Fast Retailing, the parent company of the global clothing chain Uniqlo, is poised to exceed its previous year’s record profits when it releases its financial results. This remarkable performance is attributed to a resurgent Chinese market and the yen’s depreciation.
Having reported record-breaking third-quarter earnings in July and subsequently revising its full-year forecast, Fast Retailing is in an enviable position. The rebound in China, where it operates over 900 stores, has been a key driver of this success.
Analysts project a 26% increase in operating profit for the fiscal year ending in August, reaching 374.6 billion yen ($2.52 billion), surpassing Fast Retailing’s forecast of 370 billion yen. This remarkable performance can be attributed to China’s resurgence, the yen’s weakening, and robust results in the United States and Europe, as highlighted by LightStream Research analyst Oshadhi Kumarasiri.
Kumarasiri anticipates a positive earnings surprise and strong guidance for the upcoming year, emphasizing the company’s resilience and growth potential. Fast Retailing serves as a barometer for retailers in China, a crucial market that has demonstrated sales resilience following the easing of COVID-19 restrictions.
The yen’s 12% depreciation against the dollar in 2023 has provided Japanese companies with a tailwind, particularly those with substantial international revenue.
Over the past two years, Fast Retailing has shifted its focus to North American and European markets, recognizing opportunities outside of China. This strategic emphasis on North America is underscored by the recent elevation of Daisuke Tsukagoshi, the regional chief, to the role of Uniqlo’s president. This development has fueled speculation about his potential succession to Tadashi Yanai, Fast Retailing’s founder and Japan’s wealthiest individual.
Tadashi Yanai, who holds approximately 19% of the company’s shares, has seen his family’s net worth reach $33.9 billion as of October 11, according to Forbes. Both Yanai and Tsukagoshi are scheduled to address shareholders at the earnings briefing on Thursday.
Fast Retailing’s shares have surged by 22% in 2023, closely tracking the gain in the benchmark Nikkei index.