TOKYO: The operator of the Uniqlo clothing brand, Japan’s Fast Retailing, said quarterly operating profit surged by a third and it bumped up its annual outlook, citing robust sales growth globally that helped it absorb U.S. tariffs.
On track for its fifth consecutive year of profit, the company has benefited from a pickup in sales in China – its largest overseas market – as well as an aggressive expansion strategy in North America and Europe.
It opened up major stores in Antwerp, Birmingham and Munich during the quarter. In the U.S., it is planning a string of new flagship stores in Chicago, New York and Boston.
“In the first quarter we absorbed the impact of additional tariffs in the U.S. and beat our expectations for business profit margin,” Chief Financial Officer Takeshi Okazaki said at a press briefing.
QUARTERLY PROFITS BEAT ANALYST EXPECTATIONS
Known for durable basic items and considered a bellwether for consumer sentiment in Japan and in China, Fast Retailing said operating profit climbed 34% to 205.6 billion yen ($1.3 billion) during the September-November period on a 15% increase in revenue.
That easily beat an LSEG consensus estimate of 177 billion yen.
Profit from its domestic business grew 20.6% from a year earlier thanks to buoyant demand for sweatshirts and warm innerwear.
Many overseas markets saw double-digit growth in revenue and profit. Autumn sales in China were strong and the launch of a collaborative business with e-commerce giant JD.com brought in new customers.
Overall, its international segment posted profit growth of 41.6%.
For the full year, it has increased its operating profit target to 650 billion yen from 610 billion yen.
Fast Retailing sought to lower its dependence on China after strict COVID-19 curbs hurt its business there and made North America and Europe its key growth areas.
The retailer forecast further revenue and profit growth in China for the remainder of the financial year to the end of August 2026 despite the ongoing diplomatic spat between the two countries that saw the Chinese government urge its citizens not to travel to Japan in November.
In response to a question on the impact of Japanese Prime Minister Sanae Takaichi’s remarks around Taiwan in November that triggered the Chinese response, CFO Okazaki said “there may be a certain degree of impact, but it’s difficult to say.”
There was no discernable impact from any drop off in Chinese inbound tourists, Okazaki added.
