UNIQLO Parent XXX Group Lowered Its Annual Profit Forecast For The Fourth Time In The Current Fiscal Year.

Although the three quarter has recovered, business earnings have resumed growth, but because of the appreciation of the yen, overseas income has decreased, Uniqlo

The parent company Fast Retailing Co. Ltd. (9983.T) XXX group lowered its annual profit forecast for the fourth time in the current fiscal year.

Now, Fast Retailing Co. Ltd. has cut its net profit forecast for the 2016 fiscal year to the end of August by 60 billion yen to 45 billion yen ($427 million).

The expected 57 billion yen is also down sharply by 59.1% compared with the 2015 fiscal year.

The operating profit is expected to be 120 billion yen and earnings expectations of 1 trillion and 800 billion yen remain unchanged, which means that they will decrease by 27% and 7% respectively over the 2015 fiscal year.

So far this year, the yen has risen by 23% against the US dollar, and the Japanese yen has risen by 30% against the yuan. At present, the Fast Retailing Co. Ltd. has a 42% share of the international market revenue. Therefore, the negative exchange rate will continue to affect the Fast Retailing Co. Ltd. fast selling.

The effect of exchange rate is not only reflected in Japan.

The erosion of sales and profits of the giants also includes its pricing strategy.

The strength of the yen has led to Fast Retailing Co. Ltd., which has to raise prices in other markets to hedge its exchange rate.

However, the increase in prices will inevitably result in the competition between Uniqlo UNIQLO and H&M, Gap, Zara, Primark and so on, which did not have the advantage of the fast fashion industry. The price hikes of Uniqlo UNIQLO have already had a huge impact on the sales of the group, and subsequently forced to call back the price.

On the contrary, in the past few years, Uniqlo and UNIQLO have been able to make flexible pricing based on the weak yen, to cope with competition and to expand internationally. Only three less than 23% years ago, the international market of Fast Retailing Co. Ltd. was fast expanding.

If the price is not raised in the international market, reducing the cost will become another option for the Fast Retailing Co. Ltd..

In May, when Uniqlo UNIQLO's preview of autumn and winter in Japan was held, Tadashi Yanai Ryui Masa, chief executive officer of Fast Retailing Co. and Ltd. declined to disclose whether or not to reduce prices. Analysts have expressed concern about the problem.

The key markets for these problems are Fast Retailing Co., Ltd. fast marketing group and Uniqlo's largest international market, the Chinese market, which is also the most important market of the group.

In the first half of China (mainland China, Hongkong, Taiwan) market profits declined after the three quarter of the market profits to reproduce the growth, but Fast Retailing Co., Ltd. fast sale group did not disclose the big China market income, but according to the group's financial report, the sales situation of the big China market is not optimistic.

Another worrying issue in the Chinese market is the recent dispute over the South China Sea.

Although both sides of the dispute are mostly China and Philippines, China and Philippines are accusing more countries in social media than in the United States and Japan.

In view of previous "Lanc me me, Lancome Denise Ho" and "Zhao Wei movie events", this shows that the mainland's nationalism has been on the rise this year.

In 2012, China broke out many anti Japanese demonstrations that originated from the "Diaoyu Islands issue" and spread to Japanese brands in China. In mid September 2012, Uniqlo Col. UNIQLO decided to close the ten stores in China and cover red cloth for its flagship flagship store, taiguri flagship store in Sanlitun, Beijing, to prevent damage.

In addition, Uniqlo, QQ, UNIQLO also posted "white Diaoyu Islands" that support Diaoyu Islands as China's inherent territory.

On Wednesday, the Japanese coast guard and the Philippines Coast Guard held a joint exercise in Manila. Although the Japanese side said they were not targeting China, the move still encouraged Chinese netizens to stir up social networks.

In 2012, a large-scale Anti Japanese March broke out in China. Uniqlo's flagship store in Sanlitun, Beijing, used a red cloth to block Logo and set up a slogan "supporting the Diaoyu Islands as an inherent territory of China" in the store.

Thanks to the efforts of Uniqlo UNIQLO Greater China's earnings growth and the US cost reduction efforts, Uniqlo's overseas business grew by 5.3% in the three quarter and 41.1% in operating profit.

In the three quarter, Uniqlo, Japan, and UNIQLO business benefited from the hot weather and the same store sales growth of 2.8% down the price, of which 40.6% of online stores grew in sales, while the downward pricing also raised the 90 basis points of gross margin after the discount rate. During the period, the brand's Japanese business receipts rose 4.4% over the same period.

{page_break}

As of the three quarter of May 31st, Fast Retailing Co. and Ltd. XXX Group recorded an overall revenue growth of 6.2% to 422 billion 900 million yen, slightly smaller than the 6.5% in the first half, and net profit fell 13% to 239 billion yen.

Thanks to the strong growth of Japan's online business and the improvement of us business, Fast Retailing Co. Ltd. has achieved 18.6% growth in the three quarter to 46 billion 400 million yen, reversing a 33.8% decline in the first half of the fiscal year.

In particular, the group pointed out that the proportion of gross profit and business expenses has improved after the reorganization of Uniqlo and UNIQLO. Since the beginning of this year, the brand has quietly finished 5 stores in the United States. A spokesman for the US said its brand was well penetrated in big cities such as New York, San Francisco and Chicago, but it did not perform well in the suburbs.

In the overseas business, the South Korean business continued to struggle in a depressed economic environment and increasingly fierce competition, and profits continued to shrink.

In the three quarter, Uniqlo, UNIQLO, UNIQLO, Southeast Asia and Oceania (Singapore, Malaysia, Thailand, Philippines, Indonesia and Australia) and Europe (Britain, France, Russia, Germany and Belgium) continued to show a double growth in revenue and profits.

As of the end of May, Uniqlo UNIQLO had 846 and 928 stores in Japan and overseas respectively, with a net increase of 2 and 161 stores.

As for the global brand business led by the second pillar brand GU, the revenue and operating profit in the three quarter increased by 12% and 8.7% respectively.

GU registered double digit growth in the same store, Theory Princessetam.tam operating profit slightly increased, Princessetam.tam and J Brand continued to record losses, Comptoir de Cotonniers losses expanded.

In the first nine months ended May 31st, Fast Retailing Co. Ltd. achieved a net profit of 71 billion 10 million yen, a 46.4% drop year by year. Apart from the decline in profits of Japan's Uniqlo and Japan's overseas business, the yen's appreciation also resulted in the loss of yen exchange.

Operating profit decreased by 23% to 145 billion 829 million yen compared with the same period last year, and revenue increased 6.4% from last year to 1 trillion and 434 billion 616 million yen.

During the period, overseas Uniqlo & amp; UNIQLO revenue increased by 532 billion 813 million yen, an increase of 10.6% compared with the same period last year, operating profit of 42 billion 235 million yen, a sharp fall of 18.7% compared to the same period. Japan's Uniqlo Uniqlo UNIQLO income of 645 billion 432 million yen, up 1.1% over the same period last year, operating profit of 93 billion 216 million yen, a year-on-year drop of 18.1%.

In the first three quarters of fiscal year 2016, overseas Uniqlo UNIQLO accounted for 37.1% of Fast Retailing Co. Ltd. fast sales, compared with 35.7% in the same period last year, while Uniqlo UNIQLO's overall business accounted for 82.1%.

Fast Retailing Co. Ltd. (9983.T) fell 1.72% to 27660 yen on Thursday, which has fallen 35.13% so far in 2016.