Fast Retailing Projects Record Profits

By Rocky Swift
TOKYO (Reuters) – The Japanese owner of casual wear giant Uniqlo, Fast Retailing, is expected to exceed its profit forecasts for the third consecutive year. The brand is making significant inroads in Western markets while recovering its business in China.

Profit Forecast

Fast Retailing's projected operating profit for the 12 months ending in August is expected to have risen 24% year-on-year to 478.3 billion yen, surpassing the company's forecast of 475 billion yen. This was updated in July due to a strong performance in the latter half of the fiscal year.

Stock Performance

Fast Retailing's shares hit a record high this week. The upcoming sales of fall and winter items in Japan and the resurgence of its Chinese business will be critical factors, according to independent analyst Mark Chadwick.

Chadwick pointed out that investor attention will focus on whether the company’s strategies in Greater China can reverse the earnings decline that resulted from weak consumer sentiment and increasing competition.

Market Challenges

With over 900 stores in China, Fast Retailing is a key indicator of the retail landscape in the world's second-largest economy. The impacts of COVID restrictions have weighed on the company for years, and currently, it contends with a sluggish economy affecting consumer confidence.

Pan Ning, CEO of Greater China, recognized in July that the market is maturing. The company is adjusting its strategy by reducing store openings and adopting a 'scrap and build' approach to underperforming locations.

During the pandemic, the company shifted its focus towards expanding in North America and Europe, which have provided strong sales results for the first nine months of fiscal 2024.

Future Aspirations

Founder Tadashi Yanai aims to establish Fast Retailing as the world’s largest fashion retailer, competing against giants like Zara and H&M. He believes that consumers prioritize value over luxury in a post-COVID world, which aligns well with Uniqlo’s offerings.

Yanai, Japan's richest man, is set to address the upcoming earnings briefing alongside Uniqlo president Daisuke Tsukagoshi, who is viewed as a potential successor.

Fast Retailing's shares have surged 43% in 2024, significantly outperforming the 16% rise in the benchmark Nikkei index.