Fast Retailing's H1 dented by weak Uniqlo, but GU prospers as it rides key trends
Fast Retailing has announced its March sales figures for Uniqlo, along with its six-month results for the company as a whole, and both sets of figures show just how the coronavirus has been affecting its retail operations around the world for much of this year, even though some countries have only felt the effects more recently.
First those Uniqlo figures. Its Japanese stores last month saw comparable sales, including online, falling 27.8% year-on-year, while total sales dropped an even bigger 28.1%.
While average purchases per customer rose — presumably as shoppers stocked up knowing that store access was limited — customer numbers plummeted in the 715 stores that were used to measure the results. The company said customer visits dropped “sharply” due to Covid-19.
Meanwhile, looking company-wide (and worldwide), for the six months to the end of February, Fast Retailing’s revenues fell. Overall revenue was down 4.7% to ¥1.2 trillion (€10.2 billion), while operating profit dropped a wider 20.9% to ¥136.7 billion, pre-tax profit fell 13.4% to ¥150.8 billion and net profit was down 17.2% to ¥103.4 billion.
The company expects revenue for the full year to drop 8.8%, but profit to fall more sharply with a 43.7% decline predicted for operating profit. That said, the firm admitted that it's difficult to make accurate predictions given the coronavirus pandemic, and is basing those forecasts on what happened in the business during March. It expects further sharp declines in revenue during April and May before operations gradually start to return to normal from June.
So what happened in the business during the first half? Its sales and profits falls were largely caused by significant reductions at Uniqlo in South Korea, mainland China, Hong Kong and Taiwan, which were hit by the pandemic (as well as other factors) before the effects became noticeable in regions like Europe and the Americas. International revenues were down 6.7% to ¥541.2 billion and operating profit fell almost 40% to ¥53.2 billion.
However, despite revenue declining in Uniqlo’s Japan operation, its profit actually rose in its domestic market. Revenues there fell 5.7% to ¥463.5 billion but operating profit rose 5.7% to ¥71.6 billion. The company suffered sales-wise as the winter stayed relatively mild and dented sales of its cold weather clothing.
Meanwhile, the GU brand reported significant increases in both revenue and profit during the first half with its revenues up 12.9% to ¥132.2 billion and operating profit rising 12% to ¥15.8 billion. The brand’s comparable sales increased thanks to strong sales of “on-target mass fashion trend items such as knitted cardigans and matching knitwear top and bottom sets, along with lightweight outerwear hit products that adapted successfully to the warm winter weather”.
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