(Bloomberg) — The owner of Uniqlo, Fast Retailing Co. (TYO:9983), raised its outlook for the entire year as a result of strong third-quarter results and a weaker yen, which boosted earnings reported in its home currency.
The operating profit for the three months ending May 31 was 81.81 billion yen ($591 million), exceeding the average analyst forecast of 67 billion yen.
The Asian retailer increased its full-year operational expectations from 270 billion yen to 290 billion yen, surpassing the average analyst forecast of 274 billion yen.
The yen, which is trading around its weakest level versus the dollar since 1998, is helping the company’s bottom line, and the currency’s movements are sure to be mentioned in the results of many industries as earnings season intensifies.
The currency also prompted Fast Retailing to say in June that its fleece and down coats would face their first price increase in years due to rising shipping and material expenses, which were compounded by a weaker yen that made imported goods more expensive.
The strong success of Uniqlo operations in South and Southeast Asia, North America, and Europe, except Russia, drove Fast Retailing’s third-quarter profits, the business reported. At the same time, the larger China region experienced significant revenue and profit decreases due to COVID limits, the research stated.
Fast Retailing is moving its focus to markets where the business picture is generally steady, as the war in Ukraine and the return of COVID in China have increased global concern around apparel sales. In April, the company announced that it is doubling down on the North American market, where it has struggled to achieve the same level of success as in Japan and China, with the goal of opening 200 Uniqlo stores in five years, up from the current 57.
China’s COVID-induced lockdowns and decreased consumption have been priced in, and a rebound is imminent, according to Mark Chadwick, a former Jefferies analyst who is now an independent analyst. While this nation is crucial, the United States is emerging as a new and profitable development driver, he stated in a Smartkarma article.
This year, the stock has risen by more than 7%, while the benchmark Topix Index has fallen by nearly 5%.
©2022 Bloomberg L.P.
