The Japanese parent company of Uniqlo, Fast Retailing anticipates US tariffs to impact its North American operations significantly, leading to planned price increases. Takeshi Okazaki, Chief Financial Officer, Fast Retailing, concedes, it is difficult for the company to absorb all costs. It aims to raise prices wherever possible, while ultimately focusing on creating a sustainable business that securely generates profits, he adds.

Earlier this week, US President Donald Trump set a new August 1 deadline for ‘reciprocal’ tariff rates, which are expected to affect nearly all trading partners. Fast Retailing estimates these tariffs will reduce its fiscal 2025 profits by approximately 1 per cent, a figure limited by proactive early product shipments.

The majority of Uniqlo apparel sold in the US is produced in Southeast Asia and South Asia. This week, Trump notified Sri Lanka, a major source market, that it would face a 30 per cent tariff from August 1. In contrast, Vietnam, which had previously faced potentially crippling tariff levies, is now expected to see a lower 20 per cent US tariff.

For the current fiscal year, ending August, Fast Retailing maintained its operating profit forecast at around $3.7 billion. The company attributes this stability to strategic early shipments of merchandise to the US market, aiming to circumnavigate the immediate impact of the increased duties.

However, operating profits for the three months ending May 31 rose only 1.4 per cent to approximately $1 billion, falling slightly below a consensus forecast of about $1.05 billion. The company's strategy involves focusing on its core Levi's brand and a DTC-first approach to ensure continued financial performance and higher returns on invested capital, assuming no major macroeconomic deterioration or supply chain disruptions.