UNIQLO Greater China Growth Engine Failure, Scenario Reversal

Although we have previously reported that the fast fashion brands can be seen as spectacular in 2015 from a wide variety of data and charts, the fast selling group of UNIQLO's parent company is also a heavy encirclement. As a strong engine of growth, the Greater China region is expanding far faster than Japan.

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However, in the latest earnings report, as of November 30, 2015, the first quarter of fiscal year 2016, XXX group net profit plunged 30.2% to 48 billion 24 million yen, less than the market forecast of 50 billion 200 million yen, operating profit of 75 billion 921 million yen, compared with 91 billion 370 million yen last year 16.9% reduction.

Revenue increased from 479 billion 543 million yen in the same period last year to 520 billion 303 million yen.

An increase of 8.5%.

Now

The expected reduction from the original 115 billion yen to 111 billion yen is also worse than the market forecast of 119 billion yen, the latest revenue is expected to be 1 trillion and 800 billion yen, down 100 billion yen than originally expected, while the 2015 fiscal year income of 1 trillion and 681 billion 781 million yen.

Against this background, UNIQLO said it would focus on opening new stores and expanding e-commerce in metropolis so as to enhance brand awareness.

However, the gloomy prospect in this fiscal year is the founder of UNIQLO.

Liu Jing, chairman and chief executive, is overshadowed by the medium-term vision of the world's largest apparel manufacturer and retailer in 2020, earning 5 trillion yen and exceeding Zara's Inditex SA and H&M's Hennes&Mauritz AB.

Despite the increase recorded, the US business losses continue to be affected by the warm winter. Meanwhile, the demand for the largest market in Japan's domestic market and greater China and South Korea has also been severely hit.

XXX now expects its annual operating profit as of August 2016 to be only 180 billion yen, or about US $1 billion 500 million, far less than the market forecast of 199 billion 600 million yen, which was expected to be 200 billion yen.

Therefore, after the closing of yesterday's winter stock market, XXX announced that it would reduce its annual profit forecast for 2016 fiscal year.