Japan’s Fast Retailing is cutting down its profit forecast for Uniqlo. Additional government restrictions in Japan to mitigate the COVID-19 virus has slowed down business for Uniqlo.
Last Week, Japan declared a fourth coronavirus state of emergency in Tokyo. The announcement came just two weeks before the Olympic Games. This further put concerns for Fast Retailing, as this would put operations for about 800 Uniqlo stores in the country on halt again.
“With the declaration of a state of emergency again, it is expected that customers’ willingness to go out and shop will be more restrained,” Chief Financial Officer Takeshi Okazaki told reporters in Tokyo.
“We expect that trend will continue for the time being, so we have revised our business forecast to reflect this,” Okazaki continued, as quoted from Reuters.
On Thursday, Fast Retailing revealed a lower number for Uniqlo’s operating profit forecast. Fast Retailing now bets for Uniqlo to record a 64% raise year-year to 245 billion yen ($2.23 billion) for the fiscal year ending August. Previously, Fast Retailing’s estimate falls at around 225 billion yen.
In comparison, Uniqlo’s profit grew to 227.9 billion yen in the nine months ended May. During the first coronavirus crisis last year, Uniqlo only noted 134.4 billion in its profit.
Accordingly, sales for masks, loungewear and stay-at-home related good were significantly strong during the pandemic.
Uniqlo: operation halts, boycott, and others
Despite the COVID-19 pandemic, Uniqlo managed to maintain its resilience. The brand’s decision to focus on China and Japan helped to balance the downturn in the United States and Europe.
However, Uniqlo went through a lot of hurdles in the past few months. Not only was COVID-19 pausing businesses in several countries, but the fashion retail company was also boycotted due to its relation with Xinjiang cotton.
Uniqlo reportedly has been sourcing its cotton from Xinjiang. The brand received a lot of backlash from its customers for alleged human rights abuses in Xijiang province.
Additionally, production in some of Myanmar’s partner facilities had to be on halt due to a military coup that happened earlier this year. These crises in Myanmar and China further upset supply lines.
In relation to the Xinjiang issues, Chief executive Tadashi Yanai has declined to comment. Yanai claimed that his company remains politically neutral. The company also declined the accusation of forced labour in its supply chain related to Xinjiang cotton.
CFO Okazaki added that the company is unaware of the problems in its supply chain. The company, however, will be cooperating with the authorities for any necessary investigation.
Read also: Earning Money is The Main Life Priority for Singapore Employees
Follow and join us on Youtube, Instagram, Facebook, and Twitter to be part of the trader community in Asia
