GU shines for Fast Retailing but Theory and other labels struggle

By

Sandra Halliday

Published
Jan 12, 2024

Most reports of Fast Retailing’s Q1 results this week focused on the headline figures and also on the performance of its star Uniqlo chain. But the group includes other businesses too so let’s look at those.

To recap though, group operating profit for the three months to the end of November was ¥147 billion ($1 billion), with sales of ¥811 billion. Both figures were above analysts’ expectations. Uniqlo Japan’s revenue rose 1.5% to ¥244.4 billion and operating profit jumped 18% to ¥46.5 billion. And Uniqlo International’s revenue soared 23.3% to ¥441.3 billion with operating profit up an astonishing 35.8% at ¥77.8 billion.

And those other brands? Fast Retailing said its GU youth-focused offer saw big increases in both revenue and profit in Q1 with revenue rising 10.7% to ¥87.8 billion and operating profit up 16.4% at ¥12.3 billion. 

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We’re told that the warm weather in September and October resulted in “sluggish” sales of AW23 products, but “sales proved strong in November once the weather turned colder and thanks to efforts to successfully prepare sufficient stock of top-selling winter items”. 

Sales of “Heavy Weight Sweat items, Heat Padded outerwear, Parachute Cargo Pants and other products that captured mass fashion trends proved especially strong” and helped GU’s operating profit margin improve by 0.7 points. Plus improvements in production efficiency also helped improve cost of sales and the gross profit margin.

Meanwhile, the picture at the Global Brands segment was less rosy. It reported a decline in both revenue and profit, the former contracting 2.4% to ¥36.6 billion and operating profit down as much as 43.9% at ¥0.3 billion.

The Theory brand’s profits declined “after warm winter weather stifled sales, and higher personnel costs primarily at Theory USA led to a deterioration in the selling, general and administrative expense ratio”. 

Meanwhile, the PLST brand saw lower revenue and a slight operating loss “due to a reduction in the network of 35 stores compared to the previous year”. 

Finally, French label Comptoir des Cotonniers was hit by falling revenue because of both “sluggish consumer sentiment in the European market and warmer winter weather”. But its losses narrowed as the gross profit margin improved.