Uniqlo owner cuts profit forecast on new COVID-19 curbs

Women wearing face masks, following the coronavirus disease (COVID-19) outbreak, walk past a store of Fast Retailing’s Uniqlo fashion chain at a shopping complex in Beijing, China on May 24 2020. REUTERS / Florence Lo

TOKYO, July 15 (Reuters) – Japanese firm Fast Retailing (9983.T), owner of clothing brand Uniqlo, has slashed its profit outlook for the year, saying additional government restrictions in Japan and on other markets to contain new COVID-19 infections have slowed customer traffic in stores.

Last week, Japan, where the company operates some 800 Uniqlo stores, declared a fourth state of coronavirus emergency in Tokyo, just two weeks before the start of the Olympics.

“With the declaration of a state of emergency again, it is expected that the willingness of customers to go out and shop will be more restricted,” CFO Takeshi Okazaki told reporters in Tokyo. “We expect this trend to continue for now, so we have revised our business forecast to reflect this.”

Fast Retailing said on Thursday it now expects operating profit for the fiscal year ending August to increase 64% year-on-year to 245 billion yen ($ 2.23 billion), against a previous estimate of 255 billion yen.

Profit reached 227.9 billion yen in the nine months ended May, up from 134.4 billion yen in the period a year earlier which had been hit hard by the coronavirus crisis.

Intermediate results were bolstered by strong sales of masks, loungewear and other products tailored to the pandemic home lifestyle.

The company has been among the most resilient retailers during the COVID-19 pandemic, as Uniqlo’s focus on China and Japan helped it escape the worst of the recession in the United States and Europe.

But the company has had to contend with crises in Myanmar and China that have disrupted supply lines and created reputation issues.

Earlier this year, it was forced to suspend operations at some partner facilities in Myanmar, where a military coup led to social unrest. Read more

In China, the company and other foreign brands face criticism from customers for alleged human rights violations in Xinjiang province. Fast Retailing operates around 800 Uniqlo stores across the continent. Read more

General manager Tadashi Yanai declined to comment on Xinjiang’s issues, saying his company remains politically neutral.

The company lost a case at US customs in May after a shipment of clothing was seized over alleged violations of a Xinjiang cotton ban.

Earlier this month, a news report said Fast Retailing was among four retailers being investigated by French prosecutors for alleged cover-up of human rights abuses in China. The company said there was no forced labor in its supply chain. Read more

CFO Okazaki reiterated that the company was not aware of any issues in its supply chain and would cooperate with any investigation by authorities.

($ 1 = 109.7400 yen)

Report by Rocky Swift in Tokyo; Editing by Sayantani Ghosh, Jacqueline Wong and Kim Coghill

Our standards: Thomson Reuters Trust Principles.

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