Fast Retailing’s Full-Year Profit and Sales Fall Due to Covid-19

TOKYO — Fast Retailing reported lower full-year profit and sales compared to a year prior, though its results were better than the company’s own latest guidance, issued in June. And despite the challenging climate, it expects to see a turnaround in the second half of the current fiscal year.

For the 12 months ended Aug. 31, the Uniqlo parent’s net profit fell by 44.4 percent to 90.3 billion yen. In addition to the effects of the pandemic, this was due to the company recording impairment losses of 23 billion yen on stores and other assets.

Operating profit for the period declined by 42 percent to 149.3 billion yen.

Fast Retailing recorded yearly sales of 2.01 trillion yen, down by 12.3 percent compared with the previous year. The company attributed the poor performance to temporary store closures and a decline in store traffic worldwide amid the health crisis.

Uniqlo Japan saw its sales during the 12 months fall by 7.6 percent to 806.8 billion yen. Same-store sales, including online sales, declined by 6.8 percent from the previous year, due to a sluggish first three quarters. “This was especially true in the third quarter when COVID-19 prompted the temporary closure of up to 311 stores out of the total of 813,” Fast Retailing said in a release. “Same-store sales rebounded by 20.2 percent in the fourth quarter as outlets began to reopen.”

View Gallery

Related Gallery

The Return of Elsa Peretti for Tiffany & Co

The company also said that yearly e-commerce sales from Uniqlo Japan increased by 29.3 percent. E-commerce sales made up a 13.3 percent share of total revenue, up from 9.5 percent in the previous year.

Uniqlo International’s sales fell 17.7 percent to 843.9 billion yen. “This was due in part to the recording of full-year impairment losses of 15.8 billion yen, mainly in Uniqlo South Korea and Uniqlo U.S.A. operations,” Fast Retailing said in its release. “However, e-commerce sales expanded favorably in all markets, increasing by around 20 percent year on year.”

Uniqlo’s operations in North America and Europe were hit hard by the pandemic, as many stores were closed for several weeks. In Europe, a decline in tourist numbers also resulted in lower sales.

Uniqlo’s performance in the Greater China region, which includes mainland China, Hong Kong and Taiwan, reported a 9.3 percent decrease in sales for the year, totaling 455.9 billion yen. However, sales in the region improved at a faster pace than predicted starting from March. E-commerce sales also remained strong, advancing about 20 percent.

In the region that includes Southeast Asia, Australia and India, Uniqlo’s sales declined by 13 percent year-on-year to 150 billion yen.

Fast Retailing also released its guidance for its current fiscal year, ending Aug. 31, 2021. It is predicting a strong recovery from the pandemic, and expecting its profit level to return to the record high of fiscal 2019. The company said it expects to see continued declines in sales in the first half, but that both profit and sales will see significant improvement in the second half, with the hope that the virus will be brought under control by that time.

The retailer said it expects net profit for the year ending Aug. 31, 2021 to rise by 82.6 percent to 165 billion yen.

It predicts that its operating profit will gain 64 percent to total 245 billion yen.

The company is forecasting yearly sales growth of 9.5 percent, for a total of 2.2 trillion yen.

Source: Read Full Article