Uniqlo Owner Expects Another Year of Record Profit Despite TariffsUpdate
By Kosaku Narioka
Fast Retailing boosted its annual earnings forecast despite tariff uncertainties looming large, expecting another year of record profit as first-half revenue continued to grow in North America, Europe and other markets.
The Japanese owner of Uniqlo and other clothing brands said Thursday that it lowered its operating profit forecast for the U.S. Uniqlo business in the second half, factoring in the potential impact of U.S. tariffs. The company expects a limited tariff impact for the six months through August, given that many of its products are already stored in the U.S.
Chief Financial Officer Takeshi Okazaki said its products for the U.S. are made primarily in Southeast Asia and that the company will assess where tariff rates are to settle and how they will affect the economy.
The company can change manufacturing locations accordingly, said its billionaire Chief Executive Tadashi Yanai. "It's adversities that present opportunities."
The stock closed 9.1% higher on Thursday before the earnings announcement as President Trump hit pause on so-called reciprocal levies that would make imports to the U.S. more expensive. The stock remains 14% lower this year, largely in line with the broader Japanese market, weighed by concerns about U.S. tariffs.
Uniqlo's revenue for North America made up 7.0% of the company's total in the previous fiscal year, compared with 30% for Japan and 22% for China, Hong Kong and Taiwan.
However, the U.S. market has become increasingly important for the company as it chases growth outside Japan and China.
Fast Retailing has been adding more Uniqlo stores in the U.S., Southeast Asia and Europe in recent quarters, even as it has slowed openings in China.
Uniqlo clothes are mostly made in countries like China, Vietnam, Bangladesh, Indonesia and India. Except for China, which is now subject to a 125% levy, the other countries were facing down reciprocal tariffs of 26%-46% before Trump's temporary course reversal.
Fast Retailing on Thursday reported a 19% increase in net profit to 233.57 billion yen, equivalent to $1.58 billion, for the six months ended Feb. 28. That exceeded the estimate of Y215.7 billion in a poll of analysts by data provider Visible Alpha.
For the fiscal year ending in August, it projected net profit to climb 10% to a record Y410.00 billion, higher than its previous view of Y385.00 billion.
First-half revenue rose 12% from a year earlier to Y1.790 trillion, thanks to growth across various regions. Earnings grew for Uniqlo businesses in North America and Europe due to strong sales at newly opened stores.
Earnings from the Uniqlo business in China dropped, however, as consumer sentiment deteriorated and stores failed to respond adequately to vastly different weather conditions across the country.
Fast Retailing said it plans to increase its global store count to 3,682 by August, primarily by opening Uniqlo stores overseas, up from 3,595 a year earlier.
Write to Kosaku Narioka at kosaku.narioka@wsj.com