On March 4, the Japanese retail giant Fast Retailing Group announced that its Uniqlo and GU stores in Japan will cut prices by about 9% because “due to the new crown virus pandemic, many customers are experiencing unprecedented difficulties.” In addition, Uniqlo also said that the price tag will display tax-included prices to save customers the trouble of calculation.
Affected by this, Fast Retailing shares fell 6.22% to HK$71.65.
Uniqlo told the Blue Whale Financial reporter that the price adjustment of related brands in Japan this time is in line with the Japanese government’s policies. For markets outside of Japan, there are currently no relevant plans.
According to the 2020 financial report of Uniqlo’s parent company Fast Retailing Group (as of August 2020), data show that the company achieved a net profit of 90.3 billion yen, down 44.4% year-on-year; revenue was 2.01 trillion yen, down 12.3% year-on-year. Although there is no deficit, this is the first full-year decline in Fast Retailing’s performance since 2017.
In this regard, Fast Retailing said that due to the impact of the new crown pneumonia epidemic, the sharp decline in offline sales has become the main reason for the sharp decline in Uniqlo’s performance.
In the first quarter of fiscal year 2021 (September to November 2020), Fast Retailing Group’s total comprehensive income in the first quarter of 2021 fell 0.6% year-on-year to 619.7 billion yen (approximately RMB 36.838 billion), with operating profit year-on-year An increase of 23% to 113 billion yen. (Approximately RMB 7 billion). According to the financial report, the market value of Fast Retailing Group exceeded 10 trillion yen for the first time thanks to the strong performance of products such as home wear and sportswear in countries such as China and Japan.
Last year, Fast Retailing’s overall performance was under greater pressure. However, the first quarter of fiscal 2021 has just improved, and Uniqlo Japan has cut prices across the board, and profits may be further pressured. Will this make Uniqlo in the epidemic worse and reduce profits? The stock price of Fast Retailing plummeted, and the capital market has already voted with its feet.