Uniqlo owner boasts about latest results
Shares of Fast Retailing, owner of the Japanese clothing brand Uniqlo, fell at the start of the Tokyo session by over 5%, even though the company is on track for a fifth consecutive year of record financial results.
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The giant announced on Thursday a 45.7%-percent increase in quarterly operating profit over the three months ended in May to 213.79 billion JPY, versus LSEG average forecasts of 177.73 billion JPY.
For comparison, a year earlier the company achieved an operating profit of 146.74 billion JPY.
Importantly, Fast Retailing raised its full-year operating profit forecast from 700 billion JPY to 730 billion JPY.
Solid results, as reported by Reuters, were largely driven by the Uniqlo International segment, where all regions saw improved profit margins.
In Japan, it was supported by increased tourism activity, driven by a weak yen.
Although the company highlighted good results in foreign markets, including North America and Europe, it expects a decline in sales and profits in Japan in the fourth quarter.
"Recently a persistent downward trend has emerged and I must honestly admit that the situation is becoming increasingly difficult," said Takeshi Okazaki, CFO of Fast Retailing, referring to the yen rate which recently fell to its lowest level in 40 years.
We wrote more about this in the article: Dollar rate approaches key level. This hasn't happened in 40 years!
"If the situation changes too quickly, it's hard to keep up, and that could potentially have a significant impact on our results", he added, emphasizing that the company expects to raise prices for some autumn-winter items in Japan by about 4% due to a weak JPY.
Sales were also affected by heat waves, which led to temporary closures of some stores and limited customer traffic, as well as transport and tourism disruptions related to the conflict in the Middle East.
As Okazaki highlighted, "the temporary, dangerous situation had of course a negative impact on consumer activity, otherwise sales could have been much higher."
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Fast Retailing and Uniqlo shares fall
Fast Retailing shares on Friday, July 10, after recovering earlier losses, fell by 3.59% to 82,110 JPY.
Since the beginning of the year, the company's shares have risen by over 43%.
Read also: Dollar rate disappoints even more. Goldman Sachs warns of a collapse
Chart. Fast Retailing share price
Source: TradingView.
The dollar to yen rate reaches 161.60 JPY after rising by almost 0.8% over the last month.
Chart. Dollar to yen rate (USD/JPY)
Source: TradingView.
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Source: Reuters.
