Uniqlo operator posts record annual profit despite China slump

TOKYO  -Japan’s Fast Retailing Co, owner of clothing brand Uniqlo, reported record full-year profit on Thursday, boosted by a decline in the yen and overcoming lingering weakness in the Chinese market.

Operating profit was 297.3 billion yen ($2.02 billion) in the 12 months through August compared with 249 billion yen a year earlier. That surpassed the company’s guidance and the consensus forecast of 291 billion yen, according to the average of 12 analyst estimates from Refinitiv.

The company’s previous operating profit record was 263 billion yen in the year ended in August 2019.

International operations drove growth, with the North American and European segments moving into the black and revenue from the region going up in value when repatriated into yen, which slid to a fresh 24-year low against the dollar this week.

The company recorded a 114.3 billion yen foreign exchange gain as Japan’s currency depreciated.

While the yen’s decline has given a boost to global Uniqlo sales, chief executive Tadashi Yanai sounded a pessimistic view on the overall effect on Japan’s economy.

“I think that the lives of ordinary people are certainly getting worse,” Yanai told reporters. “Everyone is talking about keeping prices the same, but the weak yen and high raw material prices are making that impossible.”

Fast Retailing saw a slight increase in sales in mainland China for the year while operating profit slid 17 percent amid stringent COVID 19-related controls. Sales picked up in the region from the fourth quarter as the curbs were eased, the company said.

China is the company’s biggest overseas market by far, with almost 900 Uniqlo stores in the mainland. Fast Retailing expects large sales and profit gains there in the second half of next year as COVID curbs relax, and it is sticking to a plan of opening 100 stores annually in Greater China.

Overall operating profit will rise to 350 billion yen next fiscal year, the company forecast. Its forecasts are based on the yen trading at 138.7 against the U.S. dollar in fiscal 2023, stronger than the 146 level reached this week.

Fast Retailing’s shares are up 21 percent in 2022, compared with an 8.9 percent drop in the benchmark Nikkei average.

($1 = 146.8800 yen)