The largest apparel retailer in Asia, Fast Retailing Co. Ltd, announced today that its profit soared by 64% due to increased sales of its Uniqlo casual-wear brand in Japan and overseas. In addition, returns further increased due to the weak performance of the yen.
The Chief Financial Officer of the company, Takeshi Okazaki, said in a statement at a news conference, cited by the Wall Street Journal: “Rapid falls in the yen pressure initial costs. We will do our best not to raise prices because customers are highly price-sensitive, but we may need to do so gradually.”
According to the companys statement, its net income increased from JPY 41.9 billion a year ago to JPY 68.8 billion ($575 million) during the first three months ended in November 2014. The result surpassed the analysts projection, which pointed to JPY 48.4 billion in income.
Fast Retailing also announced a 23% increase in its sales to JPY 479.5 billion. Supported by stability of the Chinese and South Korean markets, the sales of the Japanese companys Uniqlo brand stores rose by 47.3% outside its home market during the first fiscal quarter. The brands sales in Japan increased by 11.6% due to stable customer demand for autumn and winter apparel.
The low-cost brand of Fast Retailing, however, warned that it might be forced to boost prices again in order to fight the negative influence of the falling yen. The weaker yen was a double-edged sword for the company. It helped the Japanese retailer generate a larger income from overseas subsidiaries when converted to yen.
The Japan-based company has recently been focused on continuous global expansion in order to increase its competitiveness to larger rivals such as H&M Hennes & Mauritz AB, Gap Inc. and Inditex.
Fast Retailing Co. Ltd was up 0.80% to close at JPY 44 760 per share today, marking a one-year gain of 12.46%. The company is valued at JPY 4.71 trillion. According to the Financial Times, the 17 analysts offering 12-month price targets for Fast Retailing Co. Ltd have a median target of JPY 40 000, with a high estimate of JPY 53 000 and a low estimate of JPY 27 000. The median estimate represents a -5.42% decrease from the last price of JPY 44 405.
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