Jan 9, 2020
Uniqlo Owner Cuts Profit View 11% as Unrest Hits Overseas Markets
Bloomberg News
,(Bloomberg) -- Fast Retailing Co. lowered its full-year operating profit outlook 11% as the Uniqlo owner’s international segment — a key driver of growth — was hurt by geopolitical turmoil in South Korea and Hong Kong.
- Asia’s largest retailer said earnings for the year through August will be 245 billion yen ($2.24 billion), according to a statement Thursday. Fast Retailing in October predicted annual operating profit of 275 billion yen.
Key Insights
- Fast Retailing has relied on strength from overseas to offset weakness at home. But pro-democracy protests that have devastated retailers in Hong Kong, and a boycott of Uniqlo products in South Korea amid a trade spat are taking a toll on sales.
- The first quarter is typically a strong one, but Uniqlo’s domestic same-store sales fell for three straight months as consumer spending was damped by a typhoon and an increase in the country’s sales tax in October. A warm November also deterred shoppers from buying the company’s popular cold-weather clothing.
- The retailer’s push to upgrade its technology and supply chain also may have weighed on results. Fast Retailing has been investing heavily on such things as a fully automated warehouse and self-checkout counters.
Market Performance
- Fast Retailing shares rose 2.7% on Thursday before the results were released, amid a rally in the broader Tokyo market.
- The stock climbed 15% last year, reaching an all-time high in July, though it has seen little change since September.
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- Fast Retailing reported operating profit of 91.7 billion yen for the quarter ended in November, missing analysts’ average estimate of 109.7 billion yen.
- See statement here.
To contact the reporters on this story: Lisa Du in Tokyo at ldu31@bloomberg.net;Grace Huang in Tokyo at xhuang66@bloomberg.net
To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Jeff Sutherland, Reed Stevenson
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