The Fast Retailing Group’s revenue totalled 716.3 billion yen, up 14.2 percent, while operating profit totalled 117 billion yen, down 2 percent in the first quarter of FY23.
The company said in a release that the result was due primarily to a large decline in profits at Uniqlo operation in the Mainland China market caused by Covid-19 restrictions on movement.
The group’s first-quarter pre-tax profit contracted to 126.8 billion yen, down 5.5 percent and profit attributable to owners of the parent decreased to 85 billion yen, a drop of 9.1 percent year-on-year.
Uniqlo Japan posts sales increase but profit declines
Uniqlo Japan reported revenue totaling 240.9 billion yen, an increase of 6.4 percent but operating profit declined by 5.6 percent to 39.4 billion yen.
First-quarter same-store sales increased by 4.7 percent year-on-year. The company added that cooler-than-usual temperatures in September and October helped generate strong sales of fall winter items, such as jackets, souffle yarn knitwear, cashmere, and Heattech items. Sales of on-trend items such as our tucked wide leg pants also sold well.
However, on the profit front, the gross profit margin declined by 1.1 points year-on-year.
Uniqlo International profit impacted by Covid restrictions in China
Uniqlo International revenue rose to 357.8 billion yen, up 19.4 percent but operating profit contracted to 57.2 billion yen, down 4.4 percent.
The company further said that two factors that sparked the decline in first-quarter profit were the impact of Covid-19 restrictions on movement in Mainland China, which resulted in a large contraction in profit there, and the temporary suspension of operations in Russia, which resulted in a first-quarter loss.
However, the South Asia, Southeast Asia & Oceania region, North America, and Europe excluding Russia all achieved positive first-quarter performances, generating strong increases in revenue and profits.
Fast Retailing reports sales and profit gains at GU
The GU business segment reported 13.6 percent rise in revenue to 79.3 billion yen and 19.3 percent increase in operating profit totaling 10.6 billion yen.
The company said, GU was able to generate strong first-quarter sales by narrowing down the number of product numbers on offer and ensuring a sufficient supply of mass-trend products. The return of more normal distribution operations, an increased ability to respond flexibly to requirements for additional production of strong-selling items, and falling temperatures in October all helped boost GU performance. Sales of heavyweight sweatshirts, wide pants, and heat padded outerwear proved especially strong.
The Global Brands segment reported 22.4 percent increase in revenue and 72.1 percent decline in operating profit to 0.7 billion yen. While
Theory brand generated much higher revenue, it also reported a decline in first-quarter profit due to a decline in profitability and a consequent contraction in profits at Theory’s United States operation following a decision to strengthen discount sales and also to falling profits from Theory’s Asian operation, which is concentrated primarily in Greater China.
PLST brand generated slightly higher revenue and profit in the first quarter on the back of strong sales of lightweight haori jackets and stick pants. France-based Comptoir des Cotonniers brand reported a decline in revenue on the back of the warmer weather in Europe from October onwards as well as declining consumer appetite in an inflationary environment, and, as a result, the brand recorded a slightly larger operating loss than in the previous year.