Uniqlo owner sees strong rebound as basic fashion resilient in pandemic

TOKYO (Reuters) - Japan's Fast Retailing 9983.T, owner of casual fashion brand Uniqlo, on Thursday forecast a stronger-than-expected surge in operating profit this business year as it rebounds from the pandemic.

FILE PHOTO: A woman wearing a face mask walks out of a store of the Fast Retailing's fashion chain Uniqlo, following the novel coronavirus disease (COVID-19) outbreak, in Beijing, China May 22, 2020. REUTERS/Tingshu Wang/File Photo

Fast Retailing, along with other global apparel makers, has been hit hard by COVID-19, which wreaked havoc on supply chains, kept shoppers home and dented spending.

But the Japanese retailer has fared better than most rivals thanks to ample cash and an emphasis on practical, casual wear. Its shares have rallied in recent months, closing on Thursday at a record 70,420 yen.

For the year ended in August, it reported a 149 billion yen (1.1 billion pounds) operating profit, down 42% from a year earlier but beating the market’s consensus forecast of 137 billion yen, according to Refinitiv data.

Its forecast for a 64% surge to 245 billion yen this business year also beat the market’s view for 235 billion yen.

Fast Retailing said the pandemic will likely weigh on revenue in the six months to February but that a strong recovery should kick in from the second half as long as the global pandemic is brought under control.

It forecast higher revenue and profit in Japan, as well as a significant revenue increase in Greater China, where it already has 782 stores - nearly as many as it does in Japan.

The rebound would come after a hard year for global retailers, as lockdowns and general wariness over spending forced storied U.S. brands such as J. Crew as well as Japanese apparel makers like Renown into bankruptcy.

Chief Executive Tadashi Yanai said Fast Retailing’s relative success at weathering the crisis came from its focus on daily essentials.

He reiterated his ambition to overtake Zara-owner Inditex ITX.MC as industry leader. Fast Retailing has been closing in on No. 2 H&M HMb.ST, despite a struggle to break into the U.S. market, thanks to its early focus on Asia's fast-growing middle class. "Even before coronavirus, the world's growth engine has been shifting to Asia's population of 4 billion," he told a news conference.

Reporting by Ritsuko Ando; editing by Richard Pullin and William Mallard