Fast Retailing, the parent company of popular clothing brand Uniqlo, has reported a 2% decline in first-quarter earnings. The decrease is attributed to weak performance in Japan and ongoing COVID-19 restrictions in China. The company’s operating profit for the three months ending in November was 117.1 billion yen ($889.82 million), down from 119.4 billion yen the previous year. This figure fell short of the consensus forecast of 135.3 billion yen, according to Refinitiv.

In Japan, the domestic results were impacted by warmer weather in November, which affected sales of fall and winter clothing. Additionally, COVID-19 restrictions in China, including the temporary closure of 247 stores in Beijing and Guangzhou, continued to hinder business operations in the region.

Despite these challenges, Fast Retailing’s CFO, Takeshi Okazaki, remains positive about the Chinese market. Okazaki believes that once “with corona” lifestyles become the norm, normal operations will resume in mainland China. On a more positive note, sales and earnings in regions outside of Japan and China saw an increase.

Fast Retailing, as Japan’s largest retailer, made headlines by announcing a significant wage increase for its employees. The decision was made to satisfy policymakers urging employers to offset the high inflation, and it has received positive feedback. Independent equities analyst Mark Chadwick highlighted the larger issue of Japanese companies struggling to attract and retain workers, making the wage increase a significant move.

Despite the decline in earnings, Fast Retailing remains confident and has maintained its full-year operating profit forecast of 350 billion yen. The company, known for its over 3,500 clothing stores globally, experienced record profits in the previous fiscal year, largely due to growth in North America and Europe. The company’s performance in the Chinese market is closely monitored as it serves as a key indicator of market trends in the region.

Following the earnings announcement, Fast Retailing’s share price fell by 2% in Tokyo trade, while the benchmark Nikkei index remained unchanged. The company’s performance will continue to be closely watched as it navigates the challenging retail landscape affected by the ongoing pandemic.

Useful links (if applicable):
1. Uniqlo Official Website
2. Refinitiv