Japan’s Fast Retailing, owner of clothing brand Uniqlo, said on Thursday overseas markets powered profit growth in the first quarter, even as sales declined at home and in China.
The results marked a reversal from the past few years when China and Japan were the big sales and profit growth drivers for the retailer.
Operating profit rose 5.6 percent to 119.4 billion yen ($1.04 billion) in the three months ended Nov. 30. That beat the market’s consensus of 102.6 billion yen, according to the average of analysts’ forecasts from Refinitiv.
The company maintained its forecast for operating profit to climb 8.4 percent to 270 billion yen in the fiscal year ending in August.
Uniqlo’s international business reported record first-quarter results, driven by sales from South Asia, North America, and Europe. The pandemic weighed on results in China, while warm weather in Japan depressed sales of Fall and Winter clothes.
The company said in October it expects a gradual recovery to pre-pandemic levels as Covid-19 vaccinations progress and as it makes further inroads in the Chinese market.
Fast Retailing opened a flagship store in Beijing in November, its third megastore in mainland China, and plans to open 100 locations in the country each year going forward.
But the company has also flagged the risk of continued production and logistic delays that have plagued major clothing groups. In September, Fast Retailing said some clothing releases would be delayed due to pandemic-related lockdowns at partner factories in Vietnam.
In addition, the rapid depreciation of the yen is raising costs for raw materials and shipping, adding to domestic pricing pressure, chief financial officer Takeshi Okazaki told reporters in Tokyo.
“We have reached a point where we have no choice but to raise the prices of some products,” he said.
As the company becomes increasingly global, strength or weakness of the yen will become less important, and stable currency markets are ideal for operations, he added.
Fast Retailing’s shares have fallen 9.5 percent year-to-date, compared with a 1.1 percent drop in the benchmark Nikkei 225 index.