Fast Retailing buoyant on global ops in H1, despite Japan and China issues

Japanese giant Fast Retailing has reported its consolidated results for the latest half year and said that it exceeded expectations as revenues were higher than predicted and its profits rose sharply. 

In the six months to February, revenues rose 1.3% to ¥1.2189 trillion (€8.9bn/£7.4bn/$9.7bn).

It reported a record half-year profit, helped by sales growth in North America, Europe, and parts of Asia, even though revenue and profit declined in Japan and China. Operating profit climbed 18% to ¥189 billion.

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And it maintained its full-year profit forecast at ¥270 billion.

But despite the generally good news, in Japan, its Uniqlo division saw revenue falling 10.2% to ¥442.5 billion and operating profit down 17.3% to ¥ 80.9 billion. Same-store sales were down 9% “due to lost sales opportunities resulting from shortages in some strong-selling Winter ranges”.

Uniqlo International, however, saw a “significant rise in revenue and profit”. Revenue jumped 13.7% to ¥593.2 billion and operating profit surged 49.7% to ¥100.3 billion. 

It saw “record performances from S/SE Asia & Oceania and Europe on the back of strong revenue and profit gains. North America reported a large increase in revenue and a move into the black”. Yet as mentioned, demand in the Greater China region declined due restricted movement in the face of Covid-19, resulting in lower revenue and profit in the first half of fiscal 2022.

The operating profit generated by the North America and Europe regions constituted approximately 20% of the total for Uniqlo International, “representing one more earnings pillar following on from the Greater China region, which accounts for approximately 55% of the segment's operating profit”.

Over at the GU brand, revenue declined 7.4% to ¥122.8 billion and profit dipped sharply — by over 40% — to ¥9.3 billion.

Sales of Autumn items “struggled in the face of persistently warm weather”. And while sales of some Winter items “proved strong, delays in production and distribution resulted in lost sales opportunities”.

Meanwhile, at the firm’s Global Brands unit, revenue rose 8.1% to ¥58.9 billion and operating profit moved into the black to the tune of ¥1 billion.

Its Theory label “generated large increases in revenue and profit”, while Comptoir des Cotonniers reported higher revenue and a “greatly reduced operating loss”.

Theory’s strength was due “primarily to a recovery in performance and a move back into the black for Theory in the United States”. 

Its French Comptoir des Cotonniers label was helped by customer numbers in France recovering compared to the previous year, which was hit hard by rising Covid-19 infections. Meanwhile, the permanent closure of unprofitable stores and other structural reforms improved cost efficiencies.

But the PLST label reported a decline in revenue and a wider operating loss as the operation was adversely impacted by Japan's Covid-19-related state of emergency and semi-state of emergency measures. It was “unable to release products and convey product news that would attract customers”.