Sunday, June 16, 2019
Martin Hennecke

Winter of discontent hits Uniqlo operator
Fast Retailing (6288), the operator of Uniqlo and GU, reported an unexpected decline in quarterly profit yesterday, blaming warm weather for hurting winter clothing sales even as its Chinese business shrugged off concerns of a decelerating economy. The firm posted that its net profit for the quarter ended November 30, 2018, fell 6.4 percent from 2017 to 73.4 billion yen (HK$5.3 billion), while the revenue increased 4.4 percent to 644.4 billion yen. Uniqlo has become Asia's biggest clothing retailer, helped in part by the popularity of its basic items such as ultra-light down coats and Heattech thermal underwear. However, stores in Japan struggled to sell such items in October and November due to unseasonably warm weather, the company said. Overall operating profit fell 8 percent to 104.7 billion yen in September-November. That compared with a 118 billion yen average of four analyst estimates compiled by Refinitiv Eikon. Fast Retailing's Uniqlo business in Japan performed particularly badly, with operating profit down 30 percent from a the same period year earlier. "Greater China reported higher revenue and profit despite the mild winter weather. Operating profit in mainland China continued to be strong, with double-digit growth," the firm said. The firm opened a net 78 stores in China in the last fiscal year, expanding to 633 locations there, while it closed a net 4 stores in Japan, ending the year with 827 stores. But analysts have been concerned how long growth momentum in China would last. Uniqlo International's revenue and profit rose for the three-month period ended November 30, 2018, with revenue totaling 291.3 billion yen, up 12.8 percent year on year and operating profit increasing 12.6 percent to 52.5 billion yen. Uniqlo International revenue and profit far outstripped that of Uniqlo Japan during the period, making it the largest business segment in the Fast Retailing Group. Uniqlo Japan's revenue fell 4.3 percent year on year to 246.1 billion yen and operating profit dropped 29.9 percent to 37.9 billion yen. Fast Retailing kept its operating profit forecast for the full year through August 2019 unchanged at 270 billion yen.

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