On Thursday, Uniqlo’s parent company, Fast Retailing Co (9983.T), will report its second-quarter earnings.
Japan’s largest retailer had its first-quarter operating earnings drop 2% owing to COVID-19 limitations in China, its biggest international market. China lifted most COVID-19 restrictions last year and reopened to travelers last month.
Investors will also examine the company’s bottom line.
Refinitiv analysts forecast Fast Retailing’s February operating profit to grow 30% to 91 billion yen ($682 million).
Analysts estimate a full-year profit of 347 billion yen, 17% more than last year’s record.
Tadashi Yanai, Japan’s richest man, launched Uniqlo, which has roughly 900 stores in China, a barometer for global retailers in the world’s second-largest economy.
For the past few years, COVID regulations slowed Chinese operations. Thus Fast Retailing focused on North America and Europe.
“We see major concerns to the company’s value, especially with the Chinese rebound lasting longer than projected,” LightStream Research analyst Oshadhi Kumarasiri said in a Smartkarma platform analysis.
“Uniqlo’s sales growth looks to have plateaued in North America and Europe and margin pressure from pay rises and inventory growth.”
Fast Retailing’s 40% pay hike shook corporate Japan. The corporation predicted that Japanese employee expenses would grow 15% over the previous year.
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