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Uniqlo can endure China-US trade conflict, company says

Fast Retailing 3Q profit up 36%, driven by China, South Korea and Southeast Asia

Fast Retailing said its products are "necessities," that are not hit by the economic climate.   © Reuters

TOKYO -- Japan's Uniqlo owner Fast Retailing would be able to counter the impact of U.S.-China trade conflict, Chief Financial Officer Takeshi Okazaki told a media conference on Thursday.

Okazaki said that recent developments between the two countries are "not going to lead to serious problems" at the moment and have not yet led to any company actions, but he admitted that the future is uncertain. "We prepare to develop a system in our global supply chain that can endure under any circumstances," he said, referring to production bases in Southeast Asia and other sites.

The fashion retailer relies largely on China for clothes manufacturing. However, production capacity in other countries, such as Vietnam and Bangladesh, is increasing at a fast pace. Even if U.S. tariffs come to extend to more Chinese apparel imports, "we have plans that allow us to respond," Okazaki said.

As for the impact on Chinese consumers, Okazaki said he continues to be optimistic about the market size. He emphasized that Uniqlo products are "necessities" that are not badly affected by the economic climate, unlike more trend-driven or luxury fashion items.

The company on Thursday released its third-quarter earnings for the fiscal year which ends in August 2018. Sales from March to May grew 12.4%, and operating profit rose by 36.9% from the previous year, driven by strong performance in Greater China, South Korea, Southeast Asia and Oceana. It maintained its record high full-year forecast, to reach 2.11 trillion yen ($18.7 billion) in revenue and 225 billion yen in operating profit.

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