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Fast Retailing sees record profit this year after 44% drop on virus

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. said Thursday it expects a record net profit this fiscal year after posting a 44.4 percent drop to 90.36 billion yen ($858 million) in the year ended August due to the coronavirus pandemic, counting on a recovery in sales in some key markets.

    The operator of the Uniqlo and GU casual clothing brands projects a net profit of 165 billion yen for the current business year through August 2021, an 82.6 percent surge from the previous year, as sales are forecast to rise 9.5 percent to 2.2 trillion yen.

    If the forecast holds, net profit will surpass the all-time high of 162.58 billion yen logged in the year ended August 2019, as the apparel maker expects a strong rebound in major markets such as Japan and China.

    The company will strengthen its online services after it found solid growth potential in the business during the virus outbreak and will continue to expand its operations in China.

    "The pandemic is a global crisis, but for us, it has become a turning point," Fast Retailing Chairman and CEO Tadashi Yanai said at a press briefing.

    Its sales fell 12.3 percent to 2.01 trillion yen in the just-ended business year, making it the first time in 17 years that the retailer has suffered a drop in both net profit and sales.

    Still, its e-commerce services, enabling customers to place orders online, along with demand for products spurred by measures against the virus spread such as stay-at-home clothing, helped limit a fall in earnings.

    In China, Fast Retailing had 767 stores as of August in the mainland, roughly the same number of stores as Japan. But given its growth potential, "it's possible to aim for 3,000 stores" in China, Yanai said.

    In the last business year, its Uniqlo business, making up about 80 percent of its total sales, logged a sharper year-on-year fall in overseas markets than in Japan.

    Sales in the domestic Uniqlo segment logged a 7.6 percent drop to 806.8 billion yen, weighed down by temporary store closures and shorter business hours this spring.

    In overseas markets, sales in the Uniqlo business slipped 17.7 percent to 843.9 billion yen.

    China and Taiwan saw stronger-than-expected recoveries toward the end of the last fiscal year, as both have successfully managed the pandemic so far.

    But sales in other overseas markets like the United States and Europe hit harder by the coronavirus outbreak, continued to struggle. Fast Retailing expects more time will be needed for these markets to recover.

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