Fast Retailing, owner of the Uniqlo brand, announced a third consecutive year of record earnings on Thursday. Operating profit rose 31% to 500.9 billion yen (US$3.35 billion) in the 12 months through August, up from 381.1 billion yen a year earlier. The results surpassed the company's forecast of 475 billion yen and outperformed the 478.3 billion yen average of 15 analyst estimates compiled by LSEG.

Uniqlo's success has been attributed to widened profit margins in its international segments, boosted by a historically weak yen that has bolstered revenues both domestically and abroad. The weak yen has also contributed to a surge in duty-free shopping in Japan, spurred by a tourism boom, and has enhanced revenue from Uniqlo's expansion into Western markets when converted back to yen.

Despite positive growth in most regions, Fast Retailing's performance in China, its largest overseas market, has not been as strong. With over 900 stores on the mainland, the company serves as a bellwether for the retail sector in the world's second-largest economy. Years of pandemic restrictions impacted earnings in China, and now the challenge is a sluggish economy, which has dampened consumer confidence.

Fast Retailing expects operating profit to rise further to 530 billion yen in fiscal 2025, underscoring the company's ongoing growth ambitions. Founder and Japan's wealthiest man, Tadashi Yanai, has long aspired for Fast Retailing to become the world's largest fashion retailer, with Zara owner Inditex and H&M standing in the way. Yanai has commented that consumers have become more value-oriented in a post-pandemic world, a shift that benefits Uniqlo's positioning.

The brand, well-known for its fleece jackets and affordable undergarments, continues to make strides in Western markets. Yanai is set to speak at the earnings briefing on Thursday, joined by Uniqlo President Daisuke Tsukagoshi, whom Yanai has mentioned as a potential successor.

Reuters