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Operating profit was 81.81 billion yen ($591 million) for the three months ended May 31, beating analysts’ average projection of 67 billion yen.
The Asian retailer raised its full-year operating forecast to 290 billion yen, up from its earlier estimate of 270 billion and beating the average analyst projection for 274 billion yen.
The yen, which is trading around the weakest against the dollar since 1998, is helping the company’s bottom line and the currency’s moves are likely to be discussed in results across multiple sectors as earnings season ramps up.
The yen also prompted Fast Retailing in June to announce its fleece and down jackets would see their first price hike in years, due to the rising costs of transport and materials, exacerbated by a weaker yen that makes imported goods more expensive.
Fast Retailing’s third-quarter results were driven by robust performance at Uniqlo operations in South and Southeast Asia, North America and Europe, excluding Russia, the company said. At the same time, the greater China region reported large declines in revenue and profit due to Covid restrictions, it said.
With the war in Ukraine and a Covid resurgence in China fueling uncertainty about clothing sales across the world, Fast Retailing is shifting its focus to markets where the business outlook is relatively stable. In April, the company said it’s doubling down on the North American market, where it has struggled to reach the same scale of success seen in Japan and China, targeting 200 Uniqlo stores in five years from 57 currently.
China’s Covid-induced lockdowns and weaker consumption have been priced in, and there is recovery ahead, according to Mark Chadwick, an independent analyst who formerly worked at Jefferies. While that country remains key, the US is emerging as a new and profitable growth driver, he said in a note posted on Smartkarma.
The stock has advanced more than 7% this year, while the benchmark Topix Index has dropped about 5%.
©2022 Bloomberg L.P.
