Fast Retailing Co, the parent company of Uniqlo, is on track to achieve a record annual profit, thanks to the weakened yen. The company’s overseas sales have been boosted by the currency devaluation, despite rising living costs and a challenging retail environment. In the past fiscal year, Fast Retailing has shown strong performances in North America and Europe, further contributing to its success.

China plays a crucial role in Fast Retailing’s international expansion, with nearly 900 stores in the country. However, due to the strict COVID-19 control measures, the company’s Chinese operations have suffered. As a result, Fast Retailing has shifted its focus to North America, where it expects to achieve an annual profit for the first time this year. Nevertheless, even in the United States and Europe, customers are avoiding shopping for clothes, leading to reduced sales for competitors like H&M. As a result, retailers have had to resort to price-cutting strategies to clear inventory.

Although Fast Retailing has managed to maintain its share price due to the growth in North America and the depreciation of the yen, challenges lie ahead. The looming threat of a recession and potential Federal Reserve rate hikes have failed to tame inflation. In fact, the yen reached a 24-year low against the dollar recently, adding to the uncertainties. Despite these challenges, Fast Retailing’s shares have risen by 18% in 2022, outperforming the benchmark Nikkei index, which has experienced an 8.5% drop.

Tadashi Yanai, Japan’s richest man who founded Fast Retailing, owns approximately 21% of the company, further highlighting his influence within the organization. His family’s net worth, estimated at $23.6 billion, solidifies his financial prowess. Another Japanese retailer, Seven & I Holdings, also reported an increased full-year profit forecast due to the weakened yen and strong fuel sales in North America.

In conclusion, Fast Retailing’s impending record annual profit is undoubtedly a positive sign for the company. The weakened yen and strong performances in North America and Europe have significantly contributed to its success. However, concerns remain over China’s recovery and the potential impact of external factors such as a recession and inflation. Monitoring these developments will be crucial in determining the company’s future growth and financial stability.

Sources:
Forbes article on Fast Retailing’s record profit forecast
Nikkei Asia article on Fast Retailing’s annual profit projection