China boosts Uniqlo parent
Uniqlo owner Fast Retailing’s healthy online sales and strong performance in overseas markets, particularly in China, have helped boost its third quarter results.
The Japanese retailer said its online sales saw a 16.1 per cent year-on-year increase in the three months to May 31 to ¥19.0 billion (US$176.1 million), increasing their proportion of total sales from 7.8 per cent to 9.1 per cent.
For the three months from March to May 2019, Uniqlo’s international segment reported strong results, with revenue expanding 15.3 per cent year-on-year and operating profit expanding 14.9 per cent year-on-year over that period.
Uniqlo continued to achieve significant year-on-year growth in both revenue and profit in Mainland China, and achieved double-digit growth in both revenue and profit in Southeast Asia and Oceania on the back of strong sales of its summer range.
But Fast Retailing’s less-than-stellar domestic sales have overshadowed the company’s strong performance in its e-commerce and international segments, indicating that Japan’s market still has a huge influence on the retailer’s results.
The company’s domestic sales saw a 0.5 per cent decline brought about by shifting a sales event to June.
On the profit front, the retailer’s operating profit declined by 7.5 per cent year-on-year on the back of a higher selling, general and administrative expense ratio, and a lower gross profit margin, which was dampened by its decision to bring forward discounting of leftover Spring Summer inventory.
China continues to be one of the main engines driving overseas expansion, with sales in the country rising in the double digits.
The retailer said Uniqlo so far hasn’t been hurt by the trade war between the US and China, and sales there were strong even in the face of a weaker yuan.
Uniqlo Europe reported a decline in profit caused by unseasonal weather patterns and political uncertainty. However, within that region, Russia continued to perform strongly and report expanding revenue and profit.
In terms of new-store activity, Uniqlo opened its first store in the Netherlands in Amsterdam in September 2018, as well as its biggest Southeast Asian global flagship store in Manila, Philippines in October 2018, and its first store in Denmark in Copenhagen in April 2019.
Fast Retailing said it is planning to focus its efforts on expanding its global e-commerce operation and its Uniqlo international and GU casual fashion brands to meet its medium-term vision to become the world’s number one apparel retailer.
This story first appeared on our sister site Inside Retail Australia.