Drive pays off for Uniqlo owner

> Japan’s Fast Retailing posts biggest quarterly operating profit in two years

TOKYO: Japan’s Fast Retailing Co Ltd, the owner of cheap-and-cheerful clothing chain Uniqlo, reported its biggest quarterly operating profit in two years as a cost-cutting drive and gains from a weaker yen helped offset tepid demand at home.

A persistent economic malaise and a lack of wage growth have eaten away at consumer confidence in Japan, prompting retailers to offer better products for less and cut expenses.

Fast Retailing has also opted to expand overseas, including China, Southeast Asia and the United States, to ride out the gloom.

With Japan’s consumer prices and household spending both slumping in November for the ninth straight month, the retailer said it did not plan to raise prices, highlighting the challenges faced by the country as it strives to banish deflation.

“Consumers are becoming cautious when it comes to shopping,” chief financial officer Takeshi Okazaki said at an earnings briefing. “They’re highly price-conscious.” Fast Retailing’s operating profit for the three months ended Nov 30 was ¥88.59 billion (RM3.4 billion), up 16.7% from a year ago and the highest since the same period in 2014.

This was mostly in line with average analysts’ expectations for an operating profit of ¥88.84 billion for the quarter, Thomson Reuters data shows.

The retailer’s revenue in Japan rose 3.4% to ¥239 billion as cold weather in November boosted sales of winter clothing such as cashmere sweaters and outerwear.

A weaker yen helped the company book a foreign exchange gain of ¥15.6 billion on foreign currencydenominated assets over the quarter. The yen averaged 13% less against the dollar between September and November compared to the same period a year earlier.

At the end of the last business year, overseas stores contributed 37% of the retailer’s overall revenue.

Fast Retailing reiterated its operating profit forecast for the year to August at a record high of ¥175 billion. That compares with an average of ¥177.3 billion predicted by 18 analysts surveyed by Thomson Reuters. – Reuters