TOKYO, April 9 (Reuters) - The Japanese owner of clothing brand Uniqlo said on Thursday that quarterly profit rose 29.4% just before the Middle East crisis roiled global markets and supply chains, and
Uniqlo-owner Fast Retailing flags record year after strong quarter
Fast Retailing Reports Strong Financial Performance Amid Global Challenges
By Rocky Swift
Quarterly Profit Surges Beyond Expectations
TOKYO, April 9 (Reuters) - The Japanese owner of clothing brand Uniqlo raised its full-year forecast on Thursday, flagging another record year, as international growth produced a stronger-than-expected jump in quarterly profit.
Fast Retailing said its operating profit rose 29.4% to 189.8 billion yen ($1.19 billion) in the three months through February from 146.7 billion yen a year earlier. That beat an average estimate of 161.6 billion yen from seven analysts compiled by LSEG.
The company raised its full-year operating profit forecast to 700 billion yen from 650 billion yen, putting the retailer on track for a fifth-consecutive year of record earnings.
Impact of Middle East Crisis on Operations
Fast Retailing said in a statement that it expects no major impact from the Middle East crisis on production and logistics on its fiscal 2026 year.
The company's second-quarter ended just before the start of U.S.-Israeli air strikes on Iran, a conflict that has sent oil prices soaring and upended supply chains. Markets are now on tenterhooks amid uncertainty over the prospect of a permanent peace deal.
Cost Pressures and Supply Chain Risks
Investors will be looking at how the Iran crisis impacts costs for Uniqlo, known for its inexpensive fleeces and everyday basics, many of which are made with polyester.
Fast Retailing's Tokyo-listed shares closed down 0.5% ahead of the results, but have gained more than 18% so far in 2026.
Teijin Frontier, a Japan-based supplier to the company, said on Tuesday it would raise prices on polyester fibre by 20% due to higher oil prices.
Europe's retailers, including clothing giant H&M and British supermarket chain Co-op, have already warned that a prolonged Middle East conflict could drive prices higher and dent consumer demand.
Logistics and Freight Challenges
CFO Takeshi Okazaki said that the crisis was already making air freight from production bases in Southeast Asia to Europe increasingly difficult.
"If this situation continues for a long time, since making chemical products that depend on crude oil, it goes without saying that we will be affected in some way," he added.
Global Expansion and Regional Performance
Growth in Japan, China, and Beyond
Fast Retailing is widely seen as a bellwether for consumer spending in Japan and mainland China, where it has almost 900 stores.
From a single store in the western Japanese city of Hiroshima in 1984, Uniqlo now has shops in more than 2,500 locations globally, and the franchise is rapidly expanding in Europe and North America as it looks beyond China, its largest overseas market.
North American and European Market Expansion
The group's North American and European operations have achieved sales growth of 30%-50% per year since fiscal 2022, and annual revenue from the regions is projected to grow to 3 trillion yen each over the medium term from about 300 billion yen and 500 billion yen, respectively, this fiscal year, the company said.
Japanese and Chinese Market Dynamics
Fast Retailing's Japanese sales have been supported by a tourism boom driven by a weak yen, while growth in China has slowed due to weak consumer sentiment, prompting store closures and restructuring.
On China, Okazaki said: "We’re pushing forward with structural reforms ... I think it’s fair to interpret that the results are now beginning to show in our performance."
Supply Chain and Tariff Pressures
The global retailer's Asia-based supply chain last year came under pressure from wide-ranging and frequently shifting tariffs by the United States, and it now faces the added hurdle of elevated costs from the Middle East conflict.
Leadership Perspective and Future Outlook
Founder’s Vision and Concerns
Tadashi Yanai, Fast Retailing's founder and Japan's richest man, has a long-standing aim to make his company the world's No. 1 clothing brand and has been outspoken on the risks from tariffs.
Asked about the impact of the Iran conflict on Fast Retailing's production bases, Yanai said Southeast Asia was being hit the hardest.
"After all, you can't really do anything without oil," he said. "On that point, I think we need to raise more of an outcry. And I really wish they would put an end to these pointless wars."
Exchange Rate Information and Reporting Credits
($1 = 158.8900 yen)
(Reporting by Rocky Swift in Tokyo; Editing by Himani Sarkar, Kim Coghill and Neil Fullick)
