UNIQLO Surrendered The Worst Report Card In History. Is The Epidemic The Main Pot?

Under the spread of the global epidemic situation, the fast selling group of UNIQLO parent company delivered the worst report card ever recorded.

In April 9th, the fast selling group of UNIQLO parent company released its performance bulletin for the first half of fiscal year 2020 (six months from September 1, 2019 to February 29, 2020).

Data show that during the reporting period, the total revenue of fast selling companies was 12085 billion yen (4.7% lower than the same period last year), with a total profit of 136 billion 700 million yen (down 20.9% compared with the same period last year).

In this regard, the explanation given by Xun sales is that due to the new crown pneumonia epidemic and other factors, the profits and profits of South Korea and greater China have dropped sharply.

Over the past few years, when fast fashion brands have been losing their jobs and their peers are generally experiencing growth difficulties, UNIQLO has maintained an enviable growth rate year by year and is regarded as the benchmark for industry. Today, under the force majeure of the epidemic, UNIQLO has no alternative, and its performance has fallen unusually.

At present, the situation of global epidemic prevention and control is still uncertain, which aggravates the worries about the future growth of global apparel retailing enterprises represented by UNIQLO.

Frankly speaking, whether the global epidemic will be controlled will affect the prospects of performance. It is difficult to reasonably estimate the financial position, operating performance, cash flow and its impact after the end of the first half of this financial year because of the uncertain impact of the epidemic on the global scale.

UNIQLO China's abnormal performance, differentiation of overseas market performance

As we all know, the market in Greater China and Southeast Asia is the backbone of UNIQLO's overseas business, especially in the Greater China region.

In the early days of the outbreak, China, as the most severely affected country, should be in need of epidemic prevention and control. All trades and professions were in a standstill. Economic development was almost stagnant. After the passenger flow was cut off, the retail businesses under the line were hit by violence, and customs shops were sweeping over restaurants and retail businesses. UNIQLO was inevitably affected.

As early as January 23rd, XXX stopped the operation of 17 UNIQLO stores in Wuhan, Hubei province. As the epidemic situation became increasingly severe, UNIQLO closed a large number of stores. During the February, a total of 395 shops temporarily closed down, more than half of the total number of stores in the country (up to the end of December 2019, UNIQLO owns 750 stores in China).

The mainland is the second largest market for UNIQLO, second only to Japan. Such a large market has been hit by a large area of closes, and the loss has become a reality. Despite strong sales in late January 2020, profits fell sharply after the impact of the new crown pneumonia epidemic in late January.

In its earnings report, XXX mentioned in particular that revenues in large areas of China were significantly reduced, and both profits and profits declined in the first half of the year.

Fortunately, since March, UNIQLO stores in mainland China have been reopening and gradually showing a trend of recovery.

What is the performance of other markets of UNIQLO overseas after a rare defeat in the heavily relied Chinese market?

According to the results of the report, the sales volume of the same store in South Korea has been greatly reduced, and the loss has been widened by the double influence of the relationship between Japan and South Korea and the new crown virus.

UNIQLO is gratified that the brand has recorded a double-digit increase in earnings and profits in the reporting period of Southeast Asia, South Asia and Oceania (including Southeast Asian markets, Australia and India). In particular, Indonesia, Philippines and Thailand have recorded double-digit growth in earnings and profits, and business is steadily expanding.

In India, after opening its first store in October 2019, UNIQLO opened third stores in New Delhi in February 2020, and its sales performance was eye-catching. In Vietnam, UNIQLO opened its first store in December 2019, and its performance exceeded expectations.

Compared with the Asian market, UNIQLO North American market is still sluggish, which is affected by warm winter in the United States, the sales of winter clothing are not smooth, and revenue is in deficit.

Although the current epidemic is rampant in Europe, due to the late impact of the epidemic, UNIQLO's performance in the European market has not been affected during the reporting period. On the contrary, both earnings and profits have recorded double-digit growth. Especially in Italy and Spain, sales are strongest. Russia's same store sales also recorded double-digit growth.

The epidemic continues to affect UNIQLO's global stores into the "war era".

With the spread of the new crown virus pneumonia worldwide, in mid March 2020, governments issued traffic control, activity restrictions and self restraining requirements, which led UNIQLO to have a closed shop policy within the entire canal (except China).

Since April 7th, UNIQLO has temporarily closed all 28 stores in Singapore, and has closed all 22 stores in Australia since April 2nd. Further, UNIQLO has closed the Asian market in March, including 192 stores in Philippines, Malaysia, Thailand, India, Indonesia and Vietnam. All 62 stores in the United States and Canada began to temporarily shut down in March 17th. The European side also complied with the request of governments since mid March 2020 to close 97 UNIQLO stores in countries outside Sweden.

The epidemic caused UNIQLO to suffer from the difficulties of the internal and external markets. At present, the epidemic situation is rising in Japan. In April 7th, the Japanese government declared a state of emergency. The UNIQLO (UNIQLO) and GU (excellent) shopping center shops in the designated areas were temporarily closed, and even the remaining stores that were still operating were forced to shorten their business hours.

Obviously, with the expansion of the epidemic, the temporary closure of stores and the decline in business returns have been foreseen. In its earnings report, xungang group stated that it is difficult to reasonably estimate the financial position, operating performance, cash flow and its impact and its impact after the end of the first half of this financial year because of the uncertain impact of the epidemic on the global scale.

It is worth mentioning that, as a fast fashion group's brand of fashion parity in recent years, GU (super excellent) in the first half of this fiscal year, the gross profit is 132 billion 200 million yen (12.9% year-on-year), with a profit of 15 billion 800 million yen (up 12% over the same period).