Japan’s Fast Retailing posts record profit, yet there is a cause for concern

Japan’s Fast Retailing posts record profit, yet there is a cause for concern

On Friday, one of the analysts stated that Fast Retailing of Japan might have to deal with slow growth irrespective of registering high amount of profit. On Thursday Fast Retailing, which is the owner of Uniqlo stated that it received a high amount of profit even for third consecutive year and recorded shares around 2.5% higher during Friday’s trading event. The operating profit of the Company rose around 9.1% as recorded on August 31.

Contrary to this, profit forecast made by the retailer didn’t live up to the expectations. For the fiscal year 2020, Fast Retailing made a profit projection around 6.7% which is below 15% as per estimated by the analysts. In one of the brief interviews with the press, Peter Boardman stated that though Fast Retailing is a great name but still it has to deal with high percentage of uncertainty.

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Recently, analysts have registered a slowdown in the economy of China after it received rapid growth in the past. Boardman also stated that 35% of total profit which Fast Retailing made come from China, thus the slowdown of Chinese economy will affect overall profit of the company.

During the beginning of present year Fast Retailing stated that it might get a total sale of around $9.26 billion from China by 2022. This would nearly double the total sale which the Company registered during fiscal year 2019. There are several challenges which Fast Retailing has to face due to trade dispute between Tokyo and Seoul, as the consumers of South Korea boycotted products manufactured in Japan.

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During fiscal 2019, Fast Retailing stated that its business in South Korea has registered a decline in terms of profit and revenue. The Company also made a forecast for large amount of declines in South Korea for fiscal year 2020.In a recent statement, Boardman stated that the Company might get high growth by e-commerce and by doing business in India. Due to this,the Company has opened an outlet in India.

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