Uniqlo, the popular Japanese casual clothing brand, is expected to post solid same-store sales figures for the month of June, which will help offset the decline in profits for its parent company, Fast Retailing Co, amid the ongoing COVID-19 pandemic. Fast Retailing is set to announce its financial results for the period of March to May, as well as domestic sales for June, later this week. Analysts are predicting a drastic decrease of around 90% in quarterly operating profit compared to the previous year, with estimates falling to 6.26 billion yen ($58.19 million), according to data from Refinitiv.

However, the outlook for domestic same-store sales in June appears positive, with JP Morgan analyst Dairo Murata forecasting a surge of 20% to 30%. This growth can be attributed to the strong demand for Uniqlo’s Airism face masks, which quickly sold out after their release in June. Additionally, as Japan has gradually eased its lockdown measures since late May, retail activity has seen an increase.

These soaring sales figures would provide an encouraging sign of recovery for Uniqlo, particularly in its home market, after experiencing significant declines of 57% in April and 18% in May. Uniqlo stores in China, a key market for the brand, have also reopened, with consumer spending slowly recovering.

Dairo Murata noted in a research note dated June 29 that the Airism face masks are expected to contribute to a 3% boost in sales, and have successfully attracted customers to the stores. Uniqlo’s emphasis on practical clothing and its strong presence in Asian markets have also contributed to its relative strength compared to other fast-fashion competitors globally.

However, some analysts caution that the surge in June sales may be a temporary result of pent-up demand from customers who were confined to their homes in previous months. They suggest that this boost in sales may not be sustainable, especially considering the looming recession.

Uniqlo has already predicted a 9% decrease in sales for the fiscal year ending on August 31, compared to the previous year, along with a 44% decline in operating profit, dropping to 145 billion yen. CEO Tadashi Yanai, who has referred to the pandemic as the largest crisis faced by humanity since World War Two, has also warned that these forecasts may be revised further in the future.

Despite the challenges posed by the COVID-19 pandemic, Uniqlo’s strong sales in June offer hope for the company’s recovery. As the retail industry and global markets continue to navigate the uncertainties brought about by the pandemic, it remains to be seen how Uniqlo will adapt and overcome the obstacles it faces.

Useful links:
Fast Retailing Co Annual Report 2020
Uniqlo Airism Face Masks