Uniqlo’s growing domestic and North American sales led to higher third-quarter revenue and profit, which helped parent company Fast Retailing offset a Covid-induced crisis in Greater China.
In a word: Huge revenue and profit gains at Uniqlo International gave Fast Retailing confidence for continued growth in the fourth quarter, which also anticipates fewer Covid restrictions in the Greater China region.
Over the quarter, the international segment experienced strong growth in South and Southeast Asia and in Oceania, North America and Europe, excluding Russia. Sales in Greater China fell after 169 stores, mostly in Shanghai, halted operations from March to May, although sales recovered when they reopened last month.
“Performances from Malaysia, the Philippines, Indonesia and Singapore were particularly strong,” Fast said. “UNIQLO North America delivered a strong increase in revenue and went black in the third quarter, with the operation’s continued strong performance underpinned by strong support from North American customers for t-shirts, tank tops, cropped pants and other basics.”
The company said Uniqlo Europe generated a “strong increase” in revenue and also “went into the black in the third quarter”. LifeWear apparel helped provide a “favorable tailwind,” as did efforts to reach new customers as tourism demand increased.
At Uniqlo Japan, same-store sales were up 7.8% from a year ago. The quarter saw strong sales of Kando jackets and pants, as well as blouses. Quarterly results were supported by strong sales performance from Golden Week and Uniqlo’s anniversary sale.
“Third quarter gross profit margin improved 3.9 points year-on-year due to a lower discount rate related to our efforts to limit discount sales,” Fast said. “Furthermore, the selling, general and administrative expense ratio improved by 1.4 points year-on-year as we further strengthened operational efficiencies, primarily in the areas of personnel expenses and of distribution.”
The other Fast divisions did not fare as well. Revenue from the GU division suffered from product delivery delays, although sales of trending items such as colored pants were strong. And the company used fewer discounts to improve its gross profit margins by 1.5 points year-over-year. Within the Global Brands division, Theory reported higher revenue, but also lower profits attributed to lockdowns in Shanghai. Product shortages hurt PLST sales, and Comptoir des Cotonniers reduced its operating loss by improving profitability after the closure of unprofitable stores and other structural changes.
Net sales: The company said revenue for the quarterly period ending in late May rose 10.3% on an annual basis to 546.1 billion yen ($3.93 billion).
Uniqlo Japan reported a 76.2% rise in operating profit to 38.1 billion yen ($273.9 million) on an 8.7% rise in revenue to 198.4 billion yen ($1.43 billion). Uniqlo International saw its operating profit rise 5.6% to 32.4 billion yen ($233 million) on a 13.9% increase in revenue to 248.0 billion yen ( $1.78 billion). For GU, operating profit was flat at 8.4 billion yen ($60.4 million) on a 0.7% drop in revenue to 67.7 billion yen ($486.7 million). ). The Global Brands division posted a loss of 300 million yen ($2.2 million) on a 19.5% increase in revenue to 31.0 billion yen ($222.9 million).
For the nine months, Fast Retailing’s revenue rose 3.9% to 1.765 billion yen ($12.69 billion).
Earnings: Operating profit for the quarter rose 36.5% to 81.8 billion yen ($588.2 million).
Operating profit for the nine months rose 19.0% to 271.0 billion yen ($1.95 billion).
The company raised its full-year guidance and now expects operating profit of 290 billion yen ($2.09 billion) on revenue of 2.25 trillion yen ($16.18 billion). The previous forecast was an operating profit of 270 billion yen ($1.94 billion) on revenue of 2.2 trillion yen ($15.82 billion).
The company’s point of view: “We expect Uniqlo International to achieve strong revenue and profit increases for the second half of fiscal 2022 and full year and we also expect revenue and profit to increase year on year. year in local currency terms,” Fast said, noting that he also expects a slight increase in revenue at GU and a second-half profit at Global Brands.