Fast Retailing reports rise in revenue and profit
The board of directors of Fast Retailing said that the company generated rises in both revenue and profit in the first nine months of fiscal 2017, with consolidated revenue totalling 1,477.9 billion Japanese yen (13 billion dollars) , up 3 percent and operating profit reaching 180.6 billion Japanese yen (1.5 billion dollars), up 23.9 percent year-on-year. The consolidated gross profit margin improved 0.7 point. The group also reported an increase in revenue and profit in the three-month period, with a strong performance from Uniqlo International contributing significantly to the 8.9 percent year-on-year rise in third-quarter revenue and the 7.5percent year-on-year gain in operating profit.
Under finance income, the company recorded a foreign exchange gain of 13.3 billion Japanese yen (0.1 billion dollars) after the spot foreign exchange rate at the end of May closed below the spot rate at the start of the business term, increasing the carrying amount of its long-term foreign-currency denominated assets in yen terms. This resulted in significant gains in consolidated profit, with profit before income taxes rising to 195.4 billion Japanese yen (1.7 billion dollars), up 60.1 percent year-on-year, and profit attributable to owners of the parent expanding to 120.1 billion Japanese yen (1.06 billion dollars), a rise of 69.1 percent.
Uniqlo Japan and international segments grew sales
Uniqlo International generated increases in both revenue and profit, while both Uniqlo Japan and Global Brands reported higher revenue but lower profits.
Uniqlo Japan reported a rise in revenue but a contraction in profit in the nine months to May 2017. Revenue rose 1.2 percent to 653.4 billion Japanese yen (5.7 billion dollars) while operating profit dipped 0.6 percent to 92.6 billion Japanese yen (0.8 billion dollars). In the three months from March to May, same-store sales, including online sales, increased 2.7 percent due to strong sales of wireless bras, easy ankle pants and Dry Stretch Kando Pants, and sales strategies over Golden Week, Mother’s Day and the Uniqlo anniversary celebration. Meanwhile, e-commerce sales increased 17.3 percent in the third quarter to constitute 6.2 percent of total sales.
Uniqlo International generated rises in both revenue and profit in the nine months to May 2017, with revenue expanding by 5.4 percent to 561.5 billion Japanese yen (4.9 billion dollars) and operating profit rising by 61.3 percent to 68.1 billion yen (0.6 billion dollars). In the third quarter from March to May, Uniqlo Southeast Asia and Oceania and Uniqlo South Korea performed well to report a doubling in operating profit. In Southeast Asia and Oceania, UT T-shirts, sports goods such as DRY-EX polo shirts, new women’s blouses and dresses, Dry Stretch Kando Pants, and clothes designed to suit the Southeast Asian climate and culture sold especially well. The company’s efforts to overhaul business management in South Korea also resulted in generating a rebound in same-store sales, an improvement in the gross profit margin, and a reduction in business expenses.
Profits continued to expand at Uniqlo Greater China owing to sales campaigns timed to draw in customers over May Day and other public holidays, and strong sales of UT T-shirts, polo shirts and other core summer ranges. Uniqlo USA reported a lower operating loss in the third quarter after same-store sales recovered and business cost ratios improved under the new operational structure. In Europe, investment in 10 new store openings over three months inflated costs and knocked operating profit slightly lower.
Global Brands segment revenues rose 2.6 percent
In the nine months, revenue from the Global Brands segment rose 2.6 percent, while operating profit contracted by 17 percent to 19.1 billion yen (0.16 billion dollars). GU revenue rose but profit and same-store sales declined over the three months from March to May 2017. While the palazzo pants and design blouses featured in the advertising campaigns sold well, they didn’t prove as much of a hit as initially anticipated. Furthermore, the company said, it didn’t produce sufficient volumes of latest fashion trend items, resulting in shortages in some products and lost sales opportunities. The gross profit margin was also hit by discounting of excess inventory, and rising cost of sales in the wake of recent yen weakness.
Among other labels in the Global Brands segment, Theory fashion brand reported significant rises in both revenue and profit in the third quarter. While same-store sales at our France-based Comptoir des Cotonniers brand continued to decline, cost-cutting helped reduce operating losses. Finally, France-based Princesse tam.tam and US-based J Brand reported further losses in line with previous year levels.
Fast Retailing expands retail presence of Uniqlo and GU
Overall, the Uniqlo International network increased by 143 to 1,071 stores at the end of May 2017.
With a medium-term vision of becoming the world’s number one apparel retailer, the company said, it is focusing efforts on expanding Uniqlo International and its low-priced GU casual fashion brand. The company continues to increase Uniqlo stores in each country where it operates, and open global flagship stores and large-format stores in major cities around the world to help consolidate Uniqlo’s position as a key global brand.
In addition, the company is expanding our GU operation, by accelerating GU store openings in Japan and aggressively promoting new store development in international markets. GU already has stores in Shanghai and Taiwan, and the first GU stores opened in Hong Kong in March 2017.