Fast Retailing profits soar 80 per cent

Uniqlo brisbaneFast Retailing profits have soared 80 per cent during its second quarter.

The parent company of Japanese fashion retailer Uniqlo has reported a group operating profit of ¥42.1 billion (US$385.8 million) in the three months to March, on the back of international expansion.

Chairman Tadashi Yanai attributes growing margins following cost cuts for the growth following a tepid previous quarter.

First-half revenue also rose, along with operating profit. Consolidated revenue reached ¥1.0175 trillion (up 0.6 per cent year-on-year) while consolidated operating profit rose 31.5 per cent to ¥130.6 billion. The consolidated gross profit margin improved 1.5 points.

For Fast Retailing’s three individual business segments, Uniqlo Japan and Uniqlo International
generated growth in both revenue and operating profit, while global brands had higher revenue but a fall in operating profit.

“The group’s medium-term vision is to become the world’s number-one apparel retailer,” says Fast Retailing. “To this aim, we are focussing our efforts on expanding Uniqlo International and our low-priced GU casual-fashion brand.”

More stores

It is continuing to grow its store numbers in each country where it has a presence, and open global flagship stores and large-format stores in major cities around the world. “In addition, we are expanding our GU business, which has grown into a second-pillar brand for the group, by accelerating store openings in Japan and aggressively promoting development in international markets.”

The launch of the Uniqlo City Tokyo Ariake office in February marked the introduction of a speedier product-creation and information-generating system which the group intends to use as a springboard to revolutionise its supply-chain processes.

The number of Uniqlo Japan stores dropped by 14 to 791 outlets, excluding 41 franchise stores. Of these, shifted from being directly run to an employee franchise model.

Factors contributing to the growth in same-store sales include strong sales in the Uniqlo anniversary sale in November, good performances by core winter ranges such as HeatTech innerwear, cashmere sweaters and BlockTech outerwear, plus a strong start for the spring/summer ranges in February.

E-commerce sales increased by 11.7 per cent to ¥28.2 billion, which was 6.2 per cent of total sales.

“We are looking to expand e-commerce further by offering a broader range of special online sizes and exclusive ranges, and enhancing services designed to make online shopping more convenient, such as enabling customers to pick up their online purchases at their local convenience store or Uniqlo store,” says the group.

Revenue for Uniqlo International  grew by 0.9 per cent to ¥392.8 billion while operating profit leapt 65.9 per cent to ¥48.7 billion. However, the stronger yen pushed down yen-based revenue by an average 11 per cent, resulting in a more subdued 0.9 per cent rise in overall revenue.

With improvements in both the gross profit margin and the selling, general and administrative expense ratio, there was a “significant” increase in operating profit. The Mainland China and Southeast Asia markets proved particularly strong.

There were strong sales in China with a large rise in profit, while there was strong growth in same-store sales in Southeast Asia. Brand visibility in Southeast Asia improved markedly through efforts to broaden the local customer base by offering a broader range of products developed specifically to suit local climates and cultures, stronger marketing activities, and the opening of the first Uniqlo global flagship store in Orchard Central, Singapore, in September.

Meanwhile, GU’s international store network, which spans Shanghai and Taiwan, was extended in March with the opening the first Hong Kong store. The group plans to continue the GU expansion in Japan.

This story first appeared on sister site, Inside Retail Asia.

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