The Japanese operator of the global clothing chain Uniqlo is expected to surpass last year’s record profit when it announces its results on Thursday, benefiting from a resurgence in China and the depreciation of the yen.
Fast Retailing (9983.T) disclosed record third-quarter earnings in July and raised its full-year forecast as its business in China, which boasts more than 900 stores and is its largest overseas market, rebounded from a pandemic-induced slowdown.
Analysts anticipate a 26 per cent increase in operating profit for the fiscal year through August, reaching 374.6 billion yen (USD 2.52 billion), based on the average estimate of 12 analysts collected by LSEG. This projection exceeds the company’s own forecast of 370 billion yen and significantly surpasses last year’s 297.3 billion yen.
Founded by Japan’s wealthiest individual, Tadashi Yanai, Fast Retailing serves as a key indicator for retailers operating in China, the world’s second-largest economy, where sales have rebounded following the easing of strict Covid-19 controls. The yen’s depreciation by about 12 per cent against the dollar in 2023 has provided a boost to Japanese companies heavily reliant on international sales.
LightStream Research analyst Oshadhi Kumarasiri suggests that consensus estimates might be underestimating the company’s results, considering the recovery in China, the weakened yen, and robust performance in the United States and Europe. Kumarasiri anticipates a positive earnings surprise and expects strong guidance for the next year.
Facing challenges in its Chinese operations for over two years, Fast Retailing has shifted its focus to North American and European markets. The company is aggressively pursuing growth in North America, evident in the recent elevation of regional chief Daisuke Tsukagoshi to the position of Uniqlo president, sparking speculation about his potential succession to Yanai.
As of 11 October, Forbes reported that Yanai and his family had a net worth of USD 33.9 billion, with Yanai holding about 19 per cent of the company’s shares.
