Fast Retailing Net Profit Jumps 45.1% in Fiscal Q1

Fast Retailing said Thursday that its net profit for the first quarter of its fiscal year jumped 45.1 percent thanks to cost-cutting measures, a foreign exchange gain and a low comparative base from the same period a year earlier.

For the three months ended Nov. 30, Uniqlo’s corporate parent posted a net profit of 69.7 billion yen, or $667 million at average exchange rates for the period. The company’s operating profit increased by 16.7 percent to 88.59 billion yen, or $848 million.

First-quarter net sales grew 1.6 percent to 528.85 billion yen, or $5.1 billion. In Japan, Uniqlo’s sales increased by 3.4 percent on the year to 238.8 billion yen, or $2.3 billion.

“Firm control over discounting helped generate a 0.3 point improvement in the gross profit margin year-on-year,” Fast Retailing said in a release of its Uniqlo Japan business. “However, the selling, general and administrative expense ratio rose by 0.2 point year-on-year. While continued cost-cutting efforts helped reduce business costs such as advertising and promotion, outsourcing and business trips, distribution costs increased in relation to the transformation of our logistics systems.”

Uniqlo International posted a year-on-year sales decline of 0.2 percent to 196.5 billion yen, or $1.9 billion. “The fall in revenue was due largely to the effect of the stronger yen compared to the previous year, which pushed yen-based sales down by an average 16 percent,” the release said. “However in terms of local currencies, sales rose across all of Uniqlo international’s operations.“

Tadashi Yanai, Fast Retailing’s chairman, president and chief executive officer, has said on numerous occasions that his goal is to make the company the world’s number-one apparel retailer. To that end, the retailer continues to open Uniqlo stores in markets around the world and is also focusing on expanding operations of the even lower-priced fast-fashion brand GU. Fifteen years after Uniqlo’s first store outside of Japan opened in 2001, the company has crossed the threshold of 1,000 international Uniqlo stores, counting a total of 1,009 as of the end of November last year.

Fast Retailing left unchanged its guidance for the fiscal year ending Aug. 31. It expects net profit to more than double to 100 billion yen, or $862.3 million at current exchange rates. The company is predicting operating profit will grow 37.5 percent to 175 billion yen, or $1.5 billion. It forecasts yearly sales growth of 3.6 percent, for a total of 1.85 trillion yen, or $16 billion.

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