Weak performance in Japan dampens Fast Retailing's Q3 results
By Prachi Singh
11 Jul 2019
The Fast Retailing Group has reported rises in both revenue and profit in the third quarter of fiscal 2019 with consolidated revenue increasing to 1.8228 trillion yen, up 7 percent and operating profit rising 3.7 percent to 247.6 billion yen (2.29 billion dollars) and profit before income taxes up 4.1 percent to 247.2 billion yen (2.29 billion dollars). The company said, profit attributable to owners of the parent rose to 158.6 billion yen (1.47 billion dollars), up 7 percent year-on-year.
However, the company said, Uniqlo Japan reported declines in both revenue and profit in the first nine months, with revenue totalling 701 billion yen (6.4 billion dollars), down 0.5 percent and operating profit totalling 96.7 billion yen (0.8 billion dollars), down 19.5 percent. The company added that gross profit margin declined 2.4 points as a result of stronger discounting of winter items following the warm winter weather in the first half, and an early rundown of spring summer inventory in the third quarter.
Uniqlo Japan Q3 sales and profit decline
For the three months through May 31, 2019, Uniqlo Japan same-store sales, including online sales, declined 0.1 percent, resulting in a 0.5 percent year-on-year decline in revenue. However, online sales expanded by 16.1 percent to 19 billion yen (0.1 billion dollars), increasing their proportion of total sales from 7.8 percent to 9.1 percent of total sales. On the profit front, operating profit declined by 7.5 percent.
On the other hand, Uniqlo International reported growth in revenue and profit in the first nine months, with revenue rising by 14.6 percent to 820.5 billion yen (7.5 billion dollars) and operating profit expanding by 11.1 percent to 124.8 billion yen (1.1 billion dollars). For the three months from March to May 2019, the segment also reported 15.3 percent rise in revenue and 14.9 percent increase in operating profit.
In terms of individual markets, the company said, within the Uniqlo Greater China region, the Mainland China operation continued to achieve significant year-on-year growth in both revenue and profit. Uniqlo Southeast Asia & Oceania achieved double-digit growth in both revenue and profit on the back of strong sales of summer ranges, while Uniqlo South Korea reported a fall in same-store sales and a slight decline in profit. While the loss generated by Uniqlo USA shrank year-on-year, overall performance was lower than expected after unseasonal weather dampened sales of spring summer ranges. Uniqlo Europe, the company added, reported a decline in profit caused by unseasonal weather patterns and political uncertainty. However, within that region, Russia continued to perform strongly and reported expanding revenue and profit.
Uniqlo International opened its first store in the Netherlands in Amsterdam in September 2018, as well as its biggest Southeast Asian global flagship store in Manila, the Philippines in October 2018, and its first store in Denmark in Copenhagen in April 2019.
Highlights of other business segment results
The GU business segment, Fast Retailing further said, reported 11.2 percent rise in revenue to 185.3 billion yen (1.7 billion dollars) and 74.5 percent increase in operating profit to 26.3 billion yen (0.2 billion dollars). Over the three-month period revenue expanded by 12.1 percent and operating profit increased by 105.8 percent. The segment’s operating profit margin improved by an 8.2 points year-on-year.
Global Brands reported a 1 percent decline in revenue to 113.6 billion yean (1 billion dollars) but a rise in profit over the first nine months of fiscal 2019. Operating profit reached 4.6 billion yen compared to a 3.5 billion yen loss in the previous year following the recording of 8.9 billion yen in impairment losses. For the three months, Global Brands reported a 1.1 percent decline in revenue and a 29 percent decline in operating profit. The company said, Theory operation reported a steady operating profit and PLST brand achieved a slight rise in profit, while France-based Comptoir des Cotonniers and Princesse tam.tam brands reported increasing losses, and US-based J Brand premium denim label generated a similar loss to the previous year.
Picture:Facebook/Uniqlo USA,Charley Gallay/Getty Images for Uniqlo