Fast Retailing, the owner of Uniqlo amongst others, confirmed its forecasts for the 2020/21 financial year on Thursday. This is surprising at first glance, as 'motherland' Japan took stricter measures against the Covid-19 virus again a week ago.
Strong quarterly figures
The fact that, for the time being, the company is keeping its earlier forecasts untouched, has a lot to do with the results in the first quarter of the broken financial year. They turned out to be better than expected. Both turnover and profit exceeded expectations, and therefore, the company has built up a buffer. The decline in sales was limited (-0.6 per cent) while operating profit rose by 23.3 per cent to 113 billion yen (896 million euros). Uniqlo did particularly well in Japan and China. In Europe, revenue and profit fell significantly.
Last week, Japan declared a state of emergency for the second time in ten months. This time it concerns Tokyo and its surrounding prefectures. That may sound very impressive, but are uncomparable to the lockdowns currently taking place in various European countries, writes Belgian business newspaper De Tijd. The Japanese will have to scale back their social life somewhat and limit non-essential travel. Furthermore, cafés and restaurants - which are still open in Japan - will close earlier in the evening.
Therefore, it is not very unusual for Fast Retailing to leave its annual forecasts unchanged for the time being. The fashion group is still expecting annual sales of 2,200 billion yen (17.45 billion euros), which is an increase of 9.5 per cent. Operating profit should reach 245 billion yen (1.94 billion euros). Whether those targets get reached, will largely depend on developments in China. After all, to achieve growth, the group will rely on that country in the upcoming months.