Tokyo Fast Retailing soars to record high as outlook rises, Uniqlo pushes accounts

(Il Sole 24 Ore Radiocor) - Fast Retailing, the Japanese group that controls brands such as Uniqlo, Theory and Helmut Lang, soared to record highs on the Tokyo Stock Exchange after raising its full-year profit outlook, thanks to solid margins and sustained growth in particular from Uniqlo, which is travelling at a fast pace in the United States and Europe. Shares gained 12% to ¥75,540 ($474), an all-time high since listing in July 1994, bringing market capitalisation to ¥23.5 trillion ($148 billion).

The clothing group now expects operating profit of ¥700 billion ($4.4 billion), up from the previous forecast of ¥650 billion for the fiscal year ending in August, above analysts' average estimate of ¥657 billion. Yearly sales are now forecast at ¥3.9 trillion, $23.8 billion (up from the previous forecast of ¥3.8 trillion and above analysts' expectations of ¥3.8 trillion. In addition, Fast Retailing expects to meet its annual sales targets of ¥500 billion in Europe and ¥300 billion in North America in the current fiscal year, one year ahead of target. As for the accounts, in the six months to February, revenues rose 14.8% to 2,060 billion yen and operating profit grew 31.7% to 400.6 billion yen.

Uniqlo Internaional saw revenues grow 22.4% and profits 37.4%, thanks to solid sales in Greater China, Southeast Asia and Western markets. "We are witnessing a real global boom for Uniqlo," said Tadashi Yanai, founder and CEO of Fast Retailing, explaining that "what was once an opinion is turning into an increasingly strong belief". The results, after all, suggest that Uniqlo's growth will increasingly be driven by overseas markets, particularly the US and Europe, while Japan remains a stable base. Tadashi Yanai targets ¥10 trillion (US$62 billion) in sales with global expansion at the core of the strategy and the improved outlook demonstrates a belief that momentum can be maintained, despite divergent demand across regions.

"This was an excellent result. The strength of the Uniqlo brand has significant penetration in Western markets and, as we can see, it is contributing significantly to profits," said analysts at Iwai Cosmo Securities.