Fast Retailing Co, the parent company of Uniqlo, the popular clothing brand, is projecting an impressive 18% surge in annual profits. This optimistic outlook is fueled by the company’s strategic expansion plans in key markets, particularly China, where they anticipate that the rising cost of living will lead to greater price-consciousness among shoppers.

Renowned for its iconic fleece jackets and affordable wardrobe staples, Fast Retailing is embarking on an ambitious expansion strategy. This includes the launch of 80 new stores annually in Greater China, encompassing regions such as Hong Kong and Taiwan. Furthermore, they intend to open 20 stores in North America and 10 in Europe, as revealed by Takeshi Okazaki, the Chief Financial Officer, in a statement to reporters.

Notably, Fast Retailing already boasts a remarkable 930 Uniqlo outlets in mainland China, surpassing the number in its home country, Japan. This positions it as a pivotal player in the retail landscape of the world’s second-largest economy.

Founder and CEO, Tadashi Yanai, observed that the post-Covid world has witnessed a significant shift in consumer behavior. Shoppers are now prioritizing value over luxury, a trend underscored by the company’s record-breaking annual results. Yanai explained, «People are looking to reduce excess and embrace a simpler way of living, on their terms.»

It’s worth noting that Fast Retailing initially aimed to open 100 new stores annually in Greater China. At present, they operate nearly 70 stores in both North America and Europe.

Fast Retailing’s robust performance stands in contrast to disappointing earnings reported by the luxury group LVMH earlier this week, which was attributed to rising inflation and economic uncertainties. This led to a broader decline in luxury stock prices across Europe.

Fast Retailing disclosed that its full-year operating profit surged by 28%, achieving its second consecutive record. The profit for the 12 months ending in August reached 381.1 billion yen ($2.56 billion), surpassing the previous record of 297.3 billion yen from the prior year.

This result slightly exceeded the consensus forecast of 374.6 billion yen, as estimated by 12 analysts surveyed by LSEG, and also exceeded the company’s prior guidance of 370 billion yen. Fast Retailing projects that operating profit will continue to rise, reaching another record of 450 billion yen in the next fiscal year.

This stellar performance follows record third-quarter earnings in July when the company raised its full-year forecast. This was largely attributed to the ongoing recovery of its business in China, which had been hampered by the pandemic.

During the pandemic, when its Chinese operations faced severe restrictions, Fast Retailing strategically shifted its focus to the North American and European markets. The company has been actively expanding its presence in North America, with Daisuke Tsukagoshi, the regional chief, recently promoted to the position of President of the Uniqlo brand. Yanai expressed confidence in Tsukagoshi’s qualifications, emphasizing his dedication to the retail floor and his proactive approach.

Fast Retailing has also benefited from the depreciation of the yen, which has declined by about 12% against the dollar this year, boosting the value of its international sales.

The company’s shares closed up 1.2% before the results were released, outperforming the broader market’s 1.75% rise.

Tadashi Yanai, Japan’s wealthiest individual, owns approximately 19% of the company’s shares, and his family has a net worth of about $34 billion, according to Forbes.

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