Uniqlo operator lifts profit outlook despite China lockdowns

TOKYO: Fast Retailing, the operator of Japanese casualwear giant Uniqlo, revised its annual net profit forecast upwards on Thursday even as business in China is hit by fresh lockdowns.

China is a key market for Uniqlo, but consumer spending has been hampered by tough lockdowns imposed on cities like Shanghai under the country’s zero-Covid policy.

Uniqlo operations in mainland China saw “a decrease in revenue and a large decline in profit” for the six months to February, Fast Retailing said, attributing the falls to curbs on movement.

In a news conference, Fast Retailing president Tadashi Yanai described the effect of China’s zero-Covid policy on profits as “very troubling”.

But elsewhere in Asia, business was brisk — buoyed by a strong performance in countries including Malaysia, where virus restrictions were eased.

In North America, strengthened branding efforts helped boost sales, the company said, unveiling plans to increase its stores in the traditionally money-losing region from 57 to 200 within five years.

Overall, the group reported that net profit for the first half jumped 38.7 percent on-year to 146.8 billion yen ($1.2 billion).

Operating profit was up 12.7 percent on-year “even after stripping out the impact of yen depreciation”, the company said.

The cheap-chic Japanese clothing group — which rivals Zara, Gap and H&M — revised its full-year net profit forecast from the previous 175 billion yen to 190 billion yen.

Despite pandemic restrictions, Fast Retailing has aggressively expanded in China, where it aims to open 100 new stores each year.

But it has suspended sales in Russia and now expects a loss for the second half of the fiscal year, after a U-turn on an initial decision to stay open despite Moscow’s invasion of Ukraine.

Yanai came under fire for his original plan to keep Uniqlo stores open, and he touched only broadly on the conflict on Thursday, saying he remains “strongly opposed to all kinds of war”.

“The ongoing war must be stopped immediately, and we must think in earnest how we can solve serious conflicts between nations, create a peaceful world and ensure people around the world will live happy lives,” he added.