Jul 15, 2021
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Uniqlo and GU shine for Fast Retailing, Theory stronger in Q3

Jul 15, 2021

Japan's Fast Retailing has cut its annual profit outlook as extra Covid-linked government restrictions in Japan and elsewhere dented footfall. Last week, Japan declared a coronavirus state of emergency in Tokyo, a fortnight before the Olympic Games start.


It expects operating profit for the year to August to be up 64% at ¥245 billion ($2.23 billion). That’s ¥10 billion less than previously predicted. But profit rose to ¥227.9 billion in the nine months to May from ¥134.4 billion a year ago.

Uniqlo Japan reported large increases in revenue and profit in the first nine months, with revenue expanding to ¥675.1 billion (+12.7% year-on-year) and operating profit rising to ¥119.5 billion (+51%). First-half revenue rose and profit “expanded significantly on the back of strong sales of products that fulfilled customer demand for stay-at-home items, as well as core Fall Winter ranges”. 

Revenue and profit also “subsequently expanded significantly in the third quarter compared to a low previous-year performance". From March to May 2021, revenue was helped by strong sales of Uniqlo U T-shirts, Kando pants and other summer ranges, along with loungewear, ultra stretch active pants, and other items”. 

Also good news was that its e-commerce revenue increased as its online sales ops continued to expand. But overall, the Q3 Uniqlo Japan performance fell short of its business plan. 

At Uniqlo International, it saw a rise in revenue and a large increase in profit in the first nine months, with revenue up 9.8% to ¥739.6 billion and operating profit increasing 88.7% to ¥97.7 billion.

Profit increased significantly in H1 due to improved profitability in its East Asia operations. Then all regions reported significant recoveries in the third quarter and the Mainland China market reported large rises in both revenue and profit. South Korea also moved back into the black in terms of operating profit. 

North America and Europe reported major revenue gains and smaller operating losses during the period as the Covid situation improved in those regions. 

Meanwhile, its GU operation saw revenue climbing 7.1% to ¥200.8 billion in the nine months and operating profit up 18.9% to ¥24.3 billion.

GU performance “held steady year-on-year” while both revenue and profit “increased considerably in the third quarter”. From March to May, items such as chef’s pants, airy shirts, and coloured flared trousers contributed to the rise in revenue. However, more recently, “sales struggled and GU performance fell short of our business estimates due to the announcement of another state of emergency in Japan and the fact that some of our GU products did not fully grasp the prevailing trend”.

And Fast Retailing’s Global Brands revenue declined with operating losses widening in the first nine months. Revenue fell 3.3% to ¥80.5 billion and the segment reported an operating loss of ¥8.9 billion compared to a loss of ¥6 billion a year ago.

In the first half, Global Brands performance worsened significantly in the wake of Covid-19, but performance, primarily driven by Theory, picked up in Q3, with revenue rising “sharply” and the operating loss shrinking to ¥0.7 billion.

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