Oct 15, 2020
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Fast Retailing profits plunge, Uniqlo International is weak, Theory makes loss

Oct 15, 2020

Uniqlo owner Fast Retailing may have taken a 42% pandemic-linked hit in its latest year but it’s forecasting a 60%+ recovery in its operating profit in the current financial year that ends next August.


In the year to August 2020, problems linked to global lockdowns meant operating profit plunged to ¥149bn (£1.1bn), although at least that managed to beat analysts’ expectations. Its net profit fell 49.2% to ¥90.4bn as revenues dropped 12.3% to ¥2.008trn. Its consolidated gross profit margin declined by 0.3 ppts year-on-year.

The company said the weak performance mainly due to the pandemic in the second half as stores were closed in markets worldwide for a few months.

The company cut its capital expenditures in the year but still invested in Japan flagships and it’s medium-term aim remains to be the world’s number one apparel retailer. So it’s still focusing its efforts on expanding Uniqlo International, as well as its Gu brand and global e-commerce. 


Uniqlo Japan saw a decline in revenue but a rise in profit. Revenue dropped only 7.6% to ¥806.8bn but operating profit rose 2.2% to ¥104.6bn. Same-store sales including e-tail were down 6.8%.

H1 comp sales had dropped 4.6% due to warm weather, but the comps decline accelerated in H2 with a 9.6% drop as it closed 311 stores temporarily.

Yet same-store sales rebounded by an impressive 20.2% year-on-year in Q4 from 1 June after it reopened its stores. It then saw strong sales of core summer ranges, products for stay-at-home lifestyles, and AIRism face masks. 

And e-commerce sales increased 29.3% in FY20 to ¥107.6bn, raising the proportion of online sales from 9.5% to 13.3%. It also generated an impressive 54.7% year-on-year increase in second-half e-commerce sales. 

But the picture wasn’t so rosy at Uniqlo International with revenue down 17.7% to ¥843.9bn and operating profit plunging almost 64% to ¥50.2bn.

This was mainly due to the pandemic, but at least e-tail rose 20% and all its markets saw online strength.

Greater China saw a 9.3% decline in revenue and 23.6% contraction in operating profit. But it improved at a faster pace than predicted from March onwards “as local support for its LifeWear concept grew”. Greater China e-commerce sales continued strongly, expanding by approximately 20% year-on-year in fiscal 2020. 

Meanwhile, sales at Uniqlo South, Southeast Asia & Oceania declined by 13% and operating profit shrank by 40%, despite a strong first half.

In North America, nearly all its stores were closed this spring and “changes in the social climate” from June onwards and a resurgence in Covid-19 infections meant a large decline in revenue and a wider operating loss.

And Uniqlo Europe was also hit hard by Covid-19 with many stores being closed temporarily and a huge decline in tourist numbers knocking revenue lower and resulting in a slight operating loss for the full year. 

But the company continued to aggressively enter new markets over the period with the first Uniqlo store opening in Milan, Italy in September 2019, the first store opening in New Delhi, India in October 2019, and the first store opening in Ho Chi Minh City, Vietnam in December 2019. 

Over at the Gu brand, it saw a rise in revenue but a decline in profit, with revenue up 3.1% to ¥246bn and operating profit down 22.5% to ¥21.8bn.

It had a strong H1 in Japan “on the back of strong sales of knitwear that perfectly captured the mass fashion trend as well as lightweight outerwear”. But the pandemic hurt its second half. However, same-store sales did start to recover in Q4, with a 2.2% year-on-year increase “on the back of standout sales of products that captured mass fashion trends and products that fulfilled stay-at-home demand”. 


Full-year e-commerce sales performed strongly, expanding by 60% year-on-year.

Its Global Brands unit reported large declines in both revenue and profit. Revenue fell 26.9% to ¥109.6bn and the operation loss widened to ¥12.7bn from ¥3.6bn.

This weak performance was due primarily to the large impact of Covid-19 in the US and Europe, which resulted in continued losses for its France-based Comptoir des Cotonniers and Princesse tam.tam brands and its US-based J Brand label. It also drove the Theory operation into the red.

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