Uniqlo’s parent company, Fast Retailing, is set to announce a significant boost in profits when it releases its latest financial results this week. The company has seen a recovery in its largest overseas market, China, and has also benefited from the weakening yen. Despite the challenges posed by the ongoing pandemic, Uniqlo has experienced a rebound in sales in China, where it operates over 900 stores. Analysts predict that Fast Retailing’s operating profit for the fiscal year ending in August will rise by 26% to 374.6 billion yen ($2.52 billion), surpassing the company’s own forecast and last year’s profits.

Fast Retailing is seen as an important indicator for retailers in China, which is the world’s second-largest economy. As the country has relaxed strict Covid-19 measures, sales have started to recover. Additionally, the yen’s decline against the dollar has provided a boost for Japanese companies, including Fast Retailing, as they generate a significant portion of their sales outside of Japan.

Some analysts believe that consensus estimates may underestimate Fast Retailing’s performance. They point to the strong recovery in China, the weakened yen, and the company’s success in the United States and Europe as factors that could contribute to better-than-expected results. Oshadhi Kumarasiri, an analyst at LightStream Research, expects positive earnings surprises and a strong outlook for next year.

In recent years, Fast Retailing has focused on expanding its presence in North America and Europe, while facing challenges in China. The company has implemented a growth strategy for North America, and its regional chief, Daisuke Tsukagoshi, was recently promoted to president of Uniqlo. This move has sparked speculation that Tsukagoshi is being groomed to succeed Tadashi Yanai, the founder and Japan’s richest man. Yanai, who owns approximately 19% of Fast Retailing’s shares, has a net worth of $33.9 billion, according to Forbes.

Both Yanai and Tsukagoshi are scheduled to speak at the upcoming earnings briefing. Fast Retailing’s shares have performed well in 2023, with a 22% increase, reflecting the gains seen in the benchmark Nikkei index.

Overall, Fast Retailing’s strong performance in China, along with the yen’s decline and its success in North America and Europe, is expected to drive record profits for the company. The latest financial results will provide insights into the company’s future growth plans and potential leadership changes.

Useful links:
Fast Retailing Official Website
Uniqlo Official Website