Uniqlo parent Fast Retailing to strengthen online sales after beating retail gloom to report better-than-expected first-half profit

Eric Ng
·4-min read

Fast Retailing, which owns Japanese brand Uniqlo, will seek to boost online sales after they helped it report a better-than-expected first-half profit.

The Tokyo-based company, one of the world’s largest fashion retailers, reported a 5.4 per cent rise in its net profit to 105.8 billion yen (US$966.2 million) for the six months to February 28. Its revenue edged up 0.5 per cent to 1.2 trillion yen.

“Online sales continued to be strong in all markets,” the company said on Thursday. “The group will enhance e-commerce sales by strengthening initiatives to provide services that fuse online and physical stores to create a new type of shopping experience.”

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Fast Retailing beat the retail gloom partly by selling more online. Its online sales rose 40.5 per cent, albeit from a low base, to 73.8 billion yen, increasing their contribution to the company’s overall profitability.

The company has also raised its full financial year revenue and profit forecast. Its overall first-half profit improvement was led by its home market, Japan, where it recorded 36.6 per cent operating profit and 6.2 per cent revenue growth. The market contributed 38 per cent of its total sales.

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“Products such as loungewear and Heat-Tech blankets, that fulfilled customer demand for stay-at-home [during the pandemic] were especially popular,” Fast Retailing said, adding that ultra-stretch jogger pants and “sport utility wear” were also sought after.

Mainland China, Hong Kong and Taiwan – together the company’s second-largest market contributing 22 per cent of sales – as well as Vietnam and Russia, have all reported significant increases in both revenue and operating profit, while South Korea returned to the black. South and Southeast Asia, Australia and Europe, however, reported sharp sales and profit falls because of temporary store closures, while the US posted a wider operating loss.

Additionally, the company’s global brands segment, which runs stores under brands such as Theory and Comptoir des Cotonniers, suffered a 22 per cent sales decline and an operating loss of 8.1 billion yen, compared to a 0.7 billion yen profit in the year-earlier period. Its GU affordable casualwear label, meanwhile, posted a 0.3 per cent sales rise and a 0.4 per cent growth in operating profit to 15.8 billion yen.

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The company, which said it aims to be the world’s top apparel retailer, expects China and Southeast Asia to be its main growth drivers outside Japan. It said it will continue to open new stores in each market it operates in, and also plans to boost e-commerce, which made up 6.1 per cent of overall sales.

Online sales may account for about 20 per cent of global retailing by 2025, up from 10 per cent in 2019, according to a forecast published by the Economist Intelligence Unit (EIU) on Wednesday. However, not all retailers will be successful in the transition in this highly competitive market. “While companies race to capitalise on the opportunities thrown up by the shift online, many will struggle to be profitable,” said Barsali Bhattacharyya, EIU’s manager of industry briefing.

Fast Retailing closed on Wednesday at HK$63.2, having almost doubled over the past 12 months, but off an all-time high of HK$80.8 recorded in late February. Trading in the stock was suspended on Thursday for the company’s interim results announcement, and will resume on Friday.

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