Q1, FY25 results of Uniqlo operator, Fast Retailing missed analyst expectations, as a sharp decline in profits from its China operations overshadowed robust sales in Japan.

The company’s operating profit rose by 7.4 per cent to 157.6 billion yen ($996.84 million) for the three months ending in November 2024, compared to the same period last year. However, this figure fell short of the consensus forecast of 160 billion yen by six analysts polled by LSEG. Despite this, Fast Retailing maintained its full-year operating profit forecast of 530 billion yen, putting it on track for a fourth consecutive year of record earnings.

Domestic sales in Japan received a boost from a tourism surge fueled by the weak yen, with duty-free shopping contributing significantly. Colder-than-usual weather in December also increased demand for thermal wear. In contrast, sales growth in China slowed due to unseasonably warm weather in October and November, leading the company to adopt a ‘scrap-and-build’ strategy, which involves redesigning underperforming stores instead of expanding rapidly.

Fast Retailing also continued its aggressive expansion strategy in North America and Europe. In the southern US, the company opened five Uniqlo stores in Texas in October, reflecting its goal of becoming the world’s top clothing brand.

The company also set a precedent for wage increases in the service industry in Japan. Following a significant pay hike in 2023, Fast Retailing announced another aggressive pay raise, effective March 2025, to retain skilled workers. Wages for full-time headquarters and sales staff will increase by up to 11 per cent, while annual salaries of new employees will rise by approximately 10 per cent.