Up and up for Fast Retailing Group
Both consolidated revenue and profit rose for apparel retailer Fast Retailing Group in the first quarter of its latest fiscal year – the three months to November 30.
Consolidated revenue rose 1.6 per cent year-on-year to reach ¥528.8 billion (U$4.6 billion), while profit soared 16.7 per cent to reach ¥88.5 billion.
The gross profit margin held steady as the company continued its group-wide cost-cutting drive initiated in fiscal 2016.
With the group recording a foreign exchange gain of ¥15.6 billion, the consolidated profit rose considerably in the quarter, with profit before taxes increasing by 34.2 per cent to ¥104.2 billion, and profit attributable to the owners of the parent expanding by 45.1 per cent to ¥69.6 billion.
Breaking down the first-quarter performance into the three individual business segments, Uniqlo Japan increased both revenue and profit, Uniqlo International had a fall in revenue but a rise in profit, and Global Brands had a rise in revenue but a fall in profit.
With its medium-term vision to become the world’s No. 1 apparel digital retailer, the group is focussing its efforts on expanding Uniqlo International and its low-priced GU casual-fashion brand.
It is continuing to grow Uniqlo store numbers in each country where it has a presence, opening global flagship stores and large-format stores in major cities. It is also expanding GU, which has grown into a second-pillar brand for the group. It has opened more GU stores within Japan and has been accelerating the brand’s development and store numbers in overseas markets.
“Another medium-term goal is to revolutionise our entire supply chain, spanning all procedures from planning to design, raw materials procurement, manufacturing and retail into a new supply chain system that can fully satisfy the needs of today’s digital era.
“The customer-centric, information-driven supply chain is designed to support a comprehensive new digital retailing business model for the Fast Retailing Group.”
Next month, the group will move all Uniqlo product-related and commercial activities to its central Ariake headquarters.
For the quarter, Uniqlo Japan increased revenue 3.4 per cent to ¥238.8 billion, and profit by 1.8 per cent to ¥45.6 billion. Same-store and online sales grew 2.5 per cent.
During the period, the number of stores was reduced by six to 800 (excluding 41 franchise stores) at the end of November. Three stores shifted from being directly run to become employee franchise stores.
Same-store sales declined in September and October because of unseasonal warm weather affecting demand for fall/winter items. Once temperatures dropped in November, same-store sales picked up.
Revenue eased 0.2 per cent to ¥196.5 billion for Uniqlo International, but there was a 44.6 per cent rise in profit. The fall in revenue was mainly because of the effect of the stronger yen, which pushed down yen-based sales by an average 16 per cent. However, in terms of local currencies, sales rose overall.
Profit contributions from Uniqlo Greater China and Uniqlo Southeast Asia and Oceania were especially strong.
Fifteen years after the first Uniqlo store outside Japan opened, the international network surpassed 1000 outlets, settling at 1009 stores at the end of November, an increase of 145.
For Global Brands, revenue rose 1.1 per cent to ¥92.7 billion while profit dropped by 22.7 per cent to ¥9.5 billion. The GU casual fashion brand grew revenue but had a profit fall after unseasonal warm weather. GU same-store sales expanded only marginally over the quarter as a whole.
The group’s Princesse Tam.tam label in France and its J Brand premium denim label in the US continued to lose money, while fashion brands Comptoir des Cotonniers and Theory had steady profits.
In October, Fast Retailing Group decided to donate US$1 million to humanitarian aid efforts in south Sudan.
In its “All-Product Recycling” initiative, the group delivers clothing collected at Uniqlo and GU stores to refugees and displaced persons, and in November head-office employees visited Myanmar to donate about 60,000 items of clothing. The beneficiaries were internally displaced persons in the Kachin and Rakhine states.