South Korea Boycotted Japanese Goods UNIQLO Warnings

Due to the weakness of local sales of Uniqlo UNIQLO, the Fast Retailing Co. Ltd. (9983.T) XXX group failed to achieve market expectations. The management also warned today that the boycott of Japanese goods will have a "short-term" impact.

Takeshi Okazaki Okazaki Takeshi, chief financial officer of Fast Retailing Co. Ltd., said at a performance meeting on Thursday that South Korea's boycott of Japanese products affected the company's UNIQLO. However, he said that every situation is short-term.

As Japan intends to restrict the export of high-end technology products to South Korea, the Korean people immediately launched a protest campaign, including boycotting Japanese products and canceling the tour to Japan.

South Korea is currently the third largest export market in Japan. Last year, its trade volume was 5 trillion and 790 billion yen, or about 53 billion 500 million US dollars, while Fast Retailing Co. Ltd. sold about 6.7% of its revenue from the Korean market. South Korean consumers have recently been encouraged to go to Samsung C&T Corp. Samsung products and consume the local fast fashion brand SPAO, while calling for boycott of UNIQLO.

On Friday, representatives of Japan and South Korea will hold talks, but the two sides said they would not discuss the matter only on account of the situation. On Wednesday, South Korean President Wen Yin on Wednesday summoned 30 senior executives of Korean enterprises to discuss how to deal with Japan's export restrictions and describe the current situation with an unprecedented crisis.

In the three quarter of May 31st, the Fast Retailing Co. Ltd. XXX group achieved an income of 555 billion 100 million yen, an increase of 7.3% over the same period last year, a slight increase in speed compared with 6.8% in the first half of the fiscal year, and continued to be promoted by overseas Uniqlo and GU excellent businesses. Operating profit increased by 9.3% to 74 billion 700 million yen (US $692 million), less than the 79 billion 400 million yen expected by the market.

Japan's Uniqlo revenue was flat in the first half of the fiscal year 0.5% decline, including online store sales same year by 0.1%. Due to weak demand, the brand needs to increase the inventory of products in the spring and summer in the early stage and increase the discount. In addition, the "Uniqlo birth thank day" of the annual promotional activities has been postponed to June, making the same store sales in May of the previous larger sales scale decline by 1.8%, and the operating profit under multiple factors dropped by 7.5% to 28 billion 900 million yen.

Overseas Uniqlo showed another picture. Revenue and operating profit rose by 15.3% and 14.9% to 240 billion 500 million yen and 36 billion 300 million yen respectively. In the first half of the fiscal year, the US market once again lost money in the first half of the fiscal year. The group said its local performance was not up to standard due to bad weather and poor sales in the spring and summer. In the first half of the fiscal year, Europe, which had a fairly flat profit, was also retrogressed by the effects of the weather and political turmoil. South Korea's income and earnings both fell, reversing the double growth in the first half of the fiscal year. Only the mainland, Southeast Asia and Oceania maintained strong momentum, and China's mainland profit growth was still over 20%.

Cheap brand GU has been focusing on the mainstream fashion trend after two years of downturn. It has also actively increased the number and type of products, pushing its performance further faster than the first half of the fiscal year. In the three quarter, revenue rose 12.2% to 68 billion 100 million yen, and business profits doubled to 12 billion 100 million yen. The brand reduced sales costs by early placing orders and centralized purchasing of raw materials. The improvement of products also depressed the discount rate, and the operating profit margin improved by 820 basis points year-on-year.

The global brand business is still the weakness of Fast Retailing Co. Ltd. fast marketing group, especially the loss of French women's clothing brand Comptoir desCotonniers, underwear brand Princess tam.tam and American high-end Cowboy brand J Brand. It also owns Theory, PLST and other brands. The three quarter revenue and operating profit decreased by 1.1% to 29% over the same period.

Management has maintained growth prospects of 8% to 2 trillion and 300 billion yen, operating profit increased 10.1% to 260 billion yen and net profit increased 6.6% to 165 billion yen in the whole year, but the three indicators in the first nine months were 7%, 3.4% and 4.1%, respectively, which means that the group is in urgent need of catching up in the current fourth quarter.

Japan's Uniqlo sales figures for June showed signs of speed. Thanks to the delay in annual promotional activities, the same store sales including online stores increased by 27.3% annually, and summer sales were also very strong.

Fast Retailing Co. Ltd. (9983.T), which hit a record high of 67720 yen before closing Thursday, rose 1.2% to 67650 yen a day, expanding its growth to 20% in 2019 and winning 10.6% of the Nikkei 225 index.