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Fast Retailing cuts net profit outlook as pandemic hits Uniqlo sales

People wait in line at a Uniqlo clothing store in Tokyo's Ginza shopping area on June 19, 2020, to buy just-launched washable and fast-drying face masks amid continued worries over the novel coronavirus. (Kyodo)

TOKYO (Kyodo) -- Fast Retailing Co. revised downward Thursday its net profit outlook for the year to August following dismal nine-month results on the shutdown of its Uniqlo stores amid the new coronavirus pandemic.

The casual clothing chain operator cut its group net profit forecast for the full year to 85 billion yen ($792 million) from 100 billion yen projected in April, in the third profit warning for its business year.

Still, the operator of the Uniqlo and GU clothing brands expects improvement in the fiscal fourth quarter, as it is reopening outlets in major markets such as the United States, Europe and Japan. Nearly all stores in China became operational again by late March.

"The results in the third quarter (ended in May) came in below our expectations for all of our business segments, as we had not factored in the impact of the declaration of the state of emergency in Japan," Chief Financial Officer Takeshi Okazaki said at a press conference.

Uniqlo store sales dropped around 40 percent in the domestic and overseas markets in the March to May quarter after the company closed all 50 outlets in the United Sates since the middle of March, although it began reopening in June.

In Europe, stores had been shut since the middle of March and about 40 percent of them reopened by late June, and 311 stores in Japan were closed from late March to the Golden Week holiday period in early May and began reopening from June.

Fast Retailing slashed its operating profit estimate to 130 billion yen from 145 billion yen and sales projection to 1.99 trillion yen from 2.09 trillion yen, also reflecting an impairment losses of 15.2 billion yen at money-losing stores due to the pandemic.

For the nine months to May, Fast Retailing's net profit fell 42.9 percent to 90.64 billion yen and operating profit sank 46.6 percent to 132.38 billion yen. Its sales declined 15.2 percent to 1.54 trillion yen.

Orders from people staying at home during the pandemic helped spur demand for T-shirts and jogging pants in Japan and abroad during the nine-month period but the impact was offset by store closures.

Same-store Uniqlo sales in Japan fell 34.0 percent from a year earlier in the three months ended May 31, while overseas Uniqlo sales declined 45.0 percent during the same term.

Sales in China, Hong Kong and Taiwan started recovering in May at a faster pace than expected but store reopening in Southeast Asia, North America and Europe were relatively slow, the company said.

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