Japan : Q1FY16 sales up but profit down at Fast Retailing

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Q1FY16 sales up but profit down at Fast Retailing

08
Jan '16

Japanese apparel marketer Fast Retailing Group, which has the Uniqlo brand in its portfolio recorded a rise in revenue but a fall in profit in the three months to November 30, 2016.

According to a Fast Retailing press release, consolidated sales climbed 8.5 per cent year on year to ¥520.3 billion; however operating profit slipped 16.9 per cent to ¥75.9 billion in the first quarter of fiscal 2016.

Global Brands reported rises in revenue and profit, Uniqlo Japan posted declines in both revenue and profit, while Uniqlo International recorded an increase in sales but a fall in profit.

“Foreign exchange gains under other income and expenses and net finance income fell ¥18.9 billion from a year ago period compared to the first quarter of fiscal 2015 as the yen weakened significantly,” it said.

“As a result, consolidated profit before income taxes in the reporting quarter contracted by ¥29.0 billion over the same period of fiscal 2015 to ¥77.6 billion,” Fast Retailing explained.

Giving reasons, the apparel marketer added that there was a dip in profit at Uniqlo Japan as warm winter lowered demand, although F/W ranges got off to strong start, boosting same-store sales.

However, unexpected warm weather in November lowered demand for winter items, pushing overall revenue sharply lower.

On the profit side, heavy discounting in November squeezed gross margins and the shortfall in sales swelled the SG&A ratio, as a result, operating profit dropped 12.4 per cent year over year.

In the case of Uniqlo International, unseasonal warm winter weather around the globe adversely impacted same-store sales at Uniqlo Greater China, Uniqlo South Korea and Uniqlo USA in particular.

“Fifteen years after the first Uniqlo store outside of Japan opened in London in fall 2001, Uniqlo International finally overtook Uniqlo Japan in terms of store numbers,” the company informed.

For Global Brands, its low-priced GU fashion casualwear brand reported higher-than-expected rises in revenue and profit, while Theory reported a slight decline in profit, and J Brand reported an expanded operating loss.

For the whole of Fiscal 2016, Fast Retailing estimates consolidated sales at ¥1.800 trillion or an expansion of 7.0 per cent over the previous fiscal.

Operating profit in the current full fiscal is expected to reach ¥180.0 billion, up 9.4 per cent and profit attributable to owners of the parent is forecast to touch ¥110.0 billion, flat as against that posted in fiscal 2015.

The apparel marketer expects basic earnings per share to reach ¥1,079.01 in fiscal 2016, which includes downward revisions in revenue, operating profit and in profit attributable to owners of the parent.

However, the company has projected that the scheduled annual dividend for the present fiscal will remain unchanged at ¥370 per share. (AR)

Fibre2Fashion News Desk – India

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