The latest quarterly report released by Japan’s Fast Retailing, the parent company of “UNIQLO”113 ( span>2021year9～11 monthly consolidated financial report, international Accounting standards) showed that the company’s net profit increased by 33% year-on-year to 93.5 billion yen. However, the domestic business in Japan and China (Fast Retail calls “Greater China”, including mainland China, Taiwan and Hong Kong), which have always been the focus, have experienced double declines in revenue and profits for the first time, which worries the market. The company’s stock price is lower than last year FebruaryThe historical high in February was almost halved.
At the same time, Fast Retailing Chief Financial Officer Takeshi Okazaki said at the financial report meeting on the 13th: “Faced with rising raw material and logistics costs and the depreciation of the Japanese yen exchange rate, Now is the time for us to evaluate and raise the prices of some products.” He also emphasized that our bottom line is to try not to raise prices as much as possible. Price increase measures will be extremely limited.
The Bank of Japan’s survey shows that the country’s core inflation rate is still well below 1%, but consumers’ inflation expectations have climbed to 2008The highest level in years. At the same time, rising raw material prices, supply chain disruptions and currency flooding are pushing up global prices.
However, Japanese media mentioned in reports the “Xinjiang cotton” issue, which seems to imply that this is one of the reasons why Uniqlo has stalled in the Chinese market.
Screenshot of Fast Retailing financial report
Financial report data shows that Fast Retailing’s total revenue in the quarter reached 627.3 billion yen (approximately RMB349.97 billion), a year-on-year increase of 1%, and operating profit reached 119.4 billion yen (approximately RMB 66.61 billion), an increase of 6%. Through measures such as restraining price cuts, the company’s gross profit margin still reached 54%, an increase of nearly two percentage points. 2022 fiscal year (ending 2022 year8 The full-year performance target for March) remains unchanged from the original expectation, and is still a year-on-year increase of net profit by 3%.
September～November, Japan’s domestic Uniqlo revenue dropped to2264 billion yen (approximately RMB 126.31 billion yuan), a decrease of 11%, and operating profit dropped to 48.7 billion yen (approximately RMB 2.717 billion), a decrease of 19%.
On the other hand, Uniqlo’s overseas business sales revenue reached 299.7 billion yen (approximately RMB167.20 billion), an increase of 15%. Operating profit reached 59.9 billion yen (approximately RMB 3.342 billion), an increase45%, a new quarterly high. Okazaki Ken said, “The income pillars are becoming more and more diversified.”
Previously, Fast Retailing’s main revenue has been the Uniqlo business in Japan and China. As of20218 months2021 financial results In 2017, Uniqlo’s business sales revenue was approximately 177.27 billion yen (approximately RMB 988.99 billion). span>5% come from Japan, and about 3% come from China, including Taiwan and Hong Kong. Other regions in Asia, Oceania, Europe and the United States only account for about 11% respectively.
In Europe and the United States, as economic activities restart, Fast Retailing has captured the demand for travel and outing clothing. The business in Europe achieved significant revenue growth; it also turned a profit in the United States; in Southeast Asia, sales in Malaysia and Indonesia, which have relaxed travel restrictions, are good.
The Chinese market, which has been the most profitable in recent years, is stalling, which is bad news for Uniqlo. Since2013year9month～11month Fast Retailing has experienced revenue and loss reductions for the first time since it began to disclose its performance in China. Okazaki Ken said, “For us,”Reducing revenue and profits in China is a very special situation…the biggest reason is the adoption of strict epidemic prevention measures.”
Fast Retailing Chief Financial Officer Takeshi Okazaki at the quarterly report conference (Nikkei Shimbun photo)
Nihon Keizai Shimbun analyzed in the report that Fast Retailing’s competitive environment is changing. After “Xinjiang cotton” became a topic in 2021, China has become far away from foreign investment. Brand, the phenomenon of supporting domestic brands, 2021year7month~9In March, the sales of existing stores of Chinese clothing brand Li Ning increased by 20%~25 %.
Uniqlo founder, Fast Retailing Group chairman, president and CEO (CEO) Yanai Masaru recently accepted an interview with Japanese media on the issue of “Xinjiang cotton” The expression is ambiguous.
Look at the reality, he said. There are differences between China and the United States on the surface, but in reality they are not. U.S. financial capital is flowing into Chinese investment. Apple products are all made in China. China’s exports to the United States have been growing. Economically, things are going well between the United States and China.
Asked “You refused to comment on whether your company uses Xinjiang cotton and whether you are worried about boycott by China.” Yanai Tadashi said, “That is not the case. I want to remain neutral between China and the United States. .The American approach is to force companies to be loyal. I want to make it clear that I will not play that game.”
When asked “What suggestions do you have for Japanese companies caught between China and the United States?” Yanai Tadashi said, “They need to admit that Japan has nothing. Japan has no choice but to make money in the global market. . They need to attract global talent and send Japanese employees overseas. Japan cannot survive without becoming an open country. In light of the COVID-19 epidemic, Japan has closed itself off, making it difficult for highly skilled technical talents to enter. If the population continues to age, Japan With few exports, Japanese may start going abroad to earn money and send remittances. Japan will be left with a country full of old people.”
Due to the hard struggle in business in Japan and China, the capital market currently has a poor evaluation of Fast Retailing. As of1month14Hong Kong stocks closed on the same day, and Fast Retailing’s stock price was 44 Hong Kong dollars/ shares, although it was higher than the previous It rose 5.52% in one trading day, but compared with 2021 year2 span>The historical high of 80.8Hong Kong dollar/ stocks hit at the end of the month has been nearly halved.
In the report, Nikkei compared Fast Retailing’s market value with Spain’s operating brands such as “ZARA“Inditex Companies do comparisons. 2021 Fast Retailing’s market value once exceeded Inditex, ranking first in the world in the apparel industry, but currently Fast Retailing The sales market value is approximately RMB3493.64 billion, and the market value of Inditex is approximately RMB 6340.9billion yuan, and the gap between the two is still widening.
“Profiting in the world” is Yanai’s ambition expressed to employees at the beginning of this year. Although Fast Retailing stated that it “will become the world’s largest brand”, it currently remains at the position of “the largest brand in China and Japan”. Nikkei News asked, with the Sino-Japanese business in a bitter battle, can “UNIQLO” become a truly global brand? The future is the most critical period.
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