Fast Retailing, the parent company of Uniqlo, has reported a significant drop in profits for the financial year ending in August 2020 due to the impact of the COVID-19 pandemic. The company’s operating profit fell by 42% to ¥149 billion (£1.1 billion) as a result of global lockdowns. Despite this decline, Fast Retailing exceeded analysts’ expectations.

Net profit also decreased by 49.2% to ¥90.4 billion, while revenue dropped by 12.3% to ¥2.008 trillion. The consolidated gross profit margin declined by 0.3 percentage points year-on-year. The weak performance is attributed to the temporary closure of stores worldwide caused by the global pandemic.

However, Fast Retailing remains optimistic about a recovery in the coming year and is focused on expanding its international presence. The company is committed to its goal of becoming the world’s top apparel retailer and has continued to invest in flagship stores in Japan. It aims to expand Uniqlo International, as well as its Gu brand and global e-commerce.

Uniqlo Japan experienced a decline in revenue but saw an increase in profit. Revenue dropped by only 7.6% to ¥806.8 billion, while operating profit rose by 2.2% to ¥104.6 billion. Same-store sales, including online sales, decreased by 6.8%. The decline in sales was primarily due to warm weather in the first half of the year and the temporary closure of stores in the second half. However, same-store sales rebounded by an impressive 20.2% year-on-year in the fourth quarter after the stores reopened. The company saw strong sales of core summer ranges, products for stay-at-home lifestyles, and AIRism face masks during this period. Additionally, e-commerce sales increased by 29.3% to ¥107.6 billion, accounting for a larger proportion of online sales.

In contrast, Uniqlo International experienced a decline in both revenue and operating profit. Revenue was down by 17.7% to ¥843.9 billion, and operating profit plummeted by almost 64% to ¥50.2 billion. However, e-commerce sales for Uniqlo International increased by 20% in all markets.

Greater China witnessed a 9.3% decline in revenue and a 23.6% contraction in operating profit. Despite the challenges posed by the pandemic, the region experienced a faster recovery than anticipated, with local support for Uniqlo’s LifeWear concept contributing to its growth. E-commerce sales in Greater China also remained strong, expanding by approximately 20% year-on-year.

Uniqlo South, Southeast Asia & Oceania saw a decline of 13% in sales and a 40% decrease in operating profit, despite a strong performance in the first half of the year.

Fast Retailing faced significant challenges in North America, where most of its stores were closed during the spring. Changes in the social climate from June onwards, along with a resurgence in COVID-19 infections, led to a significant decline in revenue and a wider operating loss.

Uniqlo Europe was also heavily impacted by the pandemic, resulting in temporary store closures and a decline in tourist numbers. This had a negative impact on revenue, leading to a slight operating loss for the year.

Despite these challenges, Fast Retailing continued to aggressively enter new markets. Uniqlo opened its first store in Milan, Italy in September 2019, followed by stores in New Delhi, India in October 2019, and Ho Chi Minh City, Vietnam in December 2019.

The company’s Gu brand experienced a rise in revenue but a decline in profit. Revenue increased by 3.1% to ¥246 billion, while operating profit decreased by 22.5% to ¥21.8 billion. The brand had a strong first half, driven by sales of knitwear and lightweight outerwear. However, the pandemic impacted its performance in the second half. Despite this, same-store sales showed signs of recovery in the fourth quarter, with a 2.2% year-on-year increase.

Fast Retailing’s Global Brands unit, which includes Comptoir des Cotonniers, Princesse tam.tam, and J Brand, reported significant declines in both revenue and profit. Revenue fell by 26.9% to ¥109.6 billion, and the operating loss widened from ¥3.6 billion to ¥12.7 billion. The US and Europe were particularly affected by the impact of COVID-19, leading to ongoing losses for these brands. The Theory operation also incurred losses.

Despite the challenges faced by Fast Retailing and its brands, the company remains hopeful for a strong recovery in the coming year. It is focused on expanding its international presence and investing in key markets, while also adapting to changing consumer needs in the wake of the pandemic. With its long-term goal of becoming the world’s leading apparel retailer, Fast Retailing is determined to overcome the obstacles presented by COVID-19 and emerge stronger than ever.

References:

1. For more information on Fast Retailing’s financial results, visit Fast Retailing Investor Relations
2. To learn more about Uniqlo and its global expansion, visit Uniqlo Official Website