Fast Retailing reported gains in its European and North American business in Q3 2024 (three months to May 2024), as sales in China and home-market Japan faltered.
The company says its revenue fell slightly short of its local-currency-based forecasts, while operating profit exceeded those estimates for Q3.
Fast Retailing also reported a "new record performance" for the first nine months of FY24.
While the company's Uniqlo, GU and Uniqlo International businesses performed well, its global brands including Theory, PLST and Comptoir des Cotonniers, reported a 5.1% decline in revenue to ¥34.3bn.
Key results for Fast Retailing in Q3 2024
- Revenue increased 13.5% and operating profit saw an increase of 31.2%
- Revenue in Greater China fell “sharply”
- The company enjoyed higher-than-expected revenue at its new Uniqlo stores in Europe and the region saw double-digit growth in its same-store sales over the three-month period.
Fast Retailing said its growth was helped by large revenue and profit gains from its Uniqlo brand in North America, Europe, Southeast Asia and in Japan.
New store openings in Europe were said to have helped drive growth, with new Uniqlo stores opening in Edinburgh, Milan, Rome, London and Nice in Q3. Fast Retailing said the openings in Edinburgh and Rome were “especially crowded”.
The company blamed a sharp fall in profits from its Greater China business on “lacklustre consumer appetite, and unseasonal weather, as well as insufficient product line-ups to satisfy local customer needs”.
Sales in Uniqlo Japan fell by ¥4.4bn, which Fast Retailing attributed to strong sales in Q3 2023. However, it also reported a 10.4% increase in revenue.
GlobalData apparel analyst Louise Deglise-Favre told Just Style: “Similarly to what has been observed in the past year, Fast retailing continues to derive its strength from the outperformance of Uniqlo in the international market, where the brand’s simple yet relatively affordable products continue to resonate with consumers.
“In its home market of Japan, it’s Uniqlo’s sister brand GU which captured the attention of consumers thanks to its younger focus and cheaper price points.”
What next for Fast Retailing?
Fast Retailing has revised its estimates for FY24 to ¥475bn, up from a previous estimate of ¥459bn. It said to expect a “fresh record performance”.
This is despite another decline in revenue and “sharp profit drop” in its China business in FY24, although the company did add that it expects to be back on a growth track in the region from FY25 after “operational reforms”.
For its Uniqlo Japan business, Fast Retailing said Q4 revenue is expected to rise on continued strong sales. However operating profit is expected to decline slightly thanks to the impact of “spot exchange rates arising from additional production orders of strong-selling items. This will likely lead to a deterioration in cost of sales and a decline in the Q4 gross profit margin”.
As Fast Retailing's GU business saw revenue increase of 5.4% to ¥86.8bn, it said it is starting to see "nascent opportunities for international expansion".
By the end of August 2024, Fast Retailing expects to have a total of 3,604 stores including 798 Uniqlo Japan stores, 1,708 Uniqlo International stores, 476 GU stores and 622 stores for its global brands.
In December 2023, Fast Retailing announced plans to open more than 20 new Uniqlo stores in the US and Canada in 2024 after it reported a record annual profit for FY23.
