Uniqlo owner Fast Retailing’s profit jumps in Q1 as more China troubles loom

Revenue and profits for Japanese ready-to-wear giant Fast Retailing soared in Japan and Western countries in Q1 of the group’s non-standard 2024-25 fiscal year, offsetting persistent difficulties in China.

On Thursday, the group reported a 22.4% rise in net profit to ¥132 billion (€810 million at current exchange rates) for the three-month period that ended in November 2024, a result well beyond market expectations.

Revenue increased by 10.4% to ¥895 billion (€5.5 billion), in line with forecasts. Sales in Japan jumped 9% to ¥267 billion, and they rose by 17% in North America and by as much as 42% in Europe.

After the tough pandemic period, Fast Retailing has been growing at an increasingly faster rate outside Japan, and is continuing to strengthen its position in Western countries and on its domestic market.

In a press release, the group said it has opened a string of new stores, notably in Texas, and is expanding its customer base in Europe thanks to “increased brand recognition.”

In Japan, Uniqlo is taking advantage of a record influx of foreign tourists, encouraged by a very weak yen to shop with abandon, and to do so tax-free.

Above all, Uniqlo is leveraging a flexible and expanded assortment, with “robust sales in September concentrated on products appropriate to a climate that was warmer,” than the seasonal average. Uniqlo is now adapting to colder-than-usual temperatures in early winter.

As in previous quarters, Fast Retailing’s weak point remains its performance in the key Chinese market.

In mainland China, the group recorded “a slump in sales and a considerable fall in profits, because it failed to develop a range of products appropriate” to a milder-than-usual winter, and “because it failed to develop a sufficiently detailed response to the specific needs of [the country’s] various regions.”

Uniqlo, which also faces formidable competition from low-cost fashion e-tailers, had previously stated it is restructuring its store fleet in China, “replacing smaller and less profitable stores with [others] in better and more profitable locations.”

Uniqlo’s underperformance on the Chinese market might worsen still. Fast Retailing’s CEO Tadashi Yanai, speaking to the BBC in late November, said that Uniqlo “does not utilise” cotton sourced in Xinjiang, the region in China where Beijing is accused of persecuting the Uighur Muslim minority.

Yanai’s remarks sparked the ire of the Chinese authorities, leading to online appeals in China for a boycott on Uniqlo.

All of this is an incentive for Fast Retailing to consolidate its growth in regions other than Japan and China, the two markets that, combined, account for half of its revenue.

In fiscal 2024-25, Fast Retailing is expecting to post record results for the fourth consecutive year, forecasting a 3.5% increase in net income and a 9.5% increase in revenue.