Uniqlo pushes for third year of record profit despite China slowdown

Uniqlo’s parent company Fast Retailing has raised its profit forecast for the year on strong domestic and overseas demand, despite a significant slowdown in Chinese demand.

The company lifted its full-year operating profit forecast to 475bn yen (£2.3bn) for the year ending August, up from 450bn yen.

Revenue rose to 86.8bn in the third quarter, while operating profit increased to 14.1bn yen.

The domestic market in Japan showed strong growth, boosted by tourists taking advantage of the yen’s slide to a 38-year low, the company said. Operating profit rise by 28.3 per cent in the first nine months of the year, to 127.8bn yen.

Fast Retailing expected to achieve a record performance for the third consecutive year, as customers buy in to the brands’ line of affordable basics.

There were signs of maturing in the Chinese market, the company said. The region reported a decline in revenue and profit due to “comparisons with a particularly strong performance in the previous year, declining consumer appetite, unseasonal weather, and product lineups that did not fully satisfy the needs of local customers”.

The weak performance of Uniqlo in China, where it has over 900 stores, is another bad sign for the world’s second-largest economy as it struggles with economic growth and disposable income.

The company is planning a growth path into South-East Asia, Europe and Australia, in a bid to take advantage of a trend to value basics over luxury in a post-pandemic economy.

It sees “nascent” opportunities for international expansion, it said, due to strong sales of goods that incorporated global mass fashion trends.

Ealier this year, Unqilo’s sales across Europe surged past £853m after one of its products went viral on TikTok.

The share price of Fast Retailing has fallen 4.85 per cent today on the results, although it has risen 10.45 per cent in the last six months.