Nothing can stop Fast Retailing Co. Ltd.!
That’s what the industry is saying after the company made record profit for the third consecutive year in China. Not only that, it has now forecast further growth in the current year albeit dented by a boycott of Japanese goods in South Korea.
As per the reports, the operating profit of the company increased by 9 per cent to clock 257.6 billion yen (2.40 billion dollars) in the year ended 31 August. Recent data has distinctly indicated a slowing Chinese economy after years of rapid growth, with concerns that the worst may not be over.
The company believes that sales from the greater China region will hit 1 trillion yen (about 9.26 billion dollars) by fiscal 2022. Now that’s nearly double the 502.5 billion yen (roughly 4.65 billion dollars) in sales that the company reported for fiscal 2019.
The analysts say that now there is period of ‘slow growth’ for the company as there is too much of uncertainty. The company also expected a sharp decline in South Korean sales amidst a boycott brought about by a diplomatic dispute.
Around 35 per cent of company’s profits come out of China, so any sort of slowdown in China is certainly having a negative impact on the Japanese giant.
Tokyo’s ongoing trade dispute with Seoul is a serious challenge for the company, which has resulted in South Korean consumers boycotting Japanese products. The company noticed its South Korea business report a decline in both revenue and profit.
It also forecasts ‘large decline’ in the country for fiscal 2020. South Korea contributes about 3 per cent of company’s revenues; expert analyst believes that though this figure is ‘not material’ but at the same time it’s a ‘significant amount of money’.
The company is, however, expanding to other markets. It recently opened its first store in India, with 2 more stores in pipeline.
And now it is also expanding to other markets such as Malaysia and Indonesia. Experts feel that India, GU and e-commerce will help the company overcome challenges.
Around 12 per cent revenue of the company comes from online and the aim is to make it 30 per cent. Uniqlo’s sister brand GU’s operating profit jumped by 139 per cent to 28 billion yen in the just-ended year.
