Uniqlo owner Fast Retailing Q2 profit jumps 80%

Japan's Fast Retailing Co Ltd , the owner of the Uniqlo casual wear brand, reported a better-than-expected 80% jump in second-quarter operating profit, as the company's efforts to improve margins helped offset flat revenues.

Operating profit for the three months ended February rose to ¥42.1 billion ($386 million), from ¥23.4 billion yen a year ago, according to calculations based on the company's results for the first half of the fiscal year.

The results were above expectations of six analysts who, on an average, had pegged quarterly operating profit at ¥36.02 billion, Thomson Reuters data shows. Fast Retailing reiterated its operating profit forecast for the year to August at a record high of ¥175 billion.

A persistent economic malaise and a lack of wage growth have eaten away at consumer confidence in Japan, prompting retailers to offer better products for less and cut expenses. Fast Retailing has also opted to expand overseas, including China, Southeast Asia and the United States, to ride out the gloom.

Uniqlo, known for its HeatTech fabric technology and rainbow coloured-basics, opened its 1,000th overseas store this fiscal year. That is more than triple the number of stores the retailer had just five years ago.

Chief Executive Tadashi Yanai has led Fast Retailing on a rapid global expansion with the goal of eventually overtaking Zara-owner Inditex SA and Hennes & Mauritz AB (H&M) as the world's top apparel retailer.

In the September-February first half, Uniqlo's overseas operating profit surged 66%, led by Greater China and Southeast Asia, but yen-based sales inched up only 0.9%. In Japan, Uniqlo operating profit rose 7.3% during the six months, although sales gained just 0.3%.

Fast Retailing shares are down about 17% year-to-date, while the broader Topix index is down more than 3%. The stock closed down about a percent ahead of results on Thursday, versus a 0.8% drop in the benchmark.