Fast Retailing: Q1 revenue declines but operating profit up 23.3 percent
14 Jan 2021
Consolidated revenue at Fast Retailing, totalled 619.7 billion yen, down 0.6 percent year-on-year, while operating profit totalled 113 billion yen, up 23.3 percent year-on-year driven by large increases in profit from Uniqlo operations in Japan and Greater China including Mainland China, Hong Kong and Taiwan, as well as rising profit and a strong overall performance from GU. On the other hand, the company said in a statement, Uniqlo operations in other parts of Asia & Oceania (including Southeast Asia, Australia, and India), North America, and Europe were hit especially hard by Covid-19, resulting in considerable declines in both revenue and profit. The first-quarter consolidated gross profit margin improved by 2.2 points to 52.4 percent, first-quarter pre-tax profit rose to 107.1 billion yen, up 5 percent and profit attributable to owners of the parent declined to 70.3 billion yen or 0.7 percent.
Uniqlo Japan, the company added, reported a rise in revenue and a significant increase in profit in the first quarter, with revenue reaching 253.8 billion yen, up 8.9 percent and operating profit rising to 60 billion yen, up 55.8 percent, while first quarter same-store sales increased by 7.3 percent year-on-year. The company reported strong sales of products such as loungewear and Heattech blankets that fulfilled customer demand for stay-at-home items and Ultra Stretch Active Pants and other items in the sports utility wear range along with haori-style jackets, smart ankle pants, and other fall winter ranges also sold well. Additionally, +J collection with designer Jil Sander, collaborative Peanuts products, and AIRism masks also contributed to the rise in sales.
The company’s e-commerce sales expanded strongly, with online sales rising to 36.7 billion yen, up 48.3 percent in the first quarter. Uniqlo Japan’s gross profit margin improved by 3.8 points on the back of a sharp reduction in discounting rates, and rising productivity that helped reduce the cost of sales.
Uniqlo International revenue declines but operating profit increases
Uniqlo International’s revenue fell to 260.6 billion yen, down 7.2 percent, while operating profit rose to 41.4 billion yen, up 9.5 percent fuelled by a significant increase in profit at Uuniqlo Greater China, especially in Mainland China and Taiwan, and a shift from an operating loss to an operating gain at Uniqlo South Korea. In sharp contrast, the company said, other parts of Asia & Oceania, North America, and Europe were hit harder than expected by Covid-19, resulting in a large decline in first-quarter profit.
The GU business segment reported increases in both revenue and profit in the first quarter, with revenue climbing to 76.5 billion yen, up 4.9 percent and operating profit expanding to 13.6 billion yen, up 9.9 percent, while same-store sales increased on strong sales of the sweat-style knitwear that featured in the TV commercials and advertising campaigns, double-faced sweatshirts and chef’s pants that successfully captured mass fashion trends, and loungewear that fulfilled stay-at-home customer needs. GU’s gross profit margin declined by 0.6 point
Global Brands reported a large decline in revenue and a slight operating loss in the first quarter. Revenue totalled 28 billion yen, down 22.3 percent and the segment generated an operating loss of 0.2 billion yen compared to a 1.8 billion yen profit recorded in the first quarter of fiscal 2020. Theory fashion label reported large declines in both revenue and profit as performance worsened in the United States, Europe, and Japan in the face of Covid-19, while sales of Japan-based PLST brand did return to previous year levels through October, but first-quarter revenue and profit both declined overall following a rise in Covid-19 infections in November. France-based Comptoir Des Cotonniers brand reported a large decline in revenue and a wider operating loss after temporarily closure of all stores in France for approximately one month from the end of October.