Uniqlo’s parent company reports a 16% increase in first-half profits

Uniqlo’s parent company, Fast Retailing Co Ltd, has reported a 16% increase in its profits for the first six months of its fiscal year. The company shared its full-year outlook on Thursday, which showed significant improvement as the apparel retailer recovered after the Chinese market reopened.

Uniqlo’s parent company reports a 16% profit growth

Uniqlo is a popular apparel brand in China. The brand is renowned for its affordable fleece jackets and “Heattech” thermals. The profit growth reported during the first half of the company’s financial year comes amid a significant market recovery in China and sales growth across Europe and North America.

Uniqlo has around 900 stores in China that have become a preferred go-to location for global retailers. The growth of Uniqlo in China has made the brand the largest foreign market for Fast Retailing, even surpassing the number of stores that the company has in Japan.

The company’s results contribute to a significant growth in evidence showing that consumer spending in China was recovering after a prolonged lockdown period caused by the COVID pandemic that affected the second-largest economy globally.

The other fashion brand that has also posted a significant recovery is the luxury group LVMH. The company’s Q1 results showed that the sales had more than doubled expectations, with the growth being attributed to the increasing demand in China.

Fast Retailing issued a statement saying that its performance in Mainland China was on track to recovery. Uniqlo’s revenue and profits in mainland China were affected in Q1, but its operations in the country started showing signs of a recovery in January. The growth resulted in the company’s remarkable recovery in Q2.

Japan’s market is lagging

While the company’s numbers in China show a significant recovery, the company has not shown a healthy recovery in Japan. The company’s profits in Japan declined by nearly 2% as the revenue increased. The weakening yen currency also increased the cost of sales.

Fast Retailing recently said that it would increase wages by as much as 40% this year, signaling that the plunging salaries were starting to be affected by the years of measures to reduce costs and the effects of deflation.

The company’s CEO recently said that Japan was at an increased risk of failing to secure the needed human resources if the country did not start increasing the amounts paid to younger people. The overall wage costs at Fast Retailing increased by 23% compared to the same period last year.

The operating profits that the group reported increased to 220 billion ten during the first six months to February. The profits notably increased from the 189 billion yen reported last year. Southeast Asia, North America, and Europe also reported robust sales growth.

The company increased the forecast for its full-year profits to 360 billion yen from the 350 billion yen that was previously reported. Analysts expect the profits for the full fiscal year to reach 347 billion yen.