Heavy discounting necessary to offload winter stock has hit Uniqlo sales. Parent Fast Retailing has struggled with a shortage of popular winter items in the past, and overcompensated last winter by ordering too much inventory ahead of what proved to be an unusually warm season.
As a result, the Japanese retailer’s first-quarter profit took a hit which in turn impacted of first-half results issued yesterday.
The company reported declines in both revenue and profit in the first half of the current financial year, with revenue totaling ¥491.3 billion, (US$4.397 billion) down 5 per cent from the previous corresponding period, and operating profit totaling ¥67.7 billion ($606 million), down 23.7 per cent from the previous year. Same-store sales fell 9 per cent, however online sales, which now account for 9.9 per cent of Uniqlo sales in Japan and 20 per cent in China, rose 30.3 per cent.
The weak first quarter for Uniqlo sales was in part compensated for by a double-digit increase in sales and profit in China, which helped the brand turn in a better-than-expected rise in operating profit to ¥68 billion ($609 million) for the three months to February.
The company said it now expects an operating profit of ¥260 billion for the financial year through August, compared to its previous forecast of ¥270 billion in January. The revised outlook would still be a record high and represent a 10 per cent year-on-year rise. Uniqlo re-stated its medium-term vision of becoming the world’s number one apparel retailer.
