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Uniqlo parent firm downgrades outlook despite earnings rebound

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Consumers are returning to stores after the initial shock of the pandemic last year, but recent activity has been lower than optimistic earlier annual projections./AFP
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Jul 16, 2021 - 03:02 AM

TOKYO, JAPAN — Fast Retailing, the operator of Japanese casualwear brand Uniqlo, on Thursday revised its annual projections slightly downwards as the pandemic drags on, despite sharp rebounds in its third-quarter earnings.

Consumers are returning to stores after the initial shock of the pandemic last year, but recent activity has been lower than the firm’s optimistic earlier annual projections to August, the company said.

It also defended its human rights record, as French magistrates investigate allegations that Fast Retailing and other major fashion groups profit from forced labour of the Uyghur minority in China.

For the nine months to May, Fast Retailing’s net profit jumped 67.0 percent to 151.35 billion yen ($1.38 billion).

Its operating profit soared 72.1 percent to 227.89 billion yen on sales of 1.69 trillion yen, up 9.9 percent.

“Results were boosted by significant increases in the final three months of the period across all the group’s four business segments,” the company said.

“At the same time, fresh measures to contend with Covid-19 in many markets kept results somewhat below expectation, prompting a partial revision to the full-year outlook.”

For the year to August, the company adjusted its annual operating profit projection to 245 billion yen from an earlier forecast of 255 billion yen, saying business has been slower than in its earlier aggressive plan.

The annual sales projection was adjusted to 2.15 trillion yen from an earlier expectation for 2.21 trillion yen.

Uniqlo stores in Japan temporarily closed or shortened their opening hours due to virus restrictions, but also failed to “convey fresh and newsworthy product features”, the company said.

Many products were similar to popular offerings from a year ago, including loungewear and sportswear, said chief financial officer Takeshi Okazaki.

Okazaki also defended the company’s concern for human rights at a press conference.

French magistrates have opened an inquiry into allegations that four fashion groups including Uniqlo are sourcing cotton from Xinjiang, China, where rights groups say the Uyghur minority are put to forced labour in conditions sometimes compared with concentration camps.

“Regardless of countries and regions, our priority is to respect human rights. We have managed our supply chains to make sure no human rights violation happens in it,” Okazaki said.

However, he did not clarify whether Fast Retailing uses cotton from Xinjiang.

“About the French authorities, we have only read about it in the media. We know nothing more. No part of our group has been contacted by them. So we are not able to comment on the reported matter now.

“Of course, if there were in fact an investigation, we would fully cooperate. As a result of it, we hope that they would reaffirm how we have been seriously working on the supplies chain issue,” he said.

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