Uniqlo parent expects profit lift ahead of tariff disruption
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The operator of Uniqlo, Japan’s Fast Retailing, is expected to post another quarter of strong earnings on Thursday, but the focus will be on how the global clothing chain navigates a trade environment thrown into disarray by new US tariffs.
Based on the LSEG consensus forecast drawn from six analysts, Fast Retailing is expected to post a 14 percent rise in operating profit to US$866 million in the three months through February from a year earlier.
That would be a record for the second quarter and a near doubling of the 7.4 per cent profit growth of the first quarter.
From one store in Hiroshima, western Japan, 40 years ago, Uniqlo has grown to more than 2,500 locations across the world, selling inexpensive fleeces and cotton shirts made primarily in China and other Asian manufacturing hubs.
But that business model has been upended by widespread tariffs announced by US President Donald Trump, along with retaliation by some of America’s trading partners.
The company has recently looked to North America and Europe for growth due to a slowing economy in China, its largest overseas consumer market with more than 900 Uniqlo stores on the mainland.
The tariffs will certainly be a negative for Fast Retailing, said independent analyst Mark Chadwick, but the measures will have the same impact on its retail peers and have a worse effect on other industries.
“Textile supply chains are probably more flexible than, say auto supply chains,” said Chadwick, who writes on the Smartkarma platform. “In short, US tariffs will have a negative impact on Fast earnings looking out over the next 12 months, but less so than other global firms like Nintendo, Toyota.”
Fast Retailing shares have fallen more than 4 percent this month as Trump laid out his tariffs plan. They are down 19 percent in 2025 after surging nearly 50 percent last year.
“Textile supply chains are probably more flexible than, say auto supply chains,”
Its founder Tadashi Yanai, Japan’s richest man, aims to make his company the world’s No. 1 clothing brand. Yanai, due to speak at Thursday’s earnings briefing, has long been an advocate of free trade and has defended the company’s business dealings in China when human rights concerns there have sprung up.
Trump said Japan would be hit with a 24 percent reciprocal tariff on non-auto products, while duties on Chinese goods would rise to 104 percent.
UBS analysts said that Uniqlo goods shipped to North America are procured from sources outside China, and Fast Retailing’s tariff costs would be an estimated $236,011 million next fiscal year, curbing business profit by about 6 per cent.
“We will be watching closely whether a heightened price consciousness among consumers leads them to re-rate the balance between value and pricing at Uniqlo, potentially translating into business opportunities over the medium term,” UBS’s Takahiro Kazahaya wrote in a report this week.
Fast Retailing expects operating profit to reach 530 billion yen in the fiscal year ending in August, which would be a fourth straight year of record earnings.
Domestic sales have recently gotten a boost from a surge in duty-free shopping amid a tourism boom in Japan fuelled by a weak yen.
Questions & Answers
Q.What is the primary concern for Fast Retailing despite its expected strong earnings this quarter?
What is the primary concern for Fast Retailing despite its expected strong earnings this quarter?
The main concern is how the global clothing chain will manage its operations within a trade environment disrupted by new US tariffs. This situation has upended its previous business model for inexpensive fleeces and cotton shirts.
Q.How significant will the impact of new tariffs be on Fast Retailing's financial performance compared to other global firms?
How significant will the impact of new tariffs be on Fast Retailing's financial performance compared to other global firms?
Analysts predict US tariffs will negatively affect Fast earnings over the next 12 months. However, the impact is expected to be less severe than for other global firms such as Nintendo or Toyota, partly due to more flexible textile supply chains.
Q.What is Fast Retailing's strategy for growth given the economic slowdown in China and the new tariffs?
What is Fast Retailing's strategy for growth given the economic slowdown in China and the new tariffs?
The company has recently shifted its focus towards North America and Europe for growth. Also, domestic sales in Japan have been boosted by a tourism boom and a weak yen, driving duty-free shopping.
Q.What is the estimated financial impact of tariffs for Uniqlo goods shipped to North America next fiscal year?
What is the estimated financial impact of tariffs for Uniqlo goods shipped to North America next fiscal year?
UBS analysts estimate Fast Retailing's tariff costs will be $236,011 million next fiscal year, which is expected to curb business profit by approximately 6 percent. Uniqlo goods for North America are sourced outside China.
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