By Kosaku Narioka and Ronnie Harui
Fast Retailing reported strong quarterly earnings and raised its annual guidance, playing down concerns about the possible impact of Japan-China tensions on its apparel business.
The Japanese owner of Uniqlo said Thursday that revenue and profit increased across various regions for the three months ended November.
Back by strong sales, Uniqlo in the U.S. offset the impact of U.S. tariffs by limiting discounts and raising prices on some products. Uniqlo clothes are mostly made in countries such as China, Vietnam, Bangladesh, Indonesia and India.
In Europe, new store openings in cities such as Glasgow and Birmingham in the U.K. and Munich and Frankfurt in Germany proved a big success. It also plans to open flagship stores in U.S. cities like Chicago, New York and Boston.
In China, a key market where profit dropped in the previous fiscal year, a tie-up with e-commerce giant JD.com helped increase online customer numbers and boost earnings.
Chief Financial Officer Takeshi Okazaki said Thursday that there might be an impact on Chinese sales after Japanese Prime Minister Sanae Takaichi's recent comments on Taiwan, but added that the company's ability to meet customer demand and weather conditions are more important drivers of earnings.
Takaichi enraged Beijing in November by saying that Japan could be dragged into a conflict to defend itself or allies such as the U.S. if China attacked Taiwan.
Shares in the Tokyo-listed company have been roughly flat since mid-November, when China urged its citizens to avoid traveling to Japan amid the diplomatic spat.
Fast Retailing on Thursday said its first-quarter net profit rose 12% from a year ago to 147.45 billion yen, equivalent to $940.5 million. That beat the Y132.0 billion consensus estimate of analysts polled by Visible Alpha.
Revenue also exceeded expectations, rising 15% to Y1.028 trillion. Operating profit jumped 34% to Y210.91 billion.
The strong quarterly performance prompted Fast Retailing to raise its earnings outlook for the fiscal year ending in August. The company now expects annual net profit to increase 3.9% to Y450.00 billion and revenue to grow 12% to Y3.800 trillion. It previously forecast net profit of Y435.00 billion on revenue of Y3.750 trillion.
In the first quarter, Uniqlo's Japan revenue rose 12% from a year earlier to Y299.07 billion. Its North American revenue increased 30% to Y88.70 billion and European revenue climbed 34% to Y136.95 billion. Uniqlo's revenue from China, Hong Kong and Taiwan grew 7.0% to Y191.16 billion.
Write to Kosaku Narioka at kosaku.narioka@wsj.com and Ronnie Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
01-08-26 0823ET
