Fast Retailing cuts profit estimate despite brisk Uniqlo sales abroad

TOKYO -- Fast Retailing Co. said Thursday the brisk performances of its Uniqlo casual clothing brand in overseas markets helped lift the group's profits in the first half, but also downgraded full-year estimates by citing slowing sales in Japan.

For the six months through February, its consolidated net profit rose 9.5 percent from a year earlier to a record-high 114.03 billion yen ($1.02 billion) on robust Uniqlo sales in China and Southeast Asian countries.

Operating profit grew 1.4 percent to 172.94 billion yen on sales of 1.27 trillion yen, up 6.8 percent, both record highs.

But for the year ending next August, the company lowered its operating profit forecast to 260 billion yen from 270 billion yen projected in January due to a slump in domestic Uniqlo sales for the first half, in which relatively warm weather dented demand for autumn clothing, the company said.

It maintained its outlook for a net profit of 165 billion yen and sales of 2.30 trillion yen for the 12 months.

"I believe our sales will not decline in China because of its very thick layer of middle-income households and we can achieve our target of opening 1,000 stores (in the country by fiscal 2021)," President and CEO Tadashi Yanai told a press conference in Tokyo.

The company said sales at more than 600 stores in China increased about 20 percent in the first half despite a slowdown in the world's second-largest economy.

Overseas stores helped Uniqlo post 88.49 billion yen in operating profit, up 9.6 percent, on sales of 580 billion yen, up 14.3 percent.

Domestic operating profit in Uniqlo operations, however, fell 23.7 percent to 67.74 billion yen on sales of 491.34 billion yen, down 0.5 percent, the company said.

"Overseas sales continued to surpass those in the domestic market. We have established a firm basis as a global firm and reached a new stage of growth," said Yanai, who added the company will open its first Uniqlo store in India later this year.

As of the end of February, the company operates 825 stores in Japan and 1,311 abroad.

Source: https://mainichi.jp/english/articles/20190412/p2g/00m/0bu/040000c