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Uniqlo parent Fast Retailing sees 3% rise in profit this fiscal year

China and Asia-Pacific markets help offset weak Japanese demand

A Uniqlo store in Tokyo's trendy Harajuku district. (Photo by Ken Kobayashi)

TOKYO -- Uniqlo owner Fast Retailing expects its earnings to rise by 3% to hit another record high of 175 billion yen ($1.54 billion) in the year ending next August, the company said Thursday.

The group also expects revenue to rise by a similar magnitude to 2.2 trillion yen over the same period. Fast Retailing executives were speaking after announcing a jump of 88% in net profit to a peak of 169 billion yen in the fiscal year that ended this past August from a year ago, on consolidated revenue of 2.1 trillion yen.

Although it is forecasting a overall annual rise in earnings, the casualwear maker said it anticipated revenue and profit to first decline in the six months to February, based on its assumption that COVID-19 will continue to have an impact on footfall and cause temporary store closures.

The company also expects to see negative impact from production and logistics delays for the time being, due to the resurgence of infections in some regions still fighting the fast-spreading delta variant of COVID-19.

It also expects its operations in Japan to fall over this fiscal year, with same-store sales seen dropping 11%. This is despite an all-time high operating profit of 123 billion yen recorded for Uniqlo Japan in the year just ended. That figure was up 18% from a year earlier with same-store sales rising 3.6%, boosted by strong demand for casualwear as customers stayed home due to the pandemic.

However, the company expects to see strong growth in its overseas revenue and profit in the second half of this fiscal year, driven by brisk demand, particularly in Greater China and the Asia-Pacific regions.

Fast Retailing Chairman and CEO Tadashi Yanai is determined to accelerate Uniqlo's growth overseas. "The vaccine has accelerated the moves of expanding the economy while reducing the spread of infection," said Yanai. "We will be opening new stores globally faster than ever before."

Fast Retailing Chairman and CEO Tadashi Yanai says the company is focused on overseas growth. (Photo by Makoto Okada) 

As part of its expansion strategy, Fast Retailing will open a flagship Uniqlo store in Beijing next month.

But Yanai expressed concerns about rising raw material prices. "Amid a surge in raw materials globally, we believe that inflation is likely in all kinds of products," he said.

Earlier this year, Fast Retailing was caught up in the controversy over the use of cotton produced in China's Xinjiang region where Uyghurs are said to be persecuted by the state.

Yanai stressed that political conflict was making the business environment more difficult. "The spread of coronavirus has caused the economies of many countries to turn inward, leading to political conflicts between countries and a growing move to divide the world," he said.

Yanai repeatedly said in the news conference that the group had led the industry's efforts to improve human rights by demanding its contractors comply with global standards and conducting site inspections. Yanai said that the group's efforts are "among the highest in the world."

"I question the tendency to force many companies to make political choices," said Yanai. "But that doesn't mean I'm going to take an ambiguous stance on human rights issues."

Fast Retailing stressed in July that the company does not use any materials linked to human rights violations in the supply chain amid rising concerns over forced labor in Xinjiang.

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