foreign News -

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

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