For the third consecutive year, the Japanese parent company of Uniqlo, Fast Retailing is poised to surpass its own forecasts for annual profits as the brand’s expansion in the Western markets and recovery in China business continues to drive growth.
As per the estimates of 15 analysts compiled in a study by LSEG, the company’s operating profit grew by 24 per cent to 478.3 billion yen during the 12 months ending Aug ’24. This slightly exceeds Fast Retailing's earlier forecast of 475 billion yen, which it raised in July after strong second-half performance.
Moving forward, key factors like the success of its fall and winter collections in Japan, as well as efforts to revitalise its business in China are likely to help drive the company’s profits. The company’s investors are likely to shift focus on strategies in Greater China to reverse earnings declines caused by weak consumer sentiment and intensified competition, says Mark Chadwick, an independent analyst.
With over 900 stores in China, Fast Retailing is considered a prominent name in China’s retail sector. While COVID-19 restrictions hampered the company's performance in the country for years, it currently struggles with a sluggish economy affecting consumer confidence. In July, Pan Ning, CEO- Greater China, acknowledged, market’s maturity led the company to scale back new store openings and adopt a ‘scrap and build’ approach to underperforming locations.
During the pandemic, when China’s sales were hit by lockdowns, Fast Retailing shifted its focus to expanding in North America and Europe. The company recorded strong sales and profits in both regions in the first nine months of fiscal 2024. Tadashi Yanai, Founder, believes, in the post-COVID world, consumers’ are increasingly opting for value over luxury, a trend that aligns with Uniqlo’s brand proposition.
