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Uniqlo operator warns raw material costs may slow record profit drive

This June 2, 2021 photo shows the interior of a new outlet of Japanese casual clothing chain Uniqlo in Tokyo's Asakusa area. (Mainichi/Yui Shuzo)

TOKYO (Kyodo) -- Fast Retailing Co. said Thursday it booked a record net profit for the year through August and projected further growth, but the operator of the Uniqlo casual clothing chain also expressed concerns about rising raw material costs.

    The net profit surged 88.0 percent from a year earlier to 169.85 billion yen ($1.50 billion), helped by fewer coronavirus infections and eased social restrictions in China as well as North American and European countries.

    The figure surpassed the previous all-time high of 162.58 billion yen logged before the pandemic in the year ended in August 2019.

    The world's third-largest apparel maker and retailer by sales reported 249.01 billion yen in operating profit, up 66.7 percent, on sales of 2.13 trillion yen, up 6.2 percent.

    For the current year through next August, it projected a 3.0 percent increase in net profit to 175.00 billion yen as the Japanese firm forecast that the pandemic-hit business activities will increasingly return to normal. It is also aiming to expand sales in e-commerce.

    Operating profit is expected to rise 8.4 percent to 270.00 billion yen, while sales are estimated at 2.20 trillion yen, up 3.1 percent.

    But the company warned that sales could decline and it might log a net loss for the first half of the business year, citing higher raw material and energy costs due to rising oil prices.

    "Since raw material costs are rising globally, there are possibilities that prices of various products, not only clothing, will increase," Fast Retailing CEO Tadashi Yanai said at a press conference.

    Store closures mainly in the Asia and Oceania regions as well as supply chain disruptions due to the pandemic also add to the cloudier outlook, the company said.

    In the year ended August, overseas Uniqlo sales grew 10.2 percent while those in the domestic market rose 4.4 percent on robust demand for casual clothing as people have spent more time at home due to the pandemic.

    Yanai also said the company received a positive response from female customers after releasing in September its quick-drying Airism sanitary shorts, and that it aims to expand research and development to areas such as making shorts for people with disabilities.

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