Sluggish sales at Uniqlo Japan impact Fast Retailing’s Q1 profits
The Fast Retailing Group revenue rose but profit fell in the first quarter of fiscal 2019, or the three months November 30, 2018. Consolidated revenue reached 644.4 billion yen, up 4.4 percent year-on-year and operating profit reached 104.6 billion yen, down 8.1 percent year-on-year. The company said, while Uniqlo International continued to expand favourably and report consistent rises in both revenue and profit, Uniqlo Japan experienced a decline in both revenue and profit as mild winter weather resulted in sluggish sales, which was largely responsible for the decline in first-quarter consolidated profit.
While the consolidated gross profit margin declined by 1 point year-on-year in the first quarter, profit before income taxes declined to 111 billion yen, a drop of 5.7 percent and profit attributable to owners of the parent decreased by 6.4 percent to 73.4 billion yen.
Sales and profit decline at Uniqlo Japan
Uniqlo Japan reported declines in both revenue and profit in the first quarter of fiscal 2019, with revenue totalling 246.1 billion yen, down 4.3 percent and operating profit totalling 37.9 billion yen, down 29.9 percent. First-quarter same-store sales, including online sales, declined 4.3 percent. The company added that while new ranges and trendy products such as premium lambswool sweaters, boa fleece sweatshirts, fluffy fleece, and knitted coats sold well, sales of core winter items struggled overall in the face of especially mild weather in October and November. However, online sales expanded by 30.9 percent year-on-year, increasing the proportion of online sales from 7 percent to 9.7 percent of total sales.
Uniqlo International revenue and profit rose in the first quarter, with revenue totalling 291.3 billion yen, up 12.8 percent and operating profit increasing to 52.5 billion yen, up 12.6 percent year-on-year. In terms of individual markets, Uniqlo Greater China reported higher revenue and profits despite the mild winter weather. The operation in Mainland China continued strong, reporting double-digit growth in operating profit. Mainland China also achieved further double-digit growth in online sales. Uniqlo South Korea reported higher operating profit in the first quarter on the back of stricter discounting, and greater operational efficiency achieved through the use of RFID tags.
Uniqlo Southeast Asia & Oceania reported higher revenue and profit due to strong same-store sales rises in all markets. Uniqlo USA also reported significant increases in both revenue and profit on the back of a successful review of regional product mixes and continued strong online sales growth, and the company said, efforts to help the operation turn a profit in the current financial year are proceeding smoothly. Uniqlo Europe also reported strong rises in both revenue and profit, with Russia generating an especially strong performance. Uniqlo opened its first store in the Netherlands in Amsterdam in September 2018, and its biggest Southeast Asian global flagship store in Manila, the Philippines in October 2018.
GU witnesses rise in sales but profits fall
The GU business segment reported a rise in revenue but a fall in profit in the first quarter, with revenue climbing to 65.4 billion yen, up 7.7 percent and operating profit declining to 8.5 billion yen, down 4.9 percent. The gross profit margin declined slightly, and business costs increased on stronger advertising and promotion activities, resulting in a slight decline in operating profit.
Global Brands revenue rose but profit fell in the first quarter. Revenue rose to 40.7 billion yen, up 1.8 percent, while operating profit declined to 2.7 billion yen, down 9.9 percent. The Theory fashion operation reported a considerable increase in profit, due to strong sales, and subsequent reduced discounting losses, at the Theory label operation in the United States. Japan-based PLST brand, generated higher revenue, however, operating profit dipped slightly due to increased costs associated with higher new store openings. Comptoir des Cotonniers, Princesse tam.tam and J Brand reported continued losses in the first quarter.