The numbers: Fine. Fast Retailing, the parent company of the Japanese clothing chain Uniqlo, said Thursday that it earned ¥74.5 billion ($691 million) for the fiscal year that ended in August, down 28.7% from a year earlier. Sales at the fashion retailer rose 21% year-over-year,to ¥1.38 trillion ($12 billion).
The takeaway: Fast Retailing blamed much of its decline in profits on a ¥19.3 billion impairment charge it took on its somewhat problematic J Brand denim unit, which it took control of in 2012. The saga of the luxury jeans unit mirrors broader struggles the company faces in the US. Though the company has 26 outposts stateside — part of a push that promises 13 more U.S. stores by Thanksgiving — the establishments have yet to show a profit, thanks mainly to the high cost of opening stores.
What’s interesting: Fast Retailing sees Uniqlo – a mash-up of “Unique Clothing” – as occupying what Tadashi Yanai, the company’s chief executive and Japan’s richest person, calls “a new category” of apparel that combines comfort and style for all, as Uniqlo’s slogan expounds. While its ambitions are global, Japan still accounts for 52% of Fast Retailing’s sales and 74% of profits. Uniqlo has been renovating its Japanese stores to expand selling space. The company also boosted prices there concurrent with the rollout of fall and winter clothing. The results may be paying off. Same-store sales in Japan over the past year rose nearly 2%. And its Japanese profits rebounded 14.2% in the last 12 months after falling 5.4% a year earlier.