Uniqlo profit drops

Uniqlo profit has plummeted in the Japanese fast fashion chain’s first half year.

Parent Fast Retailing has revealed a 33.8 per cent decline in year-on-year surplus, despite a 6.5 per cent increase in sales from September 2015 to February 2016.

Consolidated revenue reached JP¥1.0116 trillion (US$9.385 billion) and profit ¥99.3 billion (US$1.535 billion).

While Global Brands reported a rise in both revenue and profit, Uniqlo Japan reported declines in both revenue and profit, and Uniqlo International reported a rise in revenue but a decline in profit.

The company blamed the Japanese decline on poor sales of winter ranges and lower gross margin, with same-store sales down 1.9 per cent.

“Subsequent stronger discounting in January and February contributed to a 3.5 per cent fall in the first-half gross margin.

Uniqlo profit was down on weaker sales in Greater China, South Korea and the US in the company’s international division. However sales and profit rose in Southeast Asia, Oceania and Europe.

In the Global Brands division, revenue and profit both rose on strong sales of GU ranges. “GU’s widely advertised campaign items such as knitwear and trendy bottoms such as wide pants and jogger pants all generated strong sales, fueling double-digit growth in same-store sales,” Fast Retailing reported.

The company is predicting a better second half but has revised its earnings forecast to a 7 per cent rise in revenue and a 27 per cent decline in operating profit.