Fast Retailing, the parent company of global clothing chain Uniqlo, announced a robust 27% increase in net profit for the quarter ending November 2023, reaching 107.8 billion yen ($740 million). This impressive growth, surpassing analyst projections of 98 billion yen, is largely attributed to a significant recovery in the Chinese market.
The company’s fiscal first-quarter performance revealed a 13% year-on-year increase in revenue, totaling 810.8 billion yen. A notable contributor to this success was Uniqlo’s overseas sales, which saw a 23% surge from the previous year. This uptick was primarily led by China, where the brand has rebounded from temporary store closures caused by the COVID pandemic.
Fast Retailing’s CFO, Takeshi Okazaki, expressed confidence in the Chinese market during a recent press conference. Despite a general slowdown in consumption growth, Okazaki highlighted the increasing selectiveness of consumers regarding product quality and pricing, a trend that plays to Uniqlo’s strengths in the market.
While the company reported exceeding sales expectations in the U.S. and Europe, its performance in Southeast Asia fell short of targets. Okazaki acknowledged a gap in understanding local consumer preferences and a mismatch between product offerings and lifestyle needs in these markets.
Domestic sales in Japan showed a modest 1.5% growth, amounting to 244.4 billion yen, impacted by warmer weather which dampened demand for winter apparel. However, the company saw an improvement in profit margins, attributed to better control over order placements. Despite anticipation of significant wage hikes in Japan, Okazaki noted a trend of increasing cost-consciousness among customers, as evidenced by a 15.4% drop in same-store sales in December compared to the previous year.
Looking ahead, Fast Retailing maintains its optimistic outlook for the fiscal year ending in August, targeting a record net profit of 310 billion yen on sales of 3.05 trillion yen. This forecast reflects the company’s resilience and adaptability in navigating diverse and evolving global markets.
