Uniqlo owner Fast Retailing Thursday said fiscal third-quarter operating profit rose 18.6%, thanks to 41% e-commerce growth in Japan (which accounted for 6% of its overall sales), improved results in Uniqlo's U.S. stores and strong sales in China.
Fast Retailing's Q3 revenue rose 6% to 423 billion yen, or about $4 billion U.S. For the nine months ending in May, Uniqlo Japan rose 1.1% and overseas Uniqlo sales rose 10.6%, according to the company.
But the strong yen hit overseas results, prompting Fast Retailing to cut its full-year forecast for the third time this year to an annual pre-tax profit of 83 billion yen ($785 million), down from 102.5 billion. The company maintained its forecast from April of operating profit of 120 billion yen ($1.14 billion) for the full fiscal year, through August, a drop of 27% from a year ago, according to Bloomberg.
Fast Retailing CFO Takeshi Okazaki said in a Tokyo briefing detailed by Bloomberg that the company prefers a stable yen, even if its strength stings its overseas business, and downplayed the currency effect, saying the company's operations have improved overall.
“We aren’t pessimistic about our business,” Okazaki said. “We believe there’s always demand for good things, so it’s important to offer good products at affordable prices.”
Fast Retailing CEO Tadashi Yanai has clearly and often expressed his ambitions to overtake Zara as the largest apparel retailer in the world. But the force and speed of Uniqlo’s expansion in the U.S. has been too much, too soon.
In May, Yanai told reporters that Fast Retailing plans to "rebuild" its U.S. operations, although he didn’t divulge many specifics on how it plans on doing so, and said that the company hopes to make the Uniqlo name better known outside of New York and other big cities in the U.S.
After faltering in U.S. malls, the Japanese apparel retailer scaled back its U.S. expansion plans last year from 15 new stores to just five, for a total of 44. Uniqlo previously has indicated a goal of having 200 U.S. stores by 2020.
Okazaki also reiterated Fast Retailing's strategy to compete on price, but Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo questioned that strategy. “The company has to come up with something value-added that people want to buy without a discount,” Fujiwara told Bloomberg. “So far it’s not working well.”